This is Liran Hirschkorn from bestlifequote.com, and today I want to talk
to you about some common term life insurance questions and answers, and
there’s a lot more information on our website and on our blog,
bestlifequote.com. You can check out the blog and you can also get quotes
there. So let’s talk a little bit about some common questions, as well as
answers to questions about term life insurance.
So, first question, “Can the life insurance company cancel the policy for
Other than nonpayment of your premium, life insurance policies
are generally non-cancellable. This means that the life insurance company
can’t cancel your policy. So this is something that most term life
insurance companies have and you can look and read this in the policy to
make sure that it’s non-cancellable.
Next question, “Are there situations where the life insurance company
wouldn’t pay the death benefit?”
So, generally insurance companies pay the
death benefit. But there are a few times where they don’t. So, most
policies do have some causes for nonpayment. As an example, if you commit
suicide in the first two years, it is one year in some states depending on
the law, or if you die while committing a crime. So don’t rob a bank and
die because your family won’t get the life insurance money.
Or if you make a material misstatement, so you lie on your application.
Let’s say you said you were a nonsmoker and they find out you’re a smoker,
or you lied about something. You knew you had cancer and you left that out.
In those cases your death benefit may be denied. A material misstatement is
essentially knowingly lying on your application.
“Is my policy renewable at the end of the term?”
So you buy a 10, 20, 30-year policy. What happens at the end of the term? So, generally the price
is locked in during the term. But you can continue the policy. It’s called
guaranteed renewable. The price will adjust based on your age. So it will
increase, but you generally can continue the policy and it’s guaranteed
Most term policies are usually renewable until age 95. Some are 90.
Depending on the life insurance company you can continue the policy until
that age. So, yes, you can continue the policy and you don’t have to
qualify by having a health exam. So even if you’re not healthy you can
continue the policy.
“Does a term policy provide living benefits?”
So we all know you get a
death benefit if you die. But there are riders that provide living
benefits. For example, there’s a Terminal Illness Rider which is included
in most policies which allows you to access a portion of the death benefits
while you’re alive if you become terminally ill.
So if a doctor says you have, let’s say, less 12 months to live, you can
typically access with many companies up to 50 percent of your death
benefit, usually up to a maximum amount like $250,000 while you are alive,
and you can use it for any reason. There are also riders that you would pay
for additionally. For example, if you wanted them, a Waiver of Premium
Rider would waive your premium payments in the event that you got disabled.
So that’s another example of a living benefit.
“Can I increase the term length of my policy in the future?”
So while you
can’t go from, let’s say, a 20-year term to a 30-year term policy what you
can do is you can convert a term policy to some form of permanent policy
with most companies typically during a certain period of time. So, for
example, many companies you can convert the policy in the first 20 years up
until age 70, whichever comes first, to some form of permanent policy that
they offer either a universal life or a whole life policy. But you can’t
just go from a 10-year to a 20-year unless you buy a new policy and replace
your existing policy.
“Can I cancel my policy in the future?”
So, yes, you can cancel a term
policy at any time. There are no penalties. You just call the insurance
company up or stop making the payments and there’s no penalty for
terminating a policy at any time.
Another question here. “How will my family be taxed on the life insurance
death benefit they receive?”
So right now, based on the current tax law and
it’s been this way for many, many years, life insurance proceeds are income
tax free. So your family would not have to pay income tax, and unless your
family is subject to estate tax, which means you would have to have a high
net worth, then if the policy is not owned outside of your estate, if it’s
owned by you personally, there may be estate taxes that are included on the
But that applies to, right now, estates that are higher than $5 million,
and you can get around that by having a trust own the life insurance
policy. For most people that’s not going to apply and for most families the
life insurance proceeds are going to be income tax free.
“What happens if you miss a premium payment?”
So most companies will
obviously notify you. They’ll send you a letter and they’ll give you some
sort of a 30-day grace period to make up the payment. But of course, if you
keep missing payments they will cancel your policy. If you don’t make that
payment in the grace period they will cancel your policy, and then you’ll
need to apply to reinstate the policy, which many times is like applying
all over for a new policy.
“What is the process for my family to file a claim?”
So your family
typically can call your life insurance agent or you can call the insurance
company directly. They’ll ask them to either fax or email, or mail in a
copy of the death certificate, and then generally companies will process
the payment right away. You can expect between three and seven days to be
able to either get a check mailed out or sometimes they’ll be able to wire
the money right into your bank account.
“Can I change my beneficiary at any time and how do I do it?”
So, yes, you
can as long as you’re the owner of the policy. You can change the
beneficiaries at any time. All you need to do is fill out a form, and again
get it over to the insurance company and they’re going to make that change.
If you have anymore questions about life insurance or you’d like to get a
life insurance quote, visit our website, bestlifequote.com. We have a lot
of articles on our blog. You can also get an instant quote there right on
the site for free. You can review all the companies and you can also call
us at 888-552-6159 to get a quote or apply for life insurance coverage.
Thank you. My name is Liran Hirschkorn and I look forward to speaking with