Important Facts

Life Insurance FAQs

The questions and answers in this article are designed to help you with some of the basic questions asked by many people when trying to understand life insurance.

Frequently Asked Questions about Life Insurance

When it comes to life insurance, there are many questions. Here are answers to some we hear most often.

How much is life insurance?
Likely less than you think. A recent industry study shows consumers believe life insurance costs nearly 3 times the actual price.* To get a fast, free quote, visit our quote engine.

*Source: LIMRA, Facts about Life 2017

I'm considering term insurance. What kind do you have?
We do offer a product that provides you affordable protection with a guaranteed fixed premium and coverage level for a specified period of time, plus your premiums won't suddenly increase after your fixed coverage period ends. It's called Protective Custom Choice ULSM .
What's the difference between a universal life policy and a variable universal life policy?

A variable universal life policy offers potential cash value growth via investment funds similar to mutual funds, making the cash value subject to market risk.

What is a cash value account?
A cash value account is one of the advantages of many universal life policies. A portion of your premiums go into a cash value account that can be accessed while you're alive. If you cancel your policy, you may have a choice of options. Typically, your choices will include options to use the cash value (less any surrender charges or outstanding loan balances) to purchase fully paid-for life insurance or receive a cash payout.
How does life insurance work?
When you apply for life insurance, the insurance company assesses your potential risk of dying and sets the premium accordingly. You pay the premium to the insurance company, and if you die while the policy is in force, the insurance company pays your heirs a death benefit.
How much life insurance do I need?

It depends on your situation. Your agent can help you determine how much money your beneficiaries might need. Things to consider are:

  • Any immediate expenses, such as hospital bills, funeral costs and estate taxes
  • Ongoing and future expenses like a mortgage, household expenses, food, tuition and healthcare
  • Additional expenses that might arise from you not being there, i.e. childcare costs and household maintenance
  • The amount of your current assets, including checking and saving accounts, investments and any other life insurance you may have
I already have life insurance with my employer. Is that enough?
For most people, no. First, employer-based policies often don't provide enough coverage to replace your income for very long. Second, employer-based policies typically end soon after you leave the job. This means if you quit your job or get laid off or fired, your family could find themselves without coverage when they need it.
Will my family pay taxes on my death benefit?
In most cases, the death benefit goes to your beneficiaries tax-free.
What happens to my policy if my life insurance company goes bankrupt?
Any insurance company selling life insurance belongs to a state-mandated organization called a guaranty association. So if the life insurance company goes bankrupt, the guaranty association will still likely offer you some coverage. The rules and amount of coverage varies by state. In the end, checking your potential insurance company's financial strength rating before you buy is important. View Protective Life's ratings here.
What can I expect from the medical exam?
These routine exams can usually be done in 25 minutes or less. They include height, weight and blood pressure checks, urine and blood samples and a request for medical records. Protective Life covers the cost of your exam.
Can I get life insurance without a medical exam?
Yes, but there may be limits to the amount of coverage that you can purchase without a medical exam.
If I have a medical condition, will that stop me from getting life insurance?
Not necessarily. It depends on the medical condition, the insurance company, the policy and other factors. Some medical conditions could simply mean paying a higher premium.
I don't have any dependents. Do I still need life insurance?
Even without kids or a spouse, you may have other family members to protect from things like unpaid debts or your funeral costs. Many single people also want to provide for aging parents who might be relying on their children as they get older.
Do I need life insurance for my business?

It can make sense if you're a partner in a business. A buy-sell agreement can be helpful if you or your partner should die. The policy allows the remaining partner(s) to buy out the deceased partner's interests at a pre-negotiated price. Another way life insurance can help is key person insurance. Key person insurance provides the owner(s) money to help replace the loss of a key person.

Why should I get life insurance for kids?
Simply put, to protect their financial future. By getting life insurance for your child when they're young, they can benefit from exceptionally low rates that won't increase as they get older. Even if your child develops a condition later, they're still covered.
What's an annuity?
An annuity is a contract issued by an insurance company that allows you to pay either a one-time premium or a series of premiums, and accumulates those funds with interest. You can either withdraw the accumulated balance in a lump sum, or elect to receive a regular stream of payments over time.

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All Learning Center articles are general summaries that can be used when considering your financial future at various life stages. The information presented is for educational purposes and is meant to supplement other information specific to your situation. It is not intended as investment advice and does not necessarily represent the opinion of Protective Life or its subsidiaries.

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