When you’re looking into life insurance policies, you can sometimes find yourself coming out to the other end of your search with more questions than answers.
To help you focus on what matters most, and guide you towards finding the right policy for your needs, here are some answers to the most commonly asked life insurance policy questions.
How does life insurance actually work?
Put in the simplest of terms, when you take out a life insurance policy you’re paying them for coverage that a benefactor (or benefactors) will receive as a cash sum after you die.
Can I choose the beneficiaries of my life insurance policy?
Absolutely. In fact, it’s recommended that you name more than one beneficiary, whether it’s your spouse, children, or grandchildren, just in case one of them should pass away before you.
The choice is really yours. But when deciding where the benefits will go and how much money they’ll receive, it’s important to note that people under the age of 18 cannot receive those benefits directly. Instead, they’ll need to be given to a trust or guardian to look after that money until that child legally turns 18.
How can I qualify for life insurance coverage?
The majority of policies will require you to answer some straightforward questions about your health and overall lifestyle. After that, most life insurance coverage requires a medical exam that’s conducted by a healthcare expert.
You’ll need to also provide a blood and urine sample in these instances. Like any other physical, things like your weight, height, and blood pressure will be measured as well. In some cases, there may also be an EKG reading.
Am I legally required to take this medical exam to qualify?
No. Some insurance companies offer life insurance without the need for a medical exam. But there are still many deciding factors that go into a final decision, like family medical histories and your overall lifestyle.
However, whether you’re shopping around for local insurers or looking to compare life insurance quotes online, everything you do (or don’t in this case) choose to participate in can potentially affect your premium.
Will my beneficiaries be taxed on a payout?
A benefactor isn’t usually expected to pay taxes on a life insurance lump sum. However, if the monies involved go to an estate instead, they’ll be subject to standard estate taxes.
Several insurers provide a service where the company holds onto the life insurance payout after the death of the policyholder in order to gain more taxable interest.
What may prevent a payout in the event of my death?
In the event of death, a few things can potentially prevent a payout. Generally speaking, payment can be denied if the policyholder dies by suicide, hasn’t been paying their premiums, or neglected to disclose information that may have affected their qualification for life insurance.
In other words, as long as you are open and honest while paying your premiums regularly, you shouldn’t need to worry about your loved ones being denied a payout.
