Your Life Insurance Questions Answered
When you enroll in a life insurance policy, you protect your loved ones from financial challenges and help them find peace of mind during a challenging time. However, it’s often confusing to navigate your policy options and figure out what coverage is best for you.
To get started, here are answers to some of the most frequently asked life insurance questions:
How does life insurance work?
Life insurance provides financial support for your loved ones following your death. The death benefit may range from a relatively small amount to cover final expenses up to a large amount that replaces your income for a length of time.
There are several different types of life insurance that all work a little differently. Most require medical underwriting, which is a process of evaluating your health to decide whether you’re eligible for coverage and how much you’ll pay. Your options may include:
- Term life insurance policies last for a set period, most commonly for 20 years. However, you may be able to opt for a policy that lasts from five to 35 years, depending on your age and other factors.
- Whole life insurance is permanent, which means it provides lifetime coverage if you continue to pay your premium. A portion of the amount you pay goes into a tax-advantaged savings account that grows in cash value over time.
- Guaranteed acceptance life insurance is available to older adults without undergoing a medical exam or answering health questions. This type of insurance provides a smaller benefit than other policies but can help pay for funeral arrangements, medical bills, debts, and other end-of-life expenses.
- Simplified issue life insurance also doesn’t require an exam, but you do need to answer questions about your health. Simplified issue policies may offer a variety of coverage options but generally have higher premiums and lower benefits than alternatives with a full medical underwriting process.
- Universal life insurance is a kind of permanent life insurance that allows you to adjust your premium payments and death benefit. You can withdraw or borrow against the policy’s cash value.
- Variable life insurance is permanent insurance that lets you choose investments for your cash value account. This type of policy comes with greater risk than others because the cash value may increase or decrease due to market conditions.
Secure your family’s future with Guaranteed Acceptance Life Insurance.
Contact GoHealth to find coverage that fits your needs.
What’s the difference between a term and a whole life insurance policy?
Term life insurance policies last for a specific length of time, typically between five to 30 years. If you outlive the term and don’t update your coverage, your family won’t receive a death benefit.
Whole life insurance policies, on the other hand, remain active as long as you pay the premium. This permanent insurance may be a more expensive option than term life, but it also builds cash value, which you may be able to use.
Simplified issue and guaranteed acceptance life insurance are forms of whole life insurance that you can qualify for easily but offer a lower benefit than other plans.
Can I get life insurance if I have a pre-existing condition?
To enroll in most types of insurance, you must undergo a medical exam or answer health questions. Any health conditions you have may affect whether you qualify for a policy and how much you pay in premiums.
If you’re between the ages of 50 and 85 and living with chronic conditions, guaranteed acceptance life insurance might be right for your needs. This type of policy offers permanent coverage with no requirement for a medical exam or health questions. If you enroll in guaranteed issue life insurance, you may need to pay premiums for two to three years before you become eligible for a full death benefit.
What life insurance has cash value?
If a life insurance policy has cash value, that means a part of your premium payments go into an account that earns interest. You may be able to use the cash value by making withdrawals that come out of your eventual death benefit or taking a loan against the value of your policy.
Term life insurance policies do not have cash value, but most permanent policies do.
- Whole life policies, including guaranteed acceptance policies, have a fixed interest rate.
- Universal life policies grow value at a market-based rate.
- Variable life insurance policies increase their value based on your choice of investment options.
- Indexed life insurance policies have their growth pinned to a market index such as the S&P 500.
Can I enroll in more than one life insurance policy?
Some people do choose to enroll in multiple life insurance policies. You may decide to add more insurance to meet increasing obligations in case of your death, such as paying off a mortgage or supporting a child through college. By laddering policies with varied terms, you can arrange to have more coverage to meet your financial responsibilities when you’re younger as well as a lower-cost policy for your later years.
Can I take out a life insurance policy for another person?
You can purchase life insurance for another person, such as a spouse, child, or parent. However, that person must give their consent, and you must have an insurable interest in them. An insurable interest means you can demonstrate that the person’s death would have a negative effect on your finances.
Secure your family’s future with Guaranteed Acceptance Life Insurance.
Contact GoHealth to find coverage that fits your needs.