Life Insurance Frequently Asked Questions

Shawn Plummer

CEO, The Annuity Expert

When it comes to life insurance, there are a lot of questions that people have. What is life insurance? How does it work? What are the benefits? This guide will answer some of the most commonly asked questions about life insurance. We will provide information on life insurance, how it works, and the different types of policies available. We will also discuss the benefits of having life insurance and answer some common questions about the process.

Table Of Contents
  1. Is life insurance taxable?
  2. Is life insurance worth it?
  3. Are term life insurance premiums fixed?
  4. What is the best life insurance policy?
  5. What is life insurance, and how does it work?
  6. At what age should you buy life insurance?
  7. How much does $100,000 in life insurance cost?
  8. Is life insurance worth it, or is it a waste of money?
  9. What are the worst life insurance companies?
  10. Who has the cheapest life insurance?
  11. Can life insurance cover funeral costs?
  12. Can life insurance be canceled at any time?
  13. What life insurance do I need for a mortgage?
  14. Where can I buy life insurance near me?
  15. How much term life insurance do I need?
  16. Which life insurance has a cash value?
  17. What life insurance company is the best?
  18. When are life insurance proceeds taxable?
  19. When is life insurance taxable?
  20. Which life insurance is best for seniors?
  21. Which life insurance is best, term or whole?
  22. Which life insurance can you borrow from?
  23. Which life insurance is best for families?
  24. Will life insurance cover Multiple Sclerosis (MS)?
  25. Will life insurance cover cancer?
  26. Will life insurance pay for a suicidal death?
  27. Will life insurance pay if drugs are in the system?
  28. Will life insurance cover me if I smoke?
  29. Will life insurance affect Social Security Income (SSI)?
  30. Will life insurance pay for a drug overdose?
  31. Will life insurance pay for skydiving, bungee jumping, scuba diving, hang gliding, or adventure sports?
  32. Will I need to take a medical exam?
  33. What is a Face Value?
  34. What’s the application process like?
  35. Where can I find term life insurance quotes for over 50?
  36. Is death insurance the same as life insurance?
  37. How do I Find Life Insurance Policy for a Deceased Person?
  38. What is the average life insurance cost per month?
  39. What is the minimum age at which a person can sign a life insurance application?
  40. Why is an applicant’s signature required on a life insurance application?
  41. Who is not required to sign a life insurance application?
  42. What happens if you lie on a life insurance application?
  43. Who Benefits from Investor-Originated Life Insurance?
  44. When an employee is required to pay a portion of the premium for an employer/employee group health plan, the employee is covered under Which Life Insurance Plan?
  45. What Happens When An incomplete life insurance application is submitted to an insurer?
  46. How Does Life Insurance Create An Immediate Estate?
  47. How is Credit Life Insurance Issued?
  48. What Type Of Life Insurance Is The Best?
  49. A life insurance replacement can be best defined as
  50. What is the Best Life Insurance Policy For A 40-Year-Old?
  51. Where is the Best Place To Get Life Insurance Quotes?
  52. Can you cash out life insurance?
  53. What is a good life insurance policy?
  54. What is the best life insurance company?
  55. Do life insurance policies expire?
  56. Do you pay taxes on life insurance?
  57. Can I borrow against my life insurance policy?
  58. Does life insurance cover suicidal death?
  59. How much is a million-dollar life insurance a month?
  60. How much is life insurance when someone dies?
  61. How do I cancel my life insurance policy?
  62. Can you take out a life insurance policy on anyone?
  63. Who is not required to sign a life insurance application?
  64. Who benefits from investor-originated life insurance?
  65. What is the point of having life insurance?
  66. What is an accelerated death benefit rider?
  67. What is living benefits life insurance?
  68. What is a life insurance trust?
  69. What is a no medical exam life insurance policy?
  70. What is the difference between term life insurance and whole life insurance?
  71. What are the different types of life insurance?
  72. Any changes made on an insurance application require the initials of whom?

Is life insurance taxable?

Proceeds from a life insurance application to a beneficiary are tax-free. Loans against a life insurance policy can be tax-free. Withdrawals from the life insurance policy’s cash value are subject to taxes.

Is life insurance worth it?

Not always. Life insurance is not worth it if you don’t have a family or beneficiaries. But, with that said, if the insured person has a family and wants to support their lifestyle after death, life insurance is worth it.

Are term life insurance premiums fixed?

Yep. The term life premiums will remain the same for the specific insurance term.

What is the best life insurance policy?

Term insurance is the best if you want a life insurance plan at the cheapest cost. However, if you want to be covered for the rest of your life, a whole life insurance (permanent insurance) plan is the best.

What is life insurance, and how does it work?

A life insurance policy is a contract with an insurance company. The issuing insurance company pays a lump sum death benefit to your beneficiaries in exchange for a series of premium payments.

The point of life insurance is to protect the named beneficiaries financially after the insured person passes away.

If you are a parent, you want to make sure the coverage amount will fulfill everyday living expenses, pay off any debt payments, and support additional financial needs in the future.

Life insurance is basically a financial safety net.

At what age should you buy life insurance?

The younger, the better. Typically between 20 years old and 35 years old are ideal insured ages. Insurance increases in cost the older the insured person gets.

If you become a parent, purchase life insurance right away, so your term life premiums are cheaper.

How much does $100,000 in life insurance cost?

  • Age 20: Around $9 (female) and $10 (male) a month for a 20-year term policy for Preferred status.
  • Age 30: Around $9 (female) and $10 (male) a month for a 20-year term policy for Preferred status.
  • Age 35: Around $10 (female) and $11 (male) a month for a 20-year term policy for Preferred status.
  • Age 40: Around $11 (female) and $13 (male) a month for a 20-year term policy for Preferred status.
  • Age 45: Around $15 (female) and $18 (male) a month for a 20-year term policy for Preferred status.
  • Age 50: Around $19 (female) and $26 (male) a month for a 20-year term policy for Preferred status.
  • Age 55: Around $29 (female) and $40 (male) a month for a 20-year term policy for Preferred status.

Is life insurance worth it, or is it a waste of money?

Not always. If you don’t have a family or beneficiaries, life insurance is not worth it. With that said, if you have a family and you want to support their lifestyle after death, life insurance is totally worth it.

What are the worst life insurance companies?

You should not purchase a life policy from a company rated below A-. It’s just not worth it, and the term life premiums will not be that much cheaper.

Who has the cheapest life insurance?

Can life insurance cover funeral costs?

Yep. In fact, there is a type of life insurance called funeral and final expense insurance that covers funeral expenses (final expenses).

Can life insurance be canceled at any time?

Yes, but you will lose the death benefit and sometimes premium payments you’ve contributed.

What life insurance do I need for a mortgage?

This is a version of term insurance called mortgage protection that protects your mortgage payments.

Where can I buy life insurance near me?

You can purchase a term life insurance policy from a local financial advisor, insurance agent, or financial institution.

I recommend seeking an independent agent or advisor to provide more options than a “Big Box” firm.

The Annuity Expert also offers life insurance to sell.

We receive a commission from the insurance companies, not you.

How much term life insurance do I need?

The rule of thumb is 10x your income, but doing a Needs Analysis will help determine further.

Which life insurance has a cash value?

Permanent life insurance such as Whole Life and Universal Life can provide cash value, but term life insurance typically does not. You can also take out a policy loan.

Term life insurance with Return of Premium (money-back guarantee) is the closest you will get to having cash value in a term policy.

What life insurance company is the best?

You want to choose an A- or better-rated company for financial strength.

When are life insurance proceeds taxable?

Based on current law, death benefits are not taxable.

When is life insurance taxable?

You can tax gains as ordinary income if you withdraw the cash value from an active permanent life insurance policy.

Which life insurance is best for seniors?

Most life insurance companies issue up to age 89. After that, depending on the premium rates will determine the best policy for you.

Which life insurance is best, term or whole?

Term Life is more affordable, but the insurance coverage period ends.

Whole Life and Universal Life can be a more expensive insurance policies, but the lifelong coverage does not end as long as premiums are paid.

Which life insurance can you borrow from?

Whole Life Insurance and Universal Life Insurance.

Which life insurance is best for families?

Term life insurance policies provide high levels of coverage at low prices.

Will life insurance cover Multiple Sclerosis (MS)?

It depends on the details and specifics of medical history, but some policies will cover this condition. Medical underwriting is required.

Will life insurance cover cancer?

It depends on the details and specifics of medical history, but some policies will cover this condition. Medical underwriting is required.

Will life insurance pay for a suicidal death?

It depends on the details and specifics of the policy, but some policies will cover this condition.

Will life insurance pay if drugs are in the system?

It depends on the details and specifics of the incident, but some policies will cover this condition.

Will life insurance cover me if I smoke?

Yes, but your premiums will be higher. Life insurance companies like to see someone not use tobacco of any kind for at least 13 months to get a non-tobacco status.

Will life insurance affect Social Security Income (SSI)?

Generally, no.

Will life insurance pay for a drug overdose?

It depends on the details and specifics of the history, but some policies will cover this condition.

Will life insurance pay for skydiving, bungee jumping, scuba diving, hang gliding, or adventure sports?

It depends on the details and specifics of the trip, but some policies will cover this condition.

Will I need to take a medical exam?

Not always. A medical exam is required on some policies, and some are not. In addition, health info, including medical history and prescription drug history, can trigger a medical exam as a requirement.

Some life insurance companies send a technician out to you to check height, weight, and urine sample, then leave—a 10-minute process.

What is a Face Value?

The face value is technical terminology for your death benefit.

What’s the application process like?

The application process varies from one insurance company to the next. However, most application processes consist of you filling out the application online or on paper.

A representative of the insurance company will come to you a few days after the application is sent in. First, they check your height, weight, and urine sample.

Behind the scenes, the insurance company checks your medical history, family history, and prescription drug history.

After gathering all these facts, they will issue your rating if approved or declined.

Where can I find term life insurance quotes for over 50?

Our term life insurance quotes engine will illustrate up to age 89, and we have plenty of other life insurance options specifically created for Seniors.

Is death insurance the same as life insurance?

Yes, death insurance is another name for life insurance. With that said, you should not get death insurance confused with Accidental Death insurance.

How do I Find Life Insurance Policy for a Deceased Person?

Beneficiaries can find life insurance policies from the deceased by contacting the National Association of Insurance Commissioners (NAIC).

A death certificate from the funeral home that conducted the burial or cremation would help improve the NAIC’s search for any forgotten life insurance policies.

The life insurance policy locator service is free with no limitations, and the process could take up to 90 business days.

Be prepared to have as much personal info on the deceased as possible.

What is the average life insurance cost per month?

A $25,000 policy can cost as little as $4.85 per month. A $100,000 policy can cost as little as $9.02 per month. A $500,000 policy can cost as little as $15.91 per month. A $1,000,000 policy can cost as little as $23.48 per month. A $10,000,000 policy can cost as little as $100.00 per month.

What is the minimum age at which a person can sign a life insurance application?

The minimum age to sign a life insurance application is age 18.

Why is an applicant’s signature required on a life insurance application?

A signature is required on a life insurance application to acknowledge the purchase of insurance coverage and the permission of a medical background check.

Who is not required to sign a life insurance application?

The beneficiaries are not required to sign a life insurance application.

What happens if you lie on a life insurance application?

If an applicant is caught providing false information on an application, the applicant could be declined coverage, the policy could be canceled immediately without warning, and the applicant’s beneficiary could be denied a death benefit.

Who Benefits from Investor-Originated Life Insurance?

The policy owner (investor) benefits upon the death of the insured.

When an employee is required to pay a portion of the premium for an employer/employee group health plan, the employee is covered under Which Life Insurance Plan?

Contributory-Group plans where employees pay a portion of the premiums are called contributory plans.

What Happens When An incomplete life insurance application is submitted to an insurer?

The application will be returned to the writing agent.

How Does Life Insurance Create An Immediate Estate?

When you buy life insurance, the face amount is available to the beneficiary after the first premium is paid. This means that if something happens to you, your beneficiary can get money right away. In some cases, it might be a good idea to name one specific person as the beneficiary.

How is Credit Life Insurance Issued?

The term of credit life insurance is often decreased over time (decreasing term insurance). As the borrower’s payments are reduced, the face amount of the insurance coverage decreases.

What Type Of Life Insurance Is The Best?

There is no single “best” type of life insurance. The best type of policy for you will depend on your individual needs and circumstances. You may want to speak with a life insurance agent or broker to help you determine which type of policy is best for you.

A life insurance replacement can be best defined as

A transaction in which a new life insurance policy is purchased and an existing life insurance policy is surrendered.

What is the Best Life Insurance Policy For A 40-Year-Old?

If you’re a 40-year-old and your main purpose in buying life insurance is to financially protect beneficiaries, term insurance is the best type of policy. Indexed universal life insurance would be the best for a person who wants to save for retirement income.

Where is the Best Place To Get Life Insurance Quotes?

Outside an independent insurance agent, The Annuity Expert is one of the best websites to get life insurance quotes.

Are life insurance payouts taxed?

Generally, when you get life insurance money because someone died, the government doesn’t tax the money. But if you earn interest from the life insurance company, that is taxed and you should report it as income.

How long do you pay for life insurance?

You can choose to pay for a term life insurance policy for 10 to 40 years. With this policy, you will pay premiums at fixed intervals for a chosen set period of time. Permanent life insurance policies are those that offer lifelong coverage, and the premium is paid in a single payment, over a limited period of time, or throughout the policyholder’s lifetime.

Can you cash out life insurance?

Most life insurance policies allow you to cash out your policy. You will need to surrender your policy to the insurance company and they will give you the cash value. The cash value is usually less than the death benefit, so make sure you understand what you’re giving up before cashing out.

What is a good life insurance policy?

A good life insurance policy is one that meets your needs and budget. There are many different types of life insurance policies, so it’s important to compare and find the right one for you. Make sure you understand the terms and conditions before purchasing a policy.

What is the best life insurance company?

There are many different life insurance companies, so it’s important to compare and find the right one for you. Make sure you understand the terms and conditions before purchasing a policy. Some things you may want to consider include the company’s financial stability, customer service, and claims process.

Do life insurance policies expire?

Permanent life insurance policies do not expire as long as the premiums are paid on time. The coverage lasts for the entire life of the insured. However, some permanent life insurance policies have an expiration date between 100 and 121 years old. Term life insurance expires at the end of the term for which it was purchased.

Do you pay taxes on life insurance?

Generally, when you get life insurance money because someone died, the government doesn’t tax the money. But if you earn interest from the life insurance company, that is taxed and you should report it as income.

Can I borrow against my life insurance policy?

Yes, you can usually borrow against your life insurance policy. The loan will be equal to the cash value of your policy minus any outstanding loans and interest. You will need to repay the loan with interest, and if you don’t repay it, the loan will be deducted from the death benefit paid to your beneficiaries.

Does life insurance cover suicidal death?

Most life insurance policies have a suicide clause that excludes death by suicide from coverage. This clause is usually in effect for the first two years of the policy. After that, the death benefit will be paid if the policyholder dies by suicide.

How much is a million-dollar life insurance a month?

The cost of a million-dollar life insurance policy varies depending on the company, the type of policy, and the age and health of the insured. But policies typically cost between $50 and $200 per month.

How much is life insurance when someone dies?

The death benefit is the amount of money paid out by the life insurance company when the policyholder dies. The death benefit is usually equal to the face value of the policy, which is the amount of coverage purchased.

How do I cancel my life insurance policy?

If you need to cancel your life insurance policy, you should contact your insurance company and ask for a surrender form. Once you fill out the form and send it back to the company, they will process your request and send you a check for the cash value of your policy.

Can you take out a life insurance policy on anyone?

Yes, you can take out a life insurance policy on anyone as long as they are willing to undergo the medical exam required by the insurance company. The insured person will need to provide information about their health, lifestyle, and family medical history.

Who is not required to sign a life insurance application?

A life insurance application does not need to be signed by the insured person or beneficiary. The policyholder is the only person who needs to sign the application.

Who benefits from investor-originated life insurance?

Investor-originated life insurance, also known as viatical settlements, are life insurance policies that are sold by the policyholder to an investor. The investor pays the policyholder a lump sum of cash, and in return, they become the beneficiary of the policy. When the policyholder dies, the investor receives the death benefit. These types of policies are typically used by people with terminal illnesses who want to cash out their life insurance policies before they die.

What is the point of having life insurance?

The main purpose of life insurance is to provide financial security for your loved ones in the event of your death. Life insurance can help pay for things like funeral expenses, outstanding debts, and everyday living expenses. It can also help provide for your family’s future needs, such as college tuition or retirement.

What is an accelerated death benefit rider?

An accelerated death benefit rider is a life insurance policy provision that allows the policyholder to receive a portion of the death benefit while they are still alive if they are diagnosed with a terminal illness. This rider is generally used to pay for medical expenses or to provide income during the policyholder’s final years.

What is living benefits life insurance?

Living benefits life insurance is a type of policy that provides payments to the policyholder while they are still alive. These payments can be used for anything, but they are typically used to pay for medical expenses or to provide income during the policyholder’s final years.

What is a life insurance trust?

A life insurance trust is an irrevocable trust that is created to hold and manage a life insurance policy. The trustee of the trust is responsible for managing the policy and distributing the death benefits to the beneficiaries.

What is a no medical exam life insurance policy?

A no medical exam life insurance policy is a type of policy that does not require the applicant to undergo a medical examination. These policies are typically more expensive than policies that require a medical exam, but they may be the only option for people with certain medical conditions.

What is the difference between term life insurance and whole life insurance?

Term life insurance is a type of policy that provides coverage for a specific period of time, typically 10, 20, or 30 years. Whole life insurance is a type of policy that provides coverage for the entire lifetime of the policyholder.

What are the different types of life insurance?

There are several different types of life insurance, including term life insurance, whole life insurance, universal life insurance, and variable universal life insurance.

Any changes made on an insurance application require the initials of whom?

The person making the changes on the insurance application must initial the changes.

Shawn Plummer

CEO, The Annuity Expert

I’m a licensed financial professional focusing on annuities and insurance for more than a decade. My former role was training financial advisors, including for a Fortune Global 500 insurance company. I’ve been featured in Time Magazine, Yahoo! Finance, MSN, SmartAsset, Entrepreneur, Bloomberg, The Simple Dollar, U.S. News and World Report, and Women’s Health Magazine.

The Annuity Expert is an online insurance agency servicing consumers across the United States. My goal is to help you take the guesswork out of retirement planning or find the best insurance coverage at the cheapest rates for you. 

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