Frequently Asked Questions (FAQs)
About Life Insurance
Life Insurance Questions,
Term Life Insurance Information,
Life Insurance Policy Information
You've got life insurance questions? We've got answers! At WholesaleInsurance.net, we understand how confusing life insurance can be. That's why we created a Frequently Asked Questions (FAQs) section. Here you can find answers to many of the questions you may have about life insurance.
Click on the links below to get answers to the most common life insurance questions.
23 Frequently Asked Questions About Life Insurance
- Why can't I list anyone I want as a beneficiary?
- What is a contingent or secondary beneficiary?
- Why can't I select any amount of insurance I want if I can afford it?
- Why is my prior health history important if I am healthy now?
- Why do the companies you show have prices that vary so much for the same coverage?
- Why does it take so long to process an application?
- Why does the company need to know my income, assets and liabilities?
- If I die, will the company refuse to pay?
1. Why can't I list anyone I want as a beneficiary?
A. In order for someone to qualify as your beneficiary at the time of application they must suffer a financial loss in the event of your death. In other words, they must expect to experience financial hardship as a result of your death. Your spouse, children, a trust or business partners are examples of common beneficiaries.
2. What is a contingent or secondary beneficiary?
A. The contingent or secondary beneficiary is the person or persons designated to receive the death benefit from your life insurance policy in the event that your primary beneficiary should die at the same time, like in a common accident, or before you do.
3. Why can't I select any amount of insurance I want if I can afford it?
A. The purpose of life insurance is to provide protection against loss. As such the amount of coverage that is available to you is the amount of potential financial loss that your beneficiary will experience. The coverage amount is usually determined by a combination of Debt Payment, Income Replacement and Estate Analysis. In all cases, the need for and purpose of the insurance will be considered.
4. Why is my prior health history important if I am healthy now?
A. Personal health history and family health history are both indicators of potential future health issues and premature death. For example, if you have had cancer you may be more likely to have a recurrence even if you are healthy now. Similarly, some types of diseases like heart disease, cancer and diabetes run in families and thus are taken into account for some types of policies if either parent died of one of these diseases prior to age 60.
5. Why do the companies you show have prices that vary so much for the same coverage?
A. There are many reasons for the variety in life insurance policies and rates. Insurance companies design products and their specific rate schedules based upon their own experience, industry experience, underwriting philosophy, marketing considerations and the availability of reinsurance.
6. Why does it take so long to process an application?
A. Sometimes it can take a considerable amount of time to process an application for life insurance. Most of that time is spent gathering information to determine your rate. If an applicant has a long medical history and has consulted with several physicians it can take a long time to retrieve those medical records from the various doctors' offices. Occasionally it will take a long period of time to retrieve just one doctor's records, particularly if the doctor's office is not automated or if the doctor is part of an HMO, a large practice or a teaching hospital staff with a bureaucratic record retrieval process.
7. Why does the company need to know my income, assets and liabilities?
A. The insurance company needs to have information about your financial situation so that the amount of insurance made available to you is appropriate for the potential financial loss your beneficiaries might incur as a result of your death.
8. If I die, will the company refuse to pay?
A. An insurance policy is a legally binding contract. The insurance company is required by law to pay the proceeds of the policy in accordance with the policy provisions. Most policies have a two year contestability period during which time they can deny payment for fraud or material misrepresentation of facts (example: you represent that you do not have heart disease yet you previously had a serious heart attack and you die of heart failure within two years of policy issuance). Suicide during the first two policy years is also excluded in most policies. In either of these situations your beneficiary would receive a return of premiums paid rather than the death benefit.
