Life Insurance Frequently Asked Questions

Shawn Plummer

CEO, The Annuity Expert

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

Are term life insurance premiums fixed?

Yep. For the specific insurance term, the term life premiums will remain the same.

What is the best life insurance policy?

If you want a life insurance plan at the cheapest cost, term insurance is the best. 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?

The 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 policy, 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, prescription drug history.

After gathering all these facts, they will issue your rating if you’re approved or decline you.

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 on 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.

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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