Life Insurance Frequently Asked Questions

There's no replacement for you and the contribution you make to your family. You want to make sure that people in your life, especially your dependents, can remain financially secure after you die.

That's what life insurance does for you and your loved ones. It gives you peace of mind. Income replacement is the #1 reason why people buy life insurance.

Stay-at-home moms or dads also have an important, often overlooked, economic value that should be covered by life insurance.

Life insurance is also used to achieve specific business or estate planning goals. As, such, life insurance financially protects your family and loved ones at a time when it is needed the most.

We recommend that each family income provider carry no less than ten times their annual income/worth in life insurance.

The amount of your outstanding mortgage should also be a consideration. Any coverage for your mortgage should be in addition to the amount of insurance you calculate for your income coverage.

It's quite common to see life insurance also referred to as mortgage insurance since most people equate buying life insurance with the need to pay off large debts such as a mortgage.

The most important buyer's tip is to buy from a financially sound life insurance company. Though competitive pricing is important, it's more important that the company is stable, financially strong and able to fulfill the policy should you need it.

You should pay particular attention, at time of purchase and throughout the life of the policy, to the financial stability ratings of your life insurance company. Lighthouse Insurance recommends that you monitor the rating of the Life Insurance Company that you choose.

The easiest life insurance to understand is term life insurance.

Term life insurance provides straightforward death benefit protection without any expensive "cash value" or investment component add-ons.

Your term life insurance policy will offer level premiums for your choice of 10, 15, 25 or 30 years during which the premiums are guaranteed not to increase. As long as you pay your premiums on time, the company cannot cancel you. If the insured dies during the term, the death benefits are paid to the beneficiary without any complicated process or rules.

It doesn't get any easier than a term life insurance policy, plus it's the most affordable type of life insurance.

Term life insurance has become very popular with consumers in recent years because premiums for new policyholders have dropped to all-time lows.

Most companies allow you to pay on a monthly, quarterly, semi-annual or annual basis, so whether you're a pay-all-at-once kind of person or you enjoy spreading it out each month, payment flexibility definitely makes it even easier to afford.

Most high quality term life policies sold today are guaranteed renewable, which gives you the right to continue your coverage beyond the initial rate guarantee period without a medical exam.

This feature can become extremely important to your family should you become sick and uninsurable towards the end of your initial term life rate guarantee period.

Choosing an initial rate guarantee period is easy. Simply match the period of time you'll need coverage to the available rate guarantee period.

For example, if your children are young or you have decades to go on your mortgage, look at 20 or 30 year term life. If your children are leaving the nest and your home is paid off or nearly paid off, perhaps 10 or 15 year term might fit the bill.

Your life changes constantly, right? From purchasing a new home to getting married or having children to starting a business or even retiring, your life and your financial situation are constantly in flux.

Because the financial needs of your loved ones change over time, you should take a look at your life insurance policy periodically.

Lighthouse Insurance suggests you review your life insurance coverage at least once a year or when you experience a major life event such as change of income or assets, marriage, divorce, retirement, the birth or adoption of a child, or purchase of a major item such as a house or business.

The standard term life policy covers death by any cause at any time in any place, except for death by suicide within the first two policy years (one year in some states), as long as it's within the term of your policy.

You will need to discuss heart disease, cancer, diabetes and other serious illnesses during the application process.

Expect to also be asked about heart disease or cancer in your family and whether or not you engage in any risky hobbies or activities, as well.

A brief face-to-face interview with a paramedic technician is usually required for coverage amounts above $250,000.

In naming your beneficiaries, keep in mind that the life insurance company will only allow the names of those who are actually financially dependent upon you in some way.

Adults or children that you support, or owe money to, are considered to have a financial interest in you.

An acquaintance, roommate, friend or relative, absent of a financial relationship, will not do.