Life insurance can be an important part of a family’s financial plan. Here are answers to 15 common life insurance questions.
1. What Is Life Insurance?
Life insurance is a contract in which an insurer pays a death benefit to designated beneficiaries when the insured dies, provided the policy is in force and requirements are met.
2. Why Do People Buy Life Insurance?
Proceeds may help with income replacement, housing costs, debts, childcare, education, final expenses, business obligations, and other financial needs.
3. Term vs. Permanent Life Insurance?
Term insurance generally covers a specified period. Permanent insurance is designed for lifetime coverage when requirements are met and may include cash value.
4. How Much Life Insurance Do I Need?
Consider income, debts, mortgage, family expenses, education goals, final expenses, existing savings, employer benefits, and dependents’ needs.
5. When Is the Best Time to Buy Life Insurance?
Age and health are key underwriting factors, so buying coverage when you’re younger and healthier can help. Life events often trigger a review.
6. Do I Need Life Insurance If I Am Single?
Maybe. Debts, final expenses, family responsibilities, business obligations, or future goals can create a need even without a spouse or children.
7. Do Both Spouses Need Life Insurance?
Often worth considering. A non-working spouse may provide childcare, transportation, caregiving, household management, and other services with significant replacement cost.
8. Is Employer Life Insurance Enough?
It is valuable but may be limited or tied to employment. Review the amount, portability, age reductions, and whether personal supplemental coverage is appropriate.
9. Will I Need a Medical Exam?
It depends on age, coverage amount, health, and underwriting program. Some applications use exams and records; others may use simplified or accelerated underwriting.
10. What Affects the Cost of Life Insurance?
Factors may include age, health, tobacco or nicotine use, coverage amount, policy type, duration, occupation, hobbies, driving history, and other underwriting factors.
11. Who Should I Name as Beneficiary?
Common choices include a spouse, children, a trust, a family member, or another appropriate beneficiary. More complex situations may warrant legal or tax advice.
12. Can I Have More Than One Beneficiary?
Yes. Policies generally permit primary and contingent beneficiaries and may allow benefits to be divided among multiple beneficiaries.
13. Are Life Insurance Proceeds Taxable?
Death benefits are generally received free from federal income tax, but exceptions and estate or tax considerations can apply. Consult a qualified professional for your situation.
14. What Happens If I Stop Paying Premiums?
The result depends on the policy. Coverage may lapse after applicable grace periods, while some permanent policies may have additional nonforfeiture or cash-value provisions.
15. How Often Should I Review My Life Insurance?
Review periodically and after marriage, divorce, a birth or adoption, home purchase, income change, business changes, major debt, retirement, or a beneficiary change.
Have More Questions?
Call Oberryman Insurance Agency at 703-986-0468 to schedule a life insurance review or discuss available coverage.
Insurance coverage, eligibility, rates, limits, deductibles, exclusions, endorsements, underwriting, and availability vary by insurance company, policy, state, and individual circumstances. This article is provided for general informational purposes and does not modify or replace the terms of an insurance policy. Life insurance information is not intended as legal, tax, investment, or financial advice.
