Common Questions & Terminology in Life Insurance

Life insurance can seem complicated. We want to make sure you are comfortable with the insurance we offer and can understand more about it. Below are some common questions and answers.

What is term life insurance?
Term life insurance is a form of life insurance that provides financial protection for a set period of time or term and often ends coverage at a set age. If you die before the term is up, your beneficiary receives the death benefit. It can be used however needed without restrictions. Term life insurance is one of the more popular and affordable ways to provide a financial safety net for loved ones. Costs are kept lower in part because it does not include income or investment options. Group term life insurance, like that offered through National Association of REALTORS®, can offer additional key advantages such as an accelerated death benefit and coverage amounts up to $1 million.

Why do I need term life insurance?
If you have a spouse, children or other family members depending on you, term life insurance can be an easy and affordable way to make sure money is available to help them cover expenses after you’re gone.

How does life insurance work?
Life insurance is designed to provide money to the people who mean the most. When applying for insurance, there is often information needed about your health and financial background. This could be collected online through data sources with your permission or through phone calls and/or a visit with a medical professional. Once the insurance company receives and reviews your information, you receive a decision confirming if you will be offered the insurance applied for. Once accepted, as long as you remain eligible and keep payments up to date, when you die, the life insurance company pays a benefit to the person(s) you name as your beneficiary. This money usually is tax-free.

How much life insurance do I need?
Experts recommend you have 6 to 10 times your annual salary in place through life insurance and/or savings. You should have enough life insurance to cover your debt and the daily expenses for those you love.

How much does life insurance cost?
The cost of life insurance is determined by many factors. Your age, gender, and health are considered when you apply. Many Americans overestimate the cost of life insurance by as much as 5 times, so it may cost less than you think. You may find the cost for insurance for each Group Term Life | Mature Group Term Life | AD&D Insurance

What are the advantages of buying through my association?
Group insurance from an association is portable so you can keep it no matter where you work. Plus, your group negotiates with insurance companies to include benefits which reflect your groups unique needs. On the other hand, employer-provided life insurance usually covers only part of your income. And if you leave your job, it often ends.

How do I apply for term life insurance?
You can apply online today. The application takes just minutes and, in some instances, you could have your application decision immediately.

Can I apply for term life insurance for my family?
Yes. Options are available for both you, the member, and your eligible spouse for both Group Term Life Insurance and Mature Group Term Life Insurance. Additionally, you can also add AD&D coverage for qualifying dependent children.

What information do I need to apply for term life insurance?
You’ll be asked to provide information about those being insured. If you qualify to use QuickDecision automated underwriting, you may be asked now for your social security number, driver’s license information, and medical details such as doctor information and prescription doses. Later, you may be asked for these or additional health and financial information. This is all part of the underwriting process require by any life insurer.

Do I need a medical exam to apply for term life insurance?
Not always. You may be requested to answer a few health questions online, by phone or have a medical exam. The exam is at the insurance company’s expense and scheduled at your convenience.

Could my life insurance application be denied?
Yes. Applications are reviewed for insurability based on age, health and other information you provide or give permission to obtain. In some cases, the insurance company will decide not to offer insurance. Guaranteed insurance products with limited coverage could be an option if this happens.

How long does it take for my insurance to go into effect?
Typically, you should receive a decision about your application within 5-10 days after your required materials are received. Some applications require gathering more information, such as physician’s statements, than others.

Are there restrictions on how the death benefit payment can be used?
No. The money your beneficiary receives can be used however needed. It could help replace lost income, cover funeral bills, pay off a mortgage, even fund college.

Insurance Terminology

Accelerated death benefit
A portion of a life insurance death benefit that can be paid to the insured person while living. The purpose is to help with costs associated with severe chronic or terminal illnesses.

Beneficiary
The person(s) or trust named to receive payment of an insurance death benefit.

Claim
Notification to the insurance company to receive payment of an insurance benefit. Typically, a form is provided requiring details needed to process the claim.

Death benefit
Money paid when an insured person dies.

Exclusion
Conditions or terms not covered by insurance. For example, suicide is an exclusion to life insurance.

Term life insurance
Life insurance that lasts for a set time period or term. At the end of the term, the insurance either ends or converts to a new term.

Group term life insurance
A type of term insurance offered through a group such as an employer or association. Employer insurance typically offers a fixed benefit set as a portion of the employee salary and often ends when employment ends. Associations offer amounts the individual can choose and can be kept across jobs.

Level term life insurance
Insurance in which payments are designed to remain the same, or level, across the term.

Premium
The cost of insurance for attained coverage that is due in periodical payments monthly or annually. Monthly payment are subject to a $2/month fee.

Underwriting
The process used to decide if and at what rate class an applicant will be offered insurance and the cost. This can include health and financial assessments.

Rate class
The categories of health and other factors of an applicant that impact insurance offered and the cost.

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