Posts
Single premium life insurance is a form of life insurance that is not discussed as much as it should be.
Some experts would argue this is due to its higher cost. Nonetheless, it’s certainly a strategy worth considering when rounding out your financial strategy and life insurance planning.
Single premium life insurance is exactly what it sounds like. You pay one premium in exchange for a guaranteed death benefit that’s good until age 121.
Of course, other benefits present themselves as well when you elect to purchase single premium life insurance.
It’s essential to understand not only how single premium life insurance works but where you should find the best companies that offer this coverage and what other benefits you can take advantage of.
Here are the details.
An Overview
Single premium life insurance has 1 unique advantage compared to purchasing other traditional forms of whole life insurance or universal life insurance.
Time.
When you opt to purchase life insurance using the single premium strategy, you are essentially fully funding the entire death benefit from day 1.
In turn, the cash value component of the life insurance policy has nothing left to do except compound and earn interest over the course of time.
This becomes especially true for younger individuals who make this purchase.
Even more so for healthy young individuals that have the financial means to do so.
The more time a policy can compound earnings, the larger the death benefit or cash value can become depending on how you structure your policy at the original purchase.
Single premium life insurance is used for several different financial strategies.
Some of the strategies include the following:
- Business Continuation
- Charitable Giving
- Estate Conservation
- Family Protection
Depending on your specific situation, a strong likelihood exists that one of these scenarios could apply to you making single premium life insurance policy a great decision if the budget allows for such.
Allows for Immediate Gains
One of the most desired features is the ability to create immediate gains.
Especially for beneficiaries listed on the policy.
Consumers that opt to purchase life insurance with one premium can often achieve death benefits in much more significant face amounts compared to the money invested originally on day 1.
Sure, this doesn’t do much for the premium payor in the form of high earning gains but let’s assume you fall into one of the previously mentioned categories and your goal is family protection.
Well, if the budget allows for it, you could effectively purchase a life insurance policy with a premium around 200,000 and achieve death benefit face amounts in much larger values.
This is purely an example of course and always be sure to discuss specific numbers, premiums and death benefits with your life insurance agent.
Underwriting Still Needs To be Completed
Something to keep in mind is that underwriting will often still need to be completed and your overall return and the total death benefit is going to be gauged by your risk profile, current age, and current health.
According to Joshua Martin (Founder of Good Life Protection), this is one of the most significant reasons why you always need to work with an independent life insurance agent who can find you the best rates with the best potential life insurance company.
All life insurance companies have unique strengths and weaknesses.
Additionally, certain life insurance companies cater to certain health niches.
This is when using an independent life insurance agent with access to dozens of top-rated life insurance companies can become very beneficial for the consumer.
Not doing so can equate to the same thing as throwing your hard-earned money out the window.
Living Benefits
Living benefits are a vastly under-rated benefit of single premium life insurance.
They are specifically designed to help provide financial relief during a financial crisis that occurs often due to illness.
According to Danny Ray, owner of Insurance for Burial, these riders often act as your “long term care” in these situations providing tax-free access to your death benefit to help cover these backbreaking medical costs.
Something to keep in mind in this situation is that the money is deducted from your total death benefit that will be passed on your beneficiaries’ tax-free at your passing.
Here’s an example.
Ted owns a single premium life insurance policy that he purchased for 205,000.00 when he was 52 years old that has a current death benefit of 510,000.00.
If Ted happens to fall ill and incurs significant medical expenses, he would be able to forward or “accelerate a portion” of these death benefits up to a maximum percentage such as 75% or 90% with some life insurance companies.
Let’s assume Ted needs 132,000 to pay for the cost associated with having cancer.
When Ted does pass away, the remaining death benefit provided to his beneficiaries will be the following.
510,000- 132,000= 378,000 (Given to Beneficiaries at Teds Death Tax Free).
Clearly, the versatility and protection provided from multiple angles is something not to ignore.
Especially if you have the financial means to add this barrier and outer layer of protection to your financial fort.
Finding the Best Companies for Single Premium Life Insurance
Plans are not hard to find, and plenty of life insurance companies offer the ability to purchase this form of life insurance.
However, we do recommend considering a few companies before exploring secondary options.
Again, as stated before, this is when it becomes essential to work with an independent life insurance agent or agency that understands your goals and situation, and that can effectively find you the best company to tailor towards your needs.
The Three Best Life Insurance Companies for Single Premium Life Insurance
American National
American National (ANICO) has been around for over 100 years, initially founded in 1905.
American National is also known by independent life insurance agents as a top-rated life insurance company for permanent life insurance and currently is backed by an impressive A+ financial strength rating from A.M Best.
American National is also regarded as a top option in the industry for living benefits afforded to their policyholders on a wide range of life insurance products.
Protective Life Insurance
Protective Life Insurance is another great option to consider when shopping single premium life insurance.
Protective Life is another A+ rated company that was initially founded in 1907.
Protective Life is also known as one of the most competitively priced life insurance companies you can choose for term life insurance and guaranteed universal life insurance (GUL) among other products.
Lincoln Financial Group
Lincoln Financial Group has been a powerhouse in the life insurance and financial services market for years.
Lincoln Financial Group is another life insurance company on the list that’s been around over 100 years founded initially in 1905.
Additionally, LFG has some of the highest regarded permanent life insurance products on the market due to stable performing returns and excellent policy riders.
While plenty of other life insurance companies certainly offer single premium life insurance, these three companies are at the top of the list and should be considered.
Withdrawal Options
Consumers are often curious of their options when it comes to accessing cash value with single premium life insurance policies or permanent life insurance in general.
In most situations, individuals will need to elect to either take a loan against the policy or can have the option to pull a certain percentage due to illness as we discussed previously.
It’s also important to realize that any money you remove from the policy will be deducted from the total death benefit or cash value (refer to our previous example).
This ultimately is reducing your total payout or total cash surrender for the policy and removing money from your beneficiaries at your passing.
This is not ideal, but sometimes it’s necessary. It all depends on your unique circumstances.
A majority of life insurance companies also have stipulations on your withdrawal options such as only allowing you to withdrawal 10% of the premiums paid into the policy or 100% of the policy gains.
Whichever is greater.
It’s imperative to discuss these options, stipulations and potential tax consequences with your agent, financial advisor, or accountant before making any withdrawals from your policy.
Drawbacks and Negatives with SPL
Single premium life insurance doesn’t come without a hindrance or two. Typically, SPL (Single Premium is life) is going to have large minimums to apply for a policy.
This may be $5,000 or higher depending on the company and all other factors involved.
Additionally, most investments in life don’t require medical underwriting.
This is not the case with single premium life insurance.
When purchasing this form of life insurance, your premiums, and the total death benefit will be significantly impacted by your age, overall health, and even your tobacco use.
Final Word, Single Premium Life Insurance Is a Versatile and Robust Option
While single premium life insurance may be cost prohibited for a significant number of consumers, it’s still a great option if your budget and financial plan allow for it.
With the options to cover costly medical expenses and the ability to get an immediate return for beneficiaries, it’s certainly a path worth discussing with a licensed agent who can place you with a life insurance company that can tailor towards your needs.
Absolutely. You could have 10 insurance policies at the same time if you wanted to.
What are some reasons for having multiple life insurance policies?
- Diversify your life insurance investments with policies from different companies
- Extend your existing life insurance coverage.
- “Stack” multiple policies to obtain the coverage needed
- “Ladder” term life insurance policies.
1. Diversify your life insurance investments with policies from different companies:
Some individuals want to make sure they’re covered no matter what happens with an insurance company, so they purchase policies from different companies. Other people choose to get two policies for different terms while they are young and healthy. One policy for a short term period, and another for either a longer term or a permanent policy.
Option 1 – Two term policies
- Banner $250,000 20-year term policy ($12.94/month)
- AIG $250,000 20-year term policy ($12.95/month)
$500,000 in coverage for 20 years from two policies
Option 2 – One term policy and one permanent
- Lincoln $400,000 20-year term policy ($10.52/month)
- Sagicor $100,000 permanent universal life policy ($42.75)
It is a great idea to mix term and permanent insurance. One policy protects your children until they are grown, and the other policy provides cash for your legacy.
2. Extend your existing life insurance coverage:
If you have a term life insurance policy that is nearing expiration, you may want to extend your policy with a new one. There is no reason why you cannot have two policies at the same time.
For example:
You may find yourself with one year left on a 10-year $200,000 term policy and want to start a new 10-year 200,000 term policy.
Helpful Tip:
It can be difficult when applying for a policy that is meant to “replace” one you already have. It involves quite a bit of extra paperwork because the new insurance company is tasked with canceling the old policy. It is easier to get the new policy and cancel the old one yourself.
3. “Stack” multiple policies to obtain the coverage needed:
Some insurers may be looking for a specific amount of coverage, but may not qualify for the amount they need from a single company. They may instead choose to “stack” policies to get to their desired level of coverage. We see this most often with Guaranteed Acceptance policies because they have lower coverage limits.
If you need $90,000 in life insurance coverage you can stack:
- $25,000 on an AIG policy,
- $25,000 on a Gerber policy, and
- $40,000 on a Great Western policy.
For example:
Helpful Tip:
The stacked guaranteed acceptance policy strategy can be beneficial for the following situations:
- For divorces, stacked guaranteed acceptance policies can guarantee child support payments in the event the individual pass away.
- Business owners can stack guaranteed acceptance policies to help secure small business loans, fund buy-sell agreements, and protect their interests in their company.
- You can stack guaranteed acceptance policies to make sure there is plenty of money available to cover your final expenses when you pass away.
4. “Ladder” multiple term life insurance policies:
Similar to stacking, you can also “ladder” a collection of term life insurance policies, with coverage that decreases over time, to affordably reach your desired coverage goal. We see this when families have multiple children. As each child reaches age 21, they lower their total life insurance coverage amount.
Here’s one way you could ladder your policies over a 30-year period
- A $500,000 policy with a 10-year term
- A $250,000 policy with a 20-year term
- A $250,000 policy with a 30-year term
For example:
How much life insurance coverage can you combine?
The limitation is the maximum amount of insurance you are allowed, based on your financial situation.
Most insurance companies determine how much you can have in total based on your income. This is why insurance applications ask whether you own additional life insurance policies.
The below table is an estimate of the maximum amount of life insurance a person and have.
| Your age | Maximum available |
|---|---|
| 20-30 | 20x |
| 31-40 | 20x |
| 41-50 | 15x |
| 51-60 | 10x |
| 61-65 | 7x |
| 66 or older | 5x |
How can you figure out the best strategy for having multiple life insurance policies?
If you’re still not sure how you can make multiple life insurance policies work for your situation, reach out to a knowledgeable life insurance agent here at True Blue! Our agents have the know-how to help you find the policies that will best fit your needs.
Because it is difficult to request multiple policies on our quote comparison engine, let us do the work for you!
Give us a call: (866) 816-2100
Accelerated death benefits, sometimes called “living benefits,” speed up the payout of your life insurance policy, tax-free. This allows you to access benefits via a rider if you are deemed either terminally, critically, or chronically ill.
They’re called “living benefits” because they are benefits you can get while you are still alive.
It is a hard comparison to make, though some compare these riders to long term care and disability policies.
Types of Accelerated Death Benefit Riders
Here’s what you need to know about each type of accelerated death benefit rider:
*Requirements to initiate these riders may vary by insurer.
1. Terminal Illness Rider
For a time, terminally ill people were selling their life insurance policies in “viatical settlements” for pennies on the dollar. It was awful for people to essentially give away their life insurance policies in order to pay for medical bills or end of life activities.
The good news is that insurance companies are required by law to include a terminal illness rider free of charge to every life insurance policy they sell.
The terminal illness rider, also known as an accelerated death benefit (ADB) rider, lets you withdraw up to 75% of your death benefits if you are diagnosed with less than 12 or 24 months to live.* You are also required to show proof of diagnosis from a doctor before you can receive accelerated benefits.
*Exact terms vary by companies and products. The amount available to withdraw can range from 25% – 90%. Most companies enact this rider when the insured has less than 12 months to live, while others like American National allow for 24 months.
2. Critical Illness Rider
A critical illness rider allows you to withdraw from your life insurance death benefit to cover medical expenses in certain instances. Depending on the policy, you can withdraw up to 100% of the policy or up to a maximum amount, such as $250,000.
The list of eligible illnesses vary by company, though normally consist of:
- Cancer (Life-threatening)
- Heart Attack (Myocardial Infarction)
- Stroke (Cerebrovascular accident)
- Paralysis
- Renal Failure
- Amyotrophic Lateral Sclerosis (ALS)
- Blindness
- Loss of 2 or More Limbs
- Major Organ Transplants
The insurance company typically requires proof from a doctor of medicine who is duly qualified, licensed in the US, and performing in the scope of his/her license. The insurance company reserves the right to request a second opinion when needed.
There are some exclusions to this if the cause of the illness is from attempted suicide, self-inflicted injury, misuse of drugs, or involvement in illegal activity.
This rider acts separately from your health insurance policy and can be invaluable in saving your life and avoiding huge financial bills.
3. Chronic Illness Rider
A chronic illness rider provides the insured to withdraw from his/her life insurance death benefit under two conditions.
1. The insured is unable to perform at least two of the following six “activities for daily life:”
- Dressing yourself
- Using the toilet
- Eating
- Bathing
- Moving around
- Continence
This means you cannot perform at least two of the above without substantial assistance from another person.
2. The insured requires substantial supervision by another person because of severe cognitive impairment.
Insurance companies typically allow you to withdraw up to 90% of the death benefit amount for chronic illness, though the fine print varies greatly depending on the company. Many companies put a maximum allowable amount of withdrawals, and the withdrawals are typically calculated on a per diem basis to cover the costs of medical care.
How Do Accelerated Death Benefits Pay Out?
Consider this example:
Once, we had a client with pancreatic cancer that was diagnosed with 16-24 months to live. He contacted us wanting to know if we knew of anyone that may want to purchase his policy. He had an offer from a company to purchase his $500,000 policy for $175,000; potentially losing $325,000 of his total benefit in the process. Thankfully, we informed him that American National provides a terminal illness rider that allows him to withdraw his full $500,000 in coverage if he wanted to.
Exploring his options for accelerated death benefits wound up saving him, and his beneficiaries, $325,000.
Most companies have accelerated death benefit riders you can purchase. There are also some that provide the riders free of charge.
For quotes from companies that include living benefits at no additional cost, visit our Living Benefits Life Insurance Quoter.
If you have questions about accelerated death benefits, feel free to reach out to True Blue Life Insurance at one of the links below.
Toll-Free: (866) 816-2100
E-mail: [email protected]
Contact us page
Let us be your personal shopper
Schedule an appointment with a True Blue agent
Why people love no exam life insurance?
Forgoing the medical exam makes the whole process of getting life insurance exponentially easier.
You get to bypass a medical examiner coming to home or office.
This means:
- No needle to draw blood
- No cup for a urine specimen
- No scale to take your weight
- No blood pressure meter thing on your arm
- No waiting for your lab results to come back
But most importantly, no stress.
It is important to know that no medical exam policies still ask your health history and look at your public reports.
Is there a cost difference?
Only for about 5% of people, those that are super healthy.
Most individuals who choose a no medical exam policy are approved at Preferred and Standard health classes, which translates to healthy and average health.
If you think you qualify for the Preferred Plus health class, or in other words, exceptional health, you could save money by taking a medical exam.
How are no medical exam policies different?
The only difference is the maximum coverage amount available. There is no difference how and when the insurance provider pays the death benefit, or any additional features the policy may provide.
Most carriers offer up to $500,000 in coverage if you choose to forgo the exam, anything over this and a medical exam is required. No medical exam policies are the same policies as those that require a medical exam.
When is a no exam policy a great fit?
- If you need less than $500,000 of coverage.
Most no exam policies max out at $500,000. There are a few that go up to one million. - If you need a life insurance policy immediately.
No exam policies typically get approved in 1 – 10 days. Compared to 4 – 8 weeks for policies that have an exam. - You’re too busy to use the traditional life insurance process.
Applications are done over the phone. Signatures are collected digitally. If you have 20 – 40 minutes, that is all that is required to complete the process. - You have a fear of needles.
Nobody likes needles. Some people really don’t like needles. - If you haven’t been to a doctor in a long time (over three years).
Undergoing a medical exam poses the risk of revealing unknown medical conditions. If you haven’t seen a doctor for a while we recommend you first secure a no medical exam policy. This way you avoid surprises that can increase your rates or cause uninsurability.
How Long Does it Take to Get a No Medical Exam Policy?
Depending on the company as well as your health, approval time is anywhere from instantly to 30 days.
While there is no medical exam involved, insurance providers rely on public records to determine your health.
If you’re not certain if an instant approval company would be the right choice for you or not, we’re here to help. We know all the differences between companies, and can recommend the ideal company based on your needs.
| Instantly | Some policies we offer are instant approval, though these are typically more expensive because they only have a single health class for everyone. |
| 1-4 days | If you have few health minor conditions that are well controlled and are taking 2 or fewer medications, then you are looking at 1 – 4 days. |
| 5-14 days | If you have a few health conditions and are taking more than 2 or more medications, then this can extend the timeframe to 5 – 14 days. |
| 14-30 days | If you have recent health conditions you are being treated for then someone at the insurance company (an underwriter) reviews your application and may order medical records from the doctors you have seen. This can extend the timeframe to 14 – 30 days. |
If I don’t take a medical exam, how do they determine my premium?
The insurance companies can pull four main reports when you apply for a policy.
| Pharmacy Report | This report contains every prescription medication you have been prescribed over the last 10 years. |
| MIB Report | The Medical Information Bureau report includes any previous life insurance applications. If you have been declined by another company this will show up. |
| Motor Vehicle Records | Life insurance companies can see information about past tickets, DUI’s, and warrants. |
| LexisNexis | Some insurance companies, also use LexisNexis to crosscheck your financial and criminal history. They can see credit scores, any bankruptcies, short sales, foreclosures, tax liens, late payments, and residential history. |
What is the process to get a no exam policy?
Getting a no medical exam term life insurance policy is simple, and depending on the company you apply with, the entire process typically only takes an hour or less.
1. Get an Instant Quote:
Run a free and anonymous quote on our comparison engine. We compare the rates from over 40 different top-rated life insurance companies.
2. Choose a policy
We provide prices, reviews, features of the policies, and a health questionnaire that takes into account the questions and guidelines of every company we represent. Don’t worry if you are not 100% sure. We verify your information and make sure you choose the best company. Or just give us a call.
3. Complete the application online or over the phone with an agent:
After you choose a policy you can either request for an agent to call you and take your application, or you can complete the application online.
4. Confirm your identity and sign the application:
Law requires that we need to briefly speak with you over the phone to confirm that it is you submitting the application.
5. Let us handle getting your policy approved
From here we take over. We check on the status of your application daily and answer any questions the company needs to clarify. We act on your behalf to get you approved at the lowest premium possible. It typically takes 2 – 10 days for us to get you the policy to you.
Let True Blue do the heavy lifting
Do you like the sound of everything a no medical exam term life insurance policy has to offer, but you don’t feel like doing the shopping and comparing yourself?
We’re here to make the entire process a breeze. Have us shop for you and present you with options at no-cost and no-obligation.
Not the online type? Give us a call. We are here to help make getting life insurance easy for you. 866-816-2100
Term life insurance is something you’ve probably heard thrown around, either by your HR person or in TV commercials. But chances are, you still may not know entirely what a term life insurance policy is, or how it works.
Thankfully, it’s pretty easy to break down everything about making your term policy work. Here’s what you need to know:
What is term life insurance?
A term life insurance policy is a safety net for your family in case you die prematurely. This policy is meant to replace your income and provide for your family in the event of your untimely death.
To keep your policy in force, premiums must be paid over a specified term. (Thes terms are usually over a period of 10, 20, or 30 years.) The longer the term on your policy, the higher your premiums will be. As long as your premiums are current and you pass away within the term, you’ll receive the death benefits. So, if you die after the term has expired, then there is no benefit that will pay out.
Term life is also referred to as “pure life insurance.” This is because it only carries the death benefit, without any of the cash value or stock market components that accompany other permanent policies. Though, it does offer the potential for other add-ons and riders if the insured so chooses.
What are the types of term life insurance:
Within the realm of term life policies, there are a few different policy types that will change the way your policy works. Here’s what they are:
- Level Premium
A policy where your premiums will stay the same over the term of your coverage. You can renew your policy at the end of the term, but the premiums will begin to steadily rise. - Yearly Renewable Term
This is coverage that is renewable after a term, whether it’s a year, five years, or longer. It will stay in force, even if the insured would otherwise be rejected applying for a new policy. Then, like most other term policies, the premiums are then based on the insured’s age and health. - Return of Premium
This policy will pay the premiums back to the insured if they outlive the term of their policy. The hitch here is that premiums for this kind of policy cost three times more than other term policies. - Living Benefits
A rider, or add-on, to a term policy which allows an insured to access their benefits in the event they diagnosed with a chronic or catastrophic illness. This way an insured can use their death benefits to help pay large medical bills, even before they pass away. - Decreasing Term Life
A term life insurance policy where the benefits steadily decrease over the course of the term. These decreases generally happen at either annual intervals or a few months at a time. - Guaranteed Level:
This policy boils down to a guarantee that an insured’s premiums and coverage will remain the same for the duration of the term. - Non-Guaranteed Level
Unlike a guaranteed level policy, this policy only guarantees stable premiums and coverage for part of the term, and runs the risk of fluctuating after that point. You’ll want to keep an eye out for a provision like this in your policy. - Group Term Life
Group term life insurance is the kind of coverage your would though an employer. For this reason, it’s usually a more cost-effective option versus buying your own individual life insurance policy.
How does term life insurance pay out?
No matter what kind of policy you go with, the process is still the same. If you pass away within the term your insurance is in force, then your family gets the death benefit of your policy. But, even that has some caveats to it as well. Instances of suicide, illegal acts, acts of war, or fraud, among others, can result in a policy not paying out.
Now, there are exceptions, such as an insured who is diagnosed with a terminal illness. In that case, the insured is entitled to a portion of their policy’s death benefit, which will vary based on the insurance provider. Whatever portion of the benefit is left when they pass away will be available to their beneficiaries.
Barring these otherwise unforeseen circumstances, beneficiaries will receive a payout from the insurance companies after they file a claim. They’ll need the death certificate to prove that you, the insured, have actually passed away. After that, they can then receive the death benefit as either a one-time lump sum or as an annuity.
Is term life insurance convertible?
Many policies come with conversion riders that allow insureds to convert their policy from term to permanent without having to do a further medical exam. This way, if you decide you would prefer to have longer lasting coverage rather than over a specified term, you can change over your policy.
This kind of rider is particularly helpful in situations where the insured wouldn’t be eligible for a new policy. Situations where they are diagnosed with a late-stage form of cancer or another medical condition. This way they can keep their policy in force for much longer than the original term. Even if you aren’t sure about it when you get your term policy, it is an important rider to consider for the future of your policy.
When is the best time to get a term policy?
There’s no one specific time that is best for buying term life insurance, so you can buy it whenever you are best prepared for it. While single people may not need a life insurance policy, experiencing life changes, like marriage or having a child, may make them want to get a term policy. And if you’re considering a policy, True Blue Life Insurance has plenty of tools to help you find the best term life insurance policy.
In the end, a term life insurance policy is there to make sure you’re protecting your family and taking care of them, even if you die suddenly. Understanding how your term life insurance works is the first step toward protecting their future.
When shopping around for a life insurance policy, you may be overwhelmed by the options available to you. Understanding how much an average life insurance policy costs is a step in the right direction. Here’s everything you need to know about the premiums you’ll come across in your search:
Life Insurance Types Ranked From Least to Most Expensive
- Term Life Insurance
- Universal Life Insurance
- Indexed Universal Life Insurance
- Flexible/Variable Universal Life Insurance
- Whole Life Insurance
Sample Rates For Average Life Insurance Cost
The following rates are based on averages for a 40-year-old male with average health, non-smoker, for $100,000 of coverage.
| Policy Type | Average Premium | Coverage Period |
|---|---|---|
| Term Life Insurance | $19.00 per month | 20 Year Term |
| Universal Life Insurance | $85.00 per month | Permanent |
| Indexed Universal Life Insurance | $110.00 per month | Permanent |
| Flexible/Variable Universal Life Insurance | $115.00 per month | Permanent |
| Whole Life Insurance | $129.50 per month | Permanent |
What Factors Go Into Classification?
The average life insurance costs calculated above were focused on the standard classification, which is where 70% of insurance customers are placed. A number of factors come together to determine your classification, so here’s quick a peek behind that curtain:
- Age
The older you are, you’re likely you are to pay more for your policy. - Gender
Statistically, women live longer than men, which means that life insurance premiums for men tend to be more expensive. - Build
Insurance companies take your height and weight into account when determining your policy class. - Medical History
Your family medical history and your prescription history help insurers calculate the risk of covering you. - Prescription History
Your history of prescribed drugs and medicine also contributes to your assessed risk by an insurer. - Lifestyle
High-risk hobbies, like skydiving or base jumping, that carry a high risk of death are likely to affect your policy class. - Financial History
Your credit history also goes a long way toward calculating your risk to an insurer. - Nicotine Usage
On average, smokers pay 2-3 times more for life insurance than non-smokers - Driving/Arrest Records
Reckless driving, DUIs, and arrests on your record stand to negatively affect your classification, as well.
Taken together all of this data helps insurance companies understand how much of a risk you are to insure. Your classification then goes into determining how much you pay for your premiums.
Term Life Insurance
Term life insurance is the most basic policy type. It provides coverage for insureds over the course of a specified term, usually 10, 20, or 30 years. Sometimes called “pure insurance,” it doesn’t carry any bells and whistles like many permanent policies. This makes it the most affordable option, for those looking to get coverage.
Universal Life Insurance
Universal life insurance is for people who want permanent life insurance, but don’t want to pay too much in terms of premium. Your premium covers both your insurance policy and a portion of it defers into a cash value. As a result, this cash value grows over the course of the policy’s lifespan. These premiums rise steadily as the policy matures and that cash value helps offset those costs.
Indexed Universal Life Insurance
Indexed universal life insurance takes the principles of a universal life policy’s cash value component, but instead invests that cash value into indexed funds. These indexed funds are similar to mutual funds, and the money grows in a similar fashion. But there’s also a cap on how much a policy can gain and lose from these funds.
Flexible/Variable Universal Life Insurance
Variable universal life insurance policies, on the other hand, are even more volatile/risky versions of an indexed universal policy. Instead of indexed funds, part of the premiums go in the stock market as an investment, and there are no limits on what the insured can gain or lose. As with anything associated with the stock market, this is a risky investment in terms of life insurance.
Whole Life Insurance
Whole life insurance is there for people who want permanent life insurance, but don’t want the risk attached to universal policies. Because of this guarantee, you’re almost certainly going to pay more for your premiums. It is the ideal policy for someone who wants to use a life insurance policy as an investment vehicle.
Final Thoughts
All of this information listed here is key for you making the right decision for your life insurance policy. Knowing the ins and outs helps make you a stronger, more knowledgable consumer.
A Brief Note About Life Insurance Policies As An Investment Vehicle
True Blue Life Insurance does not recommend using a life insurance policy as an investment except for a very few specific situations. Specifically, the only people who should use these policies as an investment are those in the upper tax brackets. If you don’t land in this category, you are better off exploring other financial vehicles.
As a final rule of thumb, your annual life insurance premiums should not be more than 2% of your salary. So, if you’re making $100,000, you should only be paying $2,000 for your life insurance.
Expect the process to take 3-6 weeks on average; however, products like no medical exam life insurance, instant issue life insurance, and guaranteed issue life insurance are quicker but carry a higher premium when compared with a traditionally underwritten life insurance policy.
Obtaining life insurance can be a notoriously long process — so much so that more than 18 million give up before the process is over. When you review the figures, this consumer apprehension starts to make sense. The average life insurance application can take 3-8 weeks to complete. That’s longer than it usually takes to get a driver’s license or receive mail from around the globe. It can even be longer than the process to get a U.S. passport.
If you’re in the insurance market and you’d like to get a better idea of how long your application might take (and learn what the insurer is doing while you wait), following our step-by-step walk-through will help you better understand the life insurance application process.
The Life Insurance Application Journey, One Step at a Time
Step 1: How Much Coverage Do You Need?
The first step is defining how much insurance you need.
At a bare minimum, True Blue recommends that you have enough coverage to pay off your current debt. However, selecting an amount that covers your long-term debt AND covers 5 years of your income is a much better plan.
Once you’ve decided how much you will need, you can run a quote through True Blue’s life insurance quote engine. No personal contact information is required, and you’ll get a rough estimate of what a policy will cost you. If you want a more detailed and accurate quote, we recommend taking our General Health Questionnaire. Not only will that give you the most accurate life insurance quote but it will also match you with the best life insurance companies and policies if you have some blemishes on your medical history.
Step 2: Filling Out the Application
After you select an insurer, you’ll be asked to fill out your application form. Expect to answer questions about your lifestyle, activities, and occupation. Some questions might feel intrusive or personal — but these are standard questions that pretty much all insurers ask. In most cases, applications take less than 30 minutes to complete, and most are done electronically, which helps save time and paper.
Obviously, the sooner you fill out your application, the sooner you can expect a decision. Whether you submit it by email or fax or you drop it off in person, try to do so within 24 to 48 hours.
Step 3: The Life Insurance Underwriters and Medical Exam
The insurance company will review your application and decide whether to continue with the application process. If the process moves forward, you’ll have a phone interview during which you’ll need to answer basic medical and lifestyle questions. If your answers are to the insurer’s satisfaction, a paramedical exam will be scheduled (if the policy requires one).
Expect to wait a week or two for the exam to be scheduled. Usually, you have the option of requesting that it be done in your home or office, but some insurers might require you to go to their exam center. A blood sample and possibly a urine sample will be taken, along with the same basic vitals that would be taken at a doctor’s office. You’ll also be asked to answer basic medical questions (again) and have your height and weight measured. It shouldn’t take more than about half an hour.
After the exam, there could be a somewhat lengthy waiting period, depending on your medical history and the amount of life insurance coverage you are seeking. The insurer will be waiting for the medical lab to process and send your results, which could take anywhere from a few days to three weeks.
Step 4: Additional Information May Be Needed
If the exam reveals any additional health conditions, the insurer may ask your doctor or hospital for an Attending Physician Statement (APS). This document is fairly expensive to request, so insurers typically only rely on it if they’re giving an application an unusually close examination. Should the insurance company take this extra step, you can add another three to five weeks to the time it will take for your application to be processed.
Whether the insurer requests additional medical records or is satisfied with the exam results, the final step is underwriting.
At this point, the insurance company’s underwriters will conduct an actuarial analysis, in which they’ll calculate your medical and lifestyle risks, and then decide how to price your premiums — or determine that you’re too risky to cover. You may also receive some follow-up calls from the insurer to discuss particulars of any risk factor or medical condition you reported.
Step 5: The Policy Is Issued
Seven to 10 business days later, assuming everything goes as planned, you’ll receive coverage.
No Medical Exam Life Insurance Policies
No exam life insurance policies are best for people who want a much quicker approval process. As the name implies, these policies don’t require a medical exam. But, you can still expect there to be a review of medical and other records, as well as questions about your overall health.
There is a downside to no exam life insurance policies. Insurance companies typically charge a considerable amount more for them — from 10 to 20 percent more, in some cases.
In addition, you will need to be in good physical health to qualify. As noted earlier, you will have to answer a series of medical questions. The insurer can verify your responses by assessing your Medical Information Bureau report, along with pharmacy records and information from the motor vehicle department.
No medical exam life insurance is best reserved for those in good health who can’t wait for the full life insurance application process, for people who haven’t visited a physician in many years, or for those with a severe aversion to needles.
Additional Factors That Can Affect Your Application Processing Time
We can guarantee that the application process won’t take forever, but it does vary from one person to the next and can be unpredictable. We’ve listed a number of factors that can affect your wait time.
Credit checks
If the insurer requests a credit check, that could delay your application. The reason for a credit check can vary, but usually it occurs when there’s been a recent financial event, like a bankruptcy. Expect another week or more for full processing.
High-value policies
Applicants who request high-dollar policies will be scrutinized much more carefully than average. Expect a significantly longer waiting period (and possibly more paperwork) if you’re seeking a policy with a high payout.
Policy type
Specialty policies, such as indexed universal life insurance and cash value life insurance, will be considered with extra scrutiny. Instant issue and guaranteed issue life insurance are the easiest/quickest to get, followed by guaranteed universal life.
Your age
Age is a big factor in life insurance, for exactly the reason you expect: life expectancy. Typically, the older you are, the longer you’ll wait for a decision. Insurance providers use extra caution when considering applicants of advanced age. But, term life insurance and plans created specifically for seniors are readily available.
Medical records requests
A request for medical records can take a substantial amount of time, so it’s good idea to call your doctor’s office in advance of a medical records request. That way, they’ll be prepared if the insurer makes such a request. By the way, there’s no cost to you for this — the life insurance company will pay any applicable costs.
Omissions in your risk disclosures
You might be tempted not to disclose any significant chronic health problems you have, but this is not advisable. One reason is that the life insurance company will spend a lot of time and resources verifying the information in your application. For instance, it might peek at your social media accounts. It will probably also check to see if any procedures you’ve had were related to a risk factor, such as a disease or a dangerous hobby. Another reason is that the consequences for lying on your application, called “material misrepresentation,” are not light. You can be denied coverage during the application process, or if your insurer discovers untruths after you’ve been granted coverage, your premiums may be increased, your policy’s death benefit may be reduced, or your coverage could be discontinued.
Know What You Need, and Keep All Parties Accountable
Countless factors can play into how long it takes to process your application, and many of them are beyond your control. Assessing your needs from the beginning is the best bet to ensure that you’ve made the right choice. After that, all that’s left is to keep track of the various parties involved in your application and gently nudge them if they fall into a holding pattern.
Having a proactive agent will help minimize the time and stress involved in getting the life insurance you need. Properly educated agents know exactly what’s needed and how to make the process quicker, so they can get you the coverage you need in less time. Finding an agent who’s focused more on service and less on the commission to be earned will help make the life insurance application process easy and carefree.
In more remote areas of the United States, air ambulances are often the lifeline for people who have a serious accident or need emergency medical attention. This is where life flight coverage comes in handy. While not technically an insurance policy, these annual membership programs act as a backup that can cover you, your spouse and your dependents in the event of a medical emergency where you need an air ambulance to transport you to a hospital.
Where this gets difficult is navigating the many intricacies of the different life flight network providers, as they are often regionally based and vary accordingly both in price and the types of coverage they offer with their membership fee. Plus, they may also have a network of other providers or reciprocal programs, opening you to wider coverage, depending on where you live.
What Is The Cost Of Life Flight Without Insurance?
Without insurance coverage or additional membership in an air ambulance organization, the out of pocket cost for a “life flight” (also called a MedEvac) can range from $12,000 to $25,000 on average per NAIC (National Association Of Insurance Commissioners).
Major Air Ambulance Insurance Providers
Prices as of the original publication of this article. Subject to change.
Northwest
- LifeFlight ($65)
- Reach Air ($85) (includes CAL-ORE Life Flight, Calstar Air Medical Services, Sierra LifeFlight, AirCare, American MedFlight, Care Connect)
- Guardian Flight ($85)
- Med-Trans ($85)
Southwest
- Air Methods Advantage ($40)
- Reach Air ($85) (includes CAL-ORE Life Flight, Calstar Air Medical Services, Sierra LifeFlight, AirCare, American MedFlight, CareConnect)
- Air Evac Lifeteam (Texas & Oklahoma) ($85)
- Guardian Flight ($85)
- Med-Trans ($85)
Midwest
- Air Methods Advantage ($40)
- Life Flight Eagle ($59)
- Air Evac Lifeteam ($85)
- Guardian Flight ($85) (Eagle Air Med, Gallup Med Flight, Med Star Ambulance, AeroCare, Valley Med Flight, MountainStar American Medflight, North Central Aircare)
- Med-Trans ($85)
Southeast
- Air Methods ($40)
- Air Evac Lifeteam ($85)
- Med-Trans ($85)
Northeast
- Air Methods ($40)
- Med-Trans ($85)
Alaska/Hawaii
- Guardian Flight (AK $125)/(HI $85)
Air Ambulance Coverage: An Addition, Not an Alternative
Something nearly all of these LifeFlight type of providers note is that this coverage is meant as an addition to versus in lieu of an existing insurance policy. The low membership fees are meant to cover expenses that health insurance companies wouldn’t otherwise cover.
Confusion around this has led to issues where patients think they are covered, but following emergency situations, they find themselves stuck with a hefty bill that they oftentimes can’t pay for. So when considering life flight coverage, it’s important to be completely sure that you’re covered by your provider. This coupled with price surges of nearly $30,000 in the last decade makes these memberships even more vital to those who need them. Concerns like this are even driving legislation in states like Montana and Oregon, which seek to offer better consumer protections against the sky high air ambulance fees.
For example, if you’re part of the AirMedCare network, you have access to their affiliated network of providers. If not, and you’re picked up by an air ambulance out of your network, then you still may run the risk of paying huge out of pocket expenses. And as prices of air ambulances rides has risen sharply over the last decade in the western United States, these air ambulance memberships may be worth exploring, especially if you don’t live in close proximity to a hospital.
Your Next Steps For Air Ambulance Insurance
Looking at ways to be prepared for emergencies with supplements like life flight are a great first step to evaluating the kind of coverage that is best for your lifestyle and family. If you’re already thinking about spending the money for life flight coverage, it may be worth considering a life insurance policy too, or at the very least an accidental policy. Since you’re already preparing for worst-case scenarios, considering a life insurance policy can help you feel secure about providing for your family without breaking the bank.
