The top 10 questions people ask about life insurance—answered.

1. What is life insurance, and why do I need it?
   If someone is reliant on you financially, you likely need life insurance. Life insurance pays a tax free lump sum to a named beneficiary if you die. If you are married, have a life partner, have a child, have a business loan or a mortgage or have other dependents, you are a candidate for life insurance.
2. How much life insurance coverage do I need?
   The rule of thumb is you need 10-12x your income to replace your income. There are various ways to calculate your needs. Here is a life insurance calculator.
3. What types of life insurance policies are available?
   The main types of insurance are term insurance and permanent insurance such as whole life, universal life and variable life.
4. How does term life insurance differ from permanent life insurance?
   Term insurance is the simplest form of insurance. The premiums are locked in for a fixed period of time such as 10, 15, 20, 25 or 30 year term. At the end of the term, the policy lapses. You may cancel the policy at any time.
5. What is the process for applying for life insurance?
   Life insurance requires an application where they will ask you your name, address, etc… Additionally, they will ask you your medical history which is typically head to toe questions about the last 10 years. About 70% of the time, the company will request medical records. If you apply for $1mil or more, the company will send out an examiner to gather blood and urine and ask you your medical history.
6. How are life insurance premiums determined?
   Life insurance companies determine rates based on age, gender, family history, medical history and risky activities and behavior. Based on all of those criteria, they will place you in a category such as super preferred, preferred, select, standard and substandard.
7. Can I get life insurance if I have pre-existing health conditions?
   Typically yes. Based on your medical history, the rates may come back at a higher rate.
8. Will my life insurance policy cover death from all causes?
   Yes. With a few exceptions. Most states have a 1 or 2 year suicide clause where claims will not be paid during that period. Some policies will not pay claims if you are in the process of commiting a felony at the time of death. For example, if you are robbing a bank and are shot, your death benefit may not be paid.
9. How does the beneficiary designation work?
   You may designate a primary and a contingent beneficiary. You may also change the designation at any time. Your primary beneficiary will receive the proceeds at the time of claim. If your primary beneficiary is deceased at the time of claim, the proceeds will be paid to your contingent beneficiary.
10. What happens if I miss a premium payment or want to cancel my policy?
    You have a 30 day grace period if you miss a payment. If you go past the 30 day grace period, you may have to go through reinstatement which would ask you your medical history again. You may cancel life insurance at any time.

For more information about life insurance or to request a quote, contact Set for Life Insurance today!