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Life Insurance FAQ

Most Asked Questions of 2009

How much life insurance should I carry?

We recommend that family breadwinners with financial dependents (or debt) carry ten times their annual income in total life insurance. Non-working spouses with financial dependants (or debts) should consider carrying $300,000 as a minimum.

Here's a government calculator you can use to determine how much coverage you need: http://www.insurance.va.gov/sgliSite/calcuator/needsCalc.htm

Which rate guarantee should I buy?

This decision should be tailored around the length of time you think you'll need coverage to remain in-force. Think about your beneficiaries for a moment. How many people are financially dependent upon you for income? When will your children be done with school? How much debt do you have? In how many years will your mortgage be paid off? Who would make up the lost income or pay off your debts if you were to unexpectedly die? And within what time frame would such lost income be replaced? Term life insurance rate guarantees range from 10 years to level-for-life. The #1 most popular buyer's choice for 2009 at Life Quotes, Inc. is 20-year term. Call us toll-free at 1-800-443-5149 or email me at todd@lrc-insurance.com if you want more help or advice in thinking through this decision.

Are life insurance prices really at all-time lows right now?

Yes. Life insurance prices have been dropping steadily for ten years and have just recently fallen again to all-time lows. Increased life longevity and good old fashioned competition are responsible for creating these bargains. This is a great time to be shopping for life insurance.

Do all life insurance companies require a physical exam?

No. Some life insurance companies do not require exams for up to $500,000 of coverage. Call us at 1-800-443-5149 or email me at todd@lrc-insurance.com  if you want quotes on a no-exam life insurance policy.

Do I really have to be upfront and entirely truthful about my smoking, weight and health history on my life insurance application?

Yes. All life insurers perform very thorough underwriting, which almost always includes outside medical records retrievals, doctor statements, Medical Information Bureau and other third party lookups where they are allowed. This means that every answer you provide on an insurance application will be verified and checked, probably more than once before the company will return a firm offer to you. And remember this, it is a crime in all 50 states to lie or withhold information on an insurance application.

Is death by any cause covered?

Yes. The standard term life policy covers death by any cause at any time in any place. An exception to this rule would be death by suicide within the first 2 policy years, 1 year in some states. Another exception would be if you lied on your application and thus obtained your policy through false pretenses. Insurers in most states are given 2 years to contest such a claim.

What is return-of-premium term life?

Return-of-premium term pays you back the entire premium if you outlive the initial rate guarantee period. In other words, you are guaranteed a payout on the policy, either by having it pay its death benefit or by having it refund 100% of your paid premiums at the end of the initial rate guarantee period. Some people find it financially attractive as a kind of \"forced savings account\" to buy this kind of a policy, which, of course, contains no long term stock market or investment risk.

What is guaranteed-level-for-life insurance?

This kind of policy provides level premiums and a guaranteed level death benefit for life. It's kind of like whole life insurance without the forced savings account. This coverage, which is often actually universal life insurance without any side investment or savings accounts, is most often purchased by high net worth families who buy these policies to pay for all or part of their estimated estate tax burden. These kinds of life insurance policies should only be bought by people who have thoroughly thought through their lifetime need for life insurance and have come to the conclusion, perhaps with a financial planner or attorney, that they do indeed have a lifetime need for life insurance.

What happens to term life premiums after the initial rate guarantee period?

They go up substantially. That's why it's important to choose a rate guarantee period at the outset that will properly span the time you expect to have dependents or debts. The premiums offered to you beyond the initial rate guarantee period are called the \"guaranteed renewable\" premiums. You'd only consider paying those high premiums if you knew you were going to die soon afterwards.

Can a term life policy be renewed beyond the initial rate guarantee period?

Yes. What you are referring to is called guaranteed renewability. Most high quality term life policies contain this feature, which allows you to continue your term life coverage beyond the initial rate guarantee period. This can be important if, for example, you were to become terminally ill towards the end of your rate guarantee period and you decide that you still need life insurance. The premiums revert to annually increasing term life, and they go up every year, but having this option of coverage available to you when you are terminally ill and uninsurable can be a real family asset.

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