Life Insurance | Boizelle Insurance Partnership

What Is Covered By A Life Insurance Policy?

A life insurance policy primarily provides a death benefit to beneficiaries, but the specifics of what can be covered or included in a policy can vary depending on the type of insurance and any additional riders or provisions. Here are the main areas and features typically covered:

1. Death Benefit:

Standard Coverage: The primary feature of all life insurance policies is the payment made to beneficiaries upon your death. This amount is generally tax-free and is intended to help cover financial needs such as funeral expenses, outstanding debts, and living expenses.

2. Types of Policies and Their Specifics

• Term Life Insurance: Provides coverage for a specific period (e.g. 10, 20, or 30 years). It pays out the death benefit if you die during the term.
• Whole Life Insurance: Offers coverage for your entire life and includes a cash value component that grows over time. It provides a death benefit and can also serve as an investment vehicle.
• Universal Life Insurance: Provides flexible coverage with adjustable premiums and death benefits, and includes a cash value component. The cash value earns interest based on market rates.
• Variable Life Insurance: Includes both a death benefit and a cash value component that can be invested in various options, such as stocks or bonds. The cash value and death benefit can vary depending on investment performance.

3. Additional Riders and Benefits

• Accidental Death Benefit Rider: Pays an additional benefit if death occurs due to an accident.
• Critical Illness Rider: Provides a lump sum payout if you are diagnosed with a critical illness covered by the rider, such as cancer or heart disease.
• Disability Waiver of Premium Rider: Waives premium payments if you become disabled and cannot work.
• Child Rider: Provides coverage for your children, often offering a death benefit if a covered child passes away.
• Long-Term Care Rider: Allows you to access part of the death benefit while you are alive to pay for long-term care services.

4. Cash Value Component (for Permanent Policies)

• Growth of Cash Value: Permanent life insurance policies (e.g. whole or universal life) accumulate cash value over time. This can be accessed through policy loans or withdrawals.
• Policy Loans: You can borrow against the cash value of the policy. Loans must be repaid with interest; otherwise, they will reduce the death benefit.

5. Terminal Illness Benefit

• Early Payout: Some policies offer an advance payment of the death benefit if you are diagnosed with a terminal illness and have a limited time to live.

6. Conversion Options

• Term-to-Permanent Conversion: Some term life insurance policies offer an option to convert to a permanent policy without needing a new medical exam

7. Premium Flexibility

• Flexible Premiums: Universal and variable life insurance policies often offer flexibility in premium payments, allowing you to adjust the amount and frequency.

Each policy and rider can vary in terms of specifics, so it’s important to carefully review the terms and conditions of your life insurance policy. Call us to speak with one of our licensed professionals to ensure it meets your financial goals and expectations.

How Much Does Life Insurance Cost?

Age and Health: Younger and healthier individuals typically pay lower premiums because they’re considered lower risk. Age and health directly affect life expectancy, which insurers use to calculate risk.

Coverage Amount: The higher the coverage amount (death benefit), the higher the premiums. Insurers access the risk associated with paying out a larger sum.

Type of Policy: Term life insurance is generally cheaper than permanent life insurance (such as whole or universal life). Permanent policies offer lifelong coverage and often include a cash value component, which increases premiums.

Term Length: For term life insurance, longer terms typically have higher premiums because the insurer covers the risk of the insured’s death for a more extended period.

Occupation and Hobbies: Riskier occupations or hobbies (e.g. skydiving, deep-sea diving) can lead to higher premiums as they increase the likelihood of death or injury.

Smoking and Substance Use: Smokers typically pay higher premiums due to the increased health risks associated with smoking. Substance use, including alcohol and drugs, can also impact premiums.

Family Medical History: Some insurers consider the medical history of your immediate family members when determining premiums, as certain health conditions may have a genetic component.

Gender: Historically, women have lower life insurance premiums than men because they tend to live longer on average.

Driving Record: Poor driving records, especially if it involves DUI or multiple accidents, may result in higher premiums due to the increased risk of premature death.

Location: Where you live can affect your life insurance premiums. Areas with higher crime rates or lower-quality healthcare may have higher premiums.

Underwriting Criteria: Each insurer has its own underwriting criteria and risk assessment process, so premiums can vary between companies even for the same individual.

Understanding these factors can help individuals make informed decisions when purchasing life insurance and potentially save money by finding the most suitable policy for their needs.

I Have a Medical Condition. Am I Disqualified From Getting Life Insurance?

Everyone can come up with a reason why they think they don’t need or shouldn’t get a life insurance policy: too young, don’t have children, single, and the list goes on. However, there are several benefits to having a life insurance policy in place when you’re young.

A person could drive themselves crazy thinking of all the reasons why they don’t need a life insurance policy. Additionally, considering all of the different policy options, benefit amounts, premiums and riders can be overwhelming. On top of that, if you have a medical condition, it may be enough to convince you not to get a life insurance policy with the idea that it’ll cost you too much financially.

Want to know the truth about life insurance and medical health conditions? The reality is that there are many manageable conditions that people may have that don’t automatically disqualify them from getting a good price on a life insurance policy.

• Health conditions a medical professional is helping them successfully manage: These conditions could include high cholesterol, hypertension, asthma, thyroid conditions, heart murmurs, diabetes, being overweight and more.
• More serious conditions in their past: This can include heart attack or heart surgery, cancer, stroke and other diseases. Though insurers’ pre-coverage medical exams and the individuals they choose to insure may differ, most will consider the type and severity of the illness, the time that’s elapsed since the diagnosis and the stability of their health and treatment regimen, before making a decision.

Things to Keep In Mind

If you’re interested in purchasing life insurance, you should consider the following:

1. Never assume a health condition automatically disqualifies you from obtaining life insurance. Sure, maybe your health is less than perfect but you may be eligible for coverage, so give us a call to speak with one our licensed insurance professionals to be sure.
2. Always be honest about your medical history. Failing to mention a major surgery, serious diagnosis or knowingly misrepresenting your health history could compromise a future claim.
3. The best time to get covered is when you’re young and healthy. The last, and quite possibly most important recommendation: don’t wait, the earlier you can apply the better — especially if you have a health condition. Down the road, if your medical status takes a turn, it could become significantly harder to obtain coverage.

Additionally, if you’re under 40, you likely qualify for (and should strongly consider) adding a Guaranteed Insurability Option (GIO) rider to your life insurance policy. The GIO rider allows you to increase your life insurance coverage as you age and remain locked in at the healthier rate class secured by your younger (and wise beyond your years) self.

So, You Think You Don’t Need Life Insurance? Think Again.

When you’re young, you feel untouchable. You feel as if nothing can stop you. You feel invincible. Because you feel this way, you’re far less likely to be thinking about life insurance. I mean, it makes sense. The problem isn’t that you don’t have life insurance while you’re young. The problem is that you’re not taking advantage of an enormous opportunity that will surely disappear by the time you’re old, gray, and wrinkly. Life insurance is much cheaper when you’re young because insurance companies know that you are far more healthy. So, they are far more willing to give you a cheaper rate to pay.

Everyone has a life story. Everyone faces different challenges at different times in their lives. Some people may face incredible physical challenges early in life, others later in life. The point is we all face them at some point or another. Insurance companies know this and anticipate them. You need to be in the know as to how insurance companies work and think.

We don’t know what life will bring us in the future. We really don’t even know what is going to happen on a day-to-day basis. All we can do is anticipate, prepare, and act accordingly. No one can know if they are going to crash head-on with an 18-wheeler, leaving them paralyzed from the waist down. And no one can know with 100% certainty that they will not develop some form of cancer during their lifetime. The point of bringing this up is not to scare you. It’s to educate you on why it’s important to get life insurance while you’re young.

If you are elderly and develop some form of cancer, it’s too late. Insurance companies may agree to give you a life insurance policy. But, don’t be surprised if the cost is astronomical. If you have children, don’t you want to be able to protect them? Life insurance can help with that. Life insurance can help pay for your child’s college education.

If you have a mortgage on your home, have kids, and you die unexpectedly, guess what? Your kids are going to have to pick up and carry that heavy burden. A life insurance policy can help in that case. When you die, your family is already faced with a terrible loss and tragedy. Why would you want to compound the loss by burdening them with the financial stress of a home mortgage?