About Life Insurance

November 5th, 2021 abriinsurance
Blog Image- Life Insurance

Welcome, readers! This is Abri News, where you’ll find helpful policy information to assist you in finding the best coverage for your needs. We cover a variety of topics here, including insurance plans, types of coverage, claim adjustments, conditions and clauses. Our agency aims to pair individuals with the best insurance package for their specific needs, which is why we carry every type of insurance you can imagine. From homeowners’ insurance to workers’ compensation to pet insurance—we have you covered! It’s our job to shop around, compare rates, and set you up with the level of coverage you need to feel safe and secure. Our clients enjoy our one-on-one approach and attention to detail. For testimonials, information about our services, or to request a quote, take a look around our website!

The purpose of insurance is to protect and support people in the event of a loss of property, value, health, or life. Given the important role insurance plays in assisting those who have suffered, it is inconceivable for most to imagine their insurance failing to pay out a claim in their time of need. The reason claims are denied varies among providers and types of insurance. That’s why we dedicated an article to examining the multitude of reasons cited by insurance companies for denied claims, as well as a few ways you can help ensure your claim is approved. We discussed how to examine the language of an insurance agreement and spot vital conditions, as well as certain caveats associated with certain types of insurance (such as the contestability period associated with life insurance). The truth is, any reputable insurance company should be happy to pay out your claim when unfavorable circumstances arise and you’re in need. However, not all insurance companies are created equal. That’s why we also detailed how to follow up on denied claims, where to go, who to speak to, and what evidence you’ll need to make sure your case stands the best chance of being appealed. Every insured should understand the list of actions which will result in a denied claim and have a plan for how to proceed. In our last article, ‘Recourse for Unfulfilled Insurance Claims,’ we help you do just that! If you’re interested, make sure you head over to that article after you’re finished reading this one!

Life insurance isn’t something young people tend to think about. As far as insurances go, life insurance is the one most often relegated to our later years, with the most common age group for people to buy insurance being 35 to 45. In 2020, the pandemic correlated to an overall increase in life insurance sales, as many people watched recently healthy loved ones become sick and pass away. Among people under the age of 44, life insurance applications increased nearly 8% over 2020. Roger Crandall, CEO of Yahoo Finance Live, says “The interest in life insurance is up. I mean, COVID certainly got people thinking about the need for life insurance and protecting their family… We’re actually seeing one of the strongest growth segments is millennials. We think that’s really positive.” Whether you believe this uptick in life insurance sales to be the mark of prudent planning on the part of young people or a sign of changing times, it’s clear life insurance is becoming a priority for many. That’s why today we’re going to be giving you the lowdown on all things life insurance, including debunking myths about how expensive life insurance policies are and how it’s an insurance only for people with large families. There’s plenty to know about life insurance and we hope you’ll join us for this interesting lesson.

Types of Insurance

Most people are familiar with the two most common types of life insurance: term and whole. Term life insurance policies have an expiration date. They span ten, twenty, thirty, or another set number of years before becoming void. This means if the policyholder dies within this timeframe, the death benefit associated with their policy will be paid to their beneficiary. And, if the policyholder does not die within this timeframe, the death benefit is forfeit. A term policy is essentially betting on when the policyholder will die. These policies, because they carry the risk of not being paid out in the end, are generally much cheaper than whole policies. Whole life insurance policies cover the entire life of the policyholder, from the approval of their application until their death–whenever their death may occur. This means the policy has no expiration date and, if the policyholder were to live another one-hundred and ten years before dying, (in addition to being a modern miracle) their beneficiary would receive their death benefit. These policies carry a guaranteed payout and, thus, are more expensive.

A universal life insurance policy falls under the umbrella of a whole policy but is considered more “flexible.” At any time, a policyholder can adjust their premium payments, their death benefits, and other aspects of the policy. The terms of such an agreement are, rightly so, more complex than either a standard term or whole policy. As well, universal policies are more expensive, but the freedom afforded to the policyholder is well worth the cost to some. A “no-exam” policy is, as the name suggests, a policy obtained without undergoing a physical examination (which is standard in the case of life insurance). If you believe you would be unable to pass a physical examination or a physical examination would drive your life insurance premium up to the point of being unaffordable, then you can find a life insurance provider who does not require examinations. Keep in mind, their premiums might be higher on average, as they will insure almost anyone.

Individual life insurance policies are the kind most of us are familiar with, but there are also group options available. Group life insurance policies are often offered at a discount and are usually purchased by companies for employees. Credit life insurance policies exist to cover existing debt an individual has incurred up until their death and to protect the family of the policyholder from incurring this debt upon their death. Using another type of life insurance policy is often preferable to taking out a credit life insurance, as the latter decreased in value proportional to the loan amount.

Contestability Period

The “contestability period” spans from the time you purchase your life insurance policy to about one or two years after the fact. During this period, if the policyholder dies, the insurance company is inclined to investigate the death. Insurance companies use this time to reevaluate the insured’s application and ensure all of the information provided therein was correct. If any aspect of the applicant’s situation was misrepresented in the application, even if the misrepresentation did not have anything to do with the policyholder’s eventual death, the insurance company can use this as grounds to deny the claim. In which case, all premiums will be reimbursed. Now, there is a marked difference between intentionally misrepresenting a situation on an application and making a mistake. Common mistakes may delay the payment of a death benefit, but cannot be used to deny your claim. Instead, insurers may calculate how this misrepresentation would’ve affected your monthly premium amount and then deduct the difference from the death benefit. Misrepresentations which constitute a denial of the death benefit are along the lines of providing the wrong age, understated your participation in a dangerous hobby or line of work, and failing to disclose an illness.

About Life Insurance

Common conditions and exclusions associated with life insurance policies are: suicide clauses, dangerous activity clauses, illegal activity clauses, aviation clauses, and acts of war clauses. These offer insurance companies a way out of paying the death benefit when the policyholder dies as a result of suicide, dangerous activities (such as scuba diving, bungee jumping, skydiving, etc.), involvement in illegal activities (such as speeding, drunk driving, or not wearing a seatbelt), private plane crashes, and death as a result of war.

Apparently, half of Americans do not have life insurance because they are under the impression it’s too expensive. In fact, on average, people think life insurance is three times more expensive than it actually is; with most millennials believing life insurance is six times higher than its actual cost. Perhaps this is why only 51% of Americans have life insurance? If so, it’s an absolute shame. For single, young people life insurance is a good investment. Some permanent life insurance policies can pay out early in the case of a critical or terminal illness. This practice is referred to as accelerated benefits and exists to help improve a terminal individual’s quality of life leading up to their death.

If you’re unsure of whether or not you can afford a life insurance policy, do not simply assume all life insurance policies are outside of your budget. Reach out to Abri and we’ll help you find the right policy for you! Life insurance is more important now than ever. Everyone here at Abri Insurance is eager to assist you in your search for the best coverage. Come back here to read the latest news and discover more about how to make the insurance industry work for you! Thanks for reading! Until next time!

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