1. What is life insurance?

Life insurance is a contract between you and an insurer, where the insurer pays a death benefit to your beneficiaries in exchange for premiums upon your passing.

2. Why do I need life insurance?

It provides financial security to your loved ones by covering expenses like debts, living costs, and education in the event of your death.

3. How does life insurance work?

You pay premiums to the insurer, and in return, your beneficiaries receive a death benefit if you pass away during the coverage period.

4. What are the different types of life insurance?

Common types include Term Life, Whole Life, Universal Life, Indexed Universal Life (IUL), and Final Expense insurance.

5. What is the best type of life insurance for me?

It depends on your needs, budget, and goals. Term life is good for temporary needs, while whole or universal life suits long-term goals.

6. How much life insurance coverage do I need?

Multiply your annual income by 10-15 or calculate based on expenses, debts, and future goals.

7. How is life insurance priced?

Premiums are based on factors like age, health, lifestyle, coverage amount, and type of policy.

8. What factors affect life insurance premiums?

Age, gender, health, smoking habits, occupation, hobbies, and coverage type all impact premiums.

9. Can I get life insurance if I have a pre-existing condition?

Yes, though premiums may be higher or options may be limited.

10. How do I apply for life insurance?

Choose a policy, complete an application, undergo underwriting (if required), and sign the contract.

11. What is a beneficiary?

A beneficiary is the person or entity you designate to receive the death benefit.

12. Can I change my beneficiary later?

Yes, most policies allow you to update your beneficiaries.

13. What is the contestability period?

A two-year period during which the insurer can investigate and deny claims due to fraud or misrepresentation.

14. What happens if I miss a payment?

Most policies have a grace period. If not paid within this time, the policy may lapse.

15. How do I file a claim?

Contact the insurer, provide the death certificate and other required documents, and the claim will be processed.

16. Are life insurance payouts taxable?

Generally, death benefits are tax-free for beneficiaries, but exceptions exist for certain policy types or estates.

17. What is cash value in life insurance?

Cash value is a savings component in permanent policies that grows tax-deferred over time.

18. Can I have multiple life insurance policies?

Yes, there’s no limit as long as you qualify financially and medically.

19. What happens if I outlive my life insurance term?

The policy expires, but some policies offer renewal or conversion options.

20. Is life insurance affordable?

Term life insurance is generally affordable. Permanent policies cost more but offer additional benefits.

21. What is an Indexed Universal Life (IUL) insurance policy?

It’s a permanent life insurance policy with a cash value tied to stock market indices.

22. How does an IUL accumulate cash value?

Cash value grows based on the performance of selected market indices, subject to caps and floors.

23. What is the role of index performance in an IUL?

Index performance determines the rate of return on the cash value but doesn’t involve direct investment in the market.

24. What are caps and floors in an IUL policy?

Caps limit maximum returns, while floors guarantee a minimum return (often 0%).

25. Are IUL policies risky?

They are less risky than direct stock market investments, thanks to floors, but returns can be unpredictable.

26. Can I lose money with an IUL?

You won’t lose money due to market losses but may incur fees that reduce cash value.

27. How does an IUL compare to Whole Life Insurance?

IULs offer flexible premiums and higher growth potential, while Whole Life has guaranteed returns and fixed premiums.

28. What are the benefits of an IUL?

Tax-deferred growth, flexible premiums, and potential for higher returns.

29. What are the disadvantages of an IUL?

High fees and the complexity of index-based returns.

30. Can I take a loan against the cash value of my IUL?

Yes, loans can be taken and are usually tax-free.

31. Is an IUL a good option for retirement planning?

Yes, for tax-advantaged growth and income.

32. How do premiums work for IUL policies?

Premiums are flexible; part goes to insurance, and the rest builds cash value.

33. Can the cash value in an IUL policy be used tax-free?

Yes, when accessed through loans or withdrawals within IRS guidelines.

34. What is the death benefit in an IUL policy?

It’s the amount paid to beneficiaries, which can be level or increase with cash value.

35. How does an IUL policy grow compared to other investments?

Returns are moderate compared to stocks but safer due to the floor.

36. Who is a good candidate for an IUL policy?

Individuals seeking life insurance with growth potential and flexibility.

37. Can I customize an IUL policy?

Yes, you can adjust premiums, death benefits, and add riders.

38. Are there fees associated with IUL policies?

Yes, including administrative fees, cost of insurance, and surrender charges.

39. How flexible are the premiums in an IUL?

You can pay higher or lower premiums, as long as the minimum is met.

40. What happens to the cash value when I die?

The insurer typically keeps the cash value, and only the death benefit is paid.

41. What is term life insurance?

Term life insurance provides coverage for a specified period (e.g., 10, 20, or 30 years) and pays a death benefit if you pass away during that term.

42. How long does term life insurance last?

Policies typically last for 10, 20, 30 years, or another predetermined term.

43. What happens when a term policy expires?

Coverage ends, but you may have options to renew or convert it to a permanent policy.

44. Can I renew or convert my term life policy?

Many policies allow you to renew for a higher premium or convert to a permanent policy without a medical exam.

45. Is term life insurance cheaper than other types?

Yes, term life is usually the most affordable type of life insurance.

46. Who should consider term life insurance?

Individuals with temporary financial obligations, like a mortgage or raising children, should consider term life.

47. What is level-term life insurance?

A policy where premiums and death benefit amounts stay fixed throughout the term.

48. What is decreasing term life insurance?

A policy where the death benefit decreases over time, often used for mortgage protection.

49. Can I cancel my term life policy early?

Yes, but you won’t receive a refund for premiums already paid.

50. Is term life insurance a good option for young families?

Yes, because it’s affordable and provides significant coverage during the years when financial obligations are high.

51. Does term life insurance have cash value?

No, it doesn’t accumulate cash value; it’s purely for death benefit protection.

52. What happens if I outlive my term life policy?

The policy expires with no payout unless it includes a return-of-premium rider.

53. Can I add riders to my term life insurance policy?

Yes, common riders include accelerated death benefits, waiver of premium, and accidental death.

54. What is return-of-premium term life insurance?

A policy that refunds the premiums paid if you outlive the term.

55. How is term life insurance different from whole life?

Term life offers temporary coverage with no cash value, while whole life provides lifetime coverage and cash value.

56. Can I get term life insurance without a medical exam?

Yes, some insurers offer no-exam policies, though premiums may be higher.

57. What happens if I stop paying premiums on my term policy?

The policy will lapse, and coverage will end.

58. Can I increase the coverage amount on a term policy?

Some policies allow increases, but most require a new application.

59. How do I choose the right term length?

Consider your financial obligations, like mortgage or education costs, and match the term length to those needs.

60. What is convertible term life insurance?

A policy that allows you to convert to a permanent policy without a medical exam.

61. What is final expense insurance?

A type of life insurance designed to cover end-of-life expenses, such as funeral costs and medical bills.

62. How is final expense insurance different from regular life insurance?

It typically has smaller coverage amounts and is easier to qualify for.

63. What does final expense insurance cover?

Funeral, burial, cremation, and other end-of-life costs.

64. Who should consider final expense insurance?

Seniors or those looking for an affordable way to cover funeral expenses.

65. Is final expense insurance expensive?

It’s generally affordable due to lower coverage amounts.

66. What is the average coverage amount for final expense insurance?

Policies typically range from $5,000 to $25,000.

67. Can final expense insurance be used for medical bills?

Yes, beneficiaries can use the death benefit for any purpose.

68. Do I need a medical exam for final expense insurance?

Most policies don’t require a medical exam and offer simplified underwriting.

69. How quickly does final expense insurance pay out?

Usually within days to weeks after the claim is filed.

70. Is final expense insurance the same as burial insurance?

Yes, the terms are often used interchangeably.

71. Can I prepay for my funeral with final expense insurance?

Some policies allow you to assign benefits directly to a funeral home.

72. Are there age limits for purchasing final expense insurance?

Most insurers offer coverage for individuals aged 50–85.

73. What is guaranteed issue final expense insurance?

A policy that accepts all applicants regardless of health, often with a waiting period for full benefits.

74. Can I customize my final expense policy?

Yes, you can add riders or adjust coverage to suit your needs.

75. Are there exclusions in final expense policies?

Yes, exclusions may apply for suicide or death within a waiting period for guaranteed issue policies.

76. What are graded benefit final expense policies?

Policies that pay reduced benefits during the first few years and full benefits afterward.

77. How do I apply for final expense insurance?

Complete an application with basic health questions; no medical exam is required.

78. Is final expense insurance a good option for seniors?

Yes, it’s ideal for seniors needing affordable coverage for end-of-life costs.

79. Can I purchase final expense insurance for someone else?

Yes, with their consent, you can buy a policy for a parent or loved one.

80. What is the waiting period for final expense insurance?

Some policies have a 2-3 year waiting period for full benefits on natural deaths.

81. What is whole life insurance?

Whole life insurance is a type of permanent life insurance that provides lifelong coverage and includes a cash value component that grows over time.

82. How does whole life insurance work?

You pay fixed premiums, and a portion goes toward the death benefit while another portion builds cash value.

83. How is whole life different from term life?

Whole life lasts for your entire lifetime and has a cash value, while term life only provides coverage for a specific period.

84. What are the benefits of whole life insurance?

Guaranteed lifetime coverage, cash value growth, fixed premiums, and potential dividends from some policies.

85. Does whole life insurance have a cash value?

Yes, it builds cash value over time, which you can access or borrow against.

86. Can I take out a loan against my whole life insurance?

Yes, you can borrow against the policy’s cash value, typically at low interest.

87. How long do I have to pay premiums on whole life insurance?

Premiums can be paid for your entire life or for a shorter period with limited-pay policies.

88. What happens if I stop paying premiums on a whole life policy?

The policy may lapse, but you may have options like reduced paid-up insurance or using cash value to cover premiums.

89. Is whole life insurance a good investment?

It’s not a traditional investment but can be a safe way to build tax-deferred cash value while providing insurance protection.

90. What is a dividend-paying whole life policy?

A participating policy that pays dividends to policyholders, which can be used to reduce premiums or increase coverage.

91. How are premiums determined for whole life insurance?

Premiums are based on age, health, and the policy’s coverage amount.

92. Who should consider whole life insurance?

Individuals seeking lifetime coverage, cash value growth, and estate planning benefits.

93. Can I surrender my whole life policy?

Yes, you can surrender the policy and receive its cash surrender value, but coverage will end.

94. What is a participating whole life policy?

A policy that shares the insurer’s profits with policyholders through dividends.

95. Are whole life insurance payouts guaranteed?

Yes, the death benefit is guaranteed as long as premiums are paid.

96. What are the disadvantages of whole life insurance?

Higher premiums and slower cash value growth compared to other financial products.

97. Can I convert a whole life policy into an annuity?

Yes, some insurers allow this through a 1035 exchange.

98. How does the cash value in a whole life policy grow?

It grows at a guaranteed rate and may also benefit from dividends, depending on the policy.

99. Is whole life insurance tax-advantaged?

Yes, the cash value grows tax-deferred, and death benefits are typically tax-free.

100. Can I use whole life insurance for estate planning?

Yes, it’s often used to cover estate taxes and pass on wealth to heirs.

101. What is mortgage protection insurance?

A type of life insurance designed to pay off your mortgage if you pass away during the coverage period.

102. How does mortgage protection insurance work?

The policy provides a death benefit equal to your mortgage balance, ensuring your home is paid off for your family.

103. Is mortgage protection insurance the same as term life insurance?

It’s similar but specifically designed to cover your mortgage, often with decreasing coverage as the loan is paid down.

104. Who should consider mortgage protection insurance?

Homeowners who want to ensure their mortgage is paid off if they die.

105. Does mortgage protection insurance pay directly to the lender?

Some policies pay directly to the lender, while others pay to your beneficiaries.

106. Can I get mortgage protection insurance with no medical exam?

Yes, many insurers offer simplified underwriting for these policies.

107. What happens if I sell my home or pay off my mortgage early?

You may cancel the policy or repurpose it as general life insurance, depending on the terms.

108. Is mortgage protection insurance expensive?

It’s generally affordable but varies based on coverage amount and your age.

109. Does mortgage protection insurance cover disability or unemployment?

Some policies offer riders for disability or unemployment protection.

110. Can I add riders to my mortgage protection policy?

Yes, common riders include critical illness or disability coverage.

111. What is an annuity?

An annuity is a financial product that provides a guaranteed income stream, often for retirement.

112. How does an annuity work?

You invest a lump sum or make periodic payments, and the insurer pays you regular income later.

113. What are the types of annuities?

Fixed, variable, indexed, immediate, and deferred annuities.

114. What is a fixed annuity?

A fixed annuity provides a guaranteed interest rate and predictable income payments.

115. What is a variable annuity?

A variable annuity allows your investments to grow based on market performance but involves risk.

116. What is an indexed annuity?

An indexed annuity earns returns based on a market index, offering growth potential with protection against loss.

117. What is an immediate annuity?

An immediate annuity begins paying income shortly after a lump-sum payment.

118. What is a deferred annuity?

A deferred annuity starts paying income at a future date, allowing your investment to grow.

119. Are annuities taxable?

Income payments are partially taxable, with taxes based on gains in the contract.

120. What are the benefits of annuities?

Guaranteed income, tax-deferred growth, and financial security in retirement.

121. What are the disadvantages of annuities?

High fees, limited liquidity, and potential surrender charges.

122. Can I access my annuity funds early?

Yes, but early withdrawals may incur penalties and surrender charges.

123. How are annuities different from life insurance?

Annuities provide income while life insurance provides a death benefit.

124. Can I leave my annuity to my heirs?

Yes, with options like a death benefit rider or joint-and-survivor annuity.

125. What is a surrender charge?

A fee for withdrawing funds early from an annuity.

126. Are annuities safe?

Fixed annuities are very safe; variable annuities carry investment risks.

127. Who should consider an annuity?

People seeking guaranteed income in retirement or tax-deferred growth.

128. How do annuities compare to other retirement products?

Annuities provide guaranteed income, unlike 401(k)s or IRAs that depend on market performance.

129. What is a lifetime income rider?

An add-on that guarantees income payments for life, regardless of the annuity balance.

130. Can annuities protect against outliving my savings?

Yes, annuities are specifically designed to provide income for life.