Your life insurance questions answered

Life insurance can be difficult to understand… We get it and can commiserate with you. Many members of our team went through the researching and buying process long before Haven Life came along.

Which means we’ve been there, done that and can help you navigate the life insurance landscape to make a confident and informed decision of your own. Below, a few of the most common questions we get from customers (along with our candid answers) about buying life insurance.

Does term life insurance go up every year?

Most kinds of life insurance policies don’t go up in cost every year. One type that does is an “annually renewable” term life insurance policy. The premium in an annually renewable policy starts out inexpensive (usually less than a level premium policy), but then the premium goes up every year as you age. And, the longer the term, the more expensive the premium payments become.

That said, we don’t sell that kind of policy.

The Haven Term policy is a “level premium” policy. This means the premium remains the same for the duration of the term length you chose for your policy. This ensures that, for your coverage term, what you pay each year remains the same regardless of your age or health. Of course, you can choose to continue your policy at the end of the term length, but likely at a higher premium.

A level premium also reduces the risk that you won’t be able to afford the policy a few years down the road. Worth noting, this is not an uncommon or expensive feature to come by. Many policies from top insurers offer level premiums.

Can life insurance have more than one beneficiary?

Yes, most, if not all, life insurance companies allow you to have more than one beneficiary. For example, Haven Term buyers can list up to 10 primary beneficiaries and 10 contingent beneficiaries.

A primary beneficiary is the first person (or persons if you elect more than one) that the death benefit would be paid out to. Contingent beneficiaries are contacted if a primary beneficiary has passed away.

As an example, if you name your spouse as the beneficiary and a sibling who would care for your children as a contingent beneficiary, the sibling would only get the death benefit if your spouse were to die prior to it being paid.

Most people list one or two primary beneficiaries and one contingent beneficiary. That being said, this is a good time for us to remind you to regularly check who you’ve listed as a beneficiary and ensure that the contact information you have provided is correct.

Is life insurance taxable to the beneficiary?

Typically, a life insurance death benefit is received free from federal income tax, and you can use it for all kinds of things, from mortgage payments to final expenses like burial and a funeral.

However, there are less common scenarios where the payout can be deemed an income taxable event or a ‘gift’ that could be subject to federal and state gift taxes:

• If you or your business own a policy and name your employee the beneficiary, this could be considered compensation, and thus, subject to income tax.
• If you own a policy on your spouse and name your child as a beneficiary, the death benefit could become taxable. That’s because when a third-party beneficiary is involved (someone who isn’t the owner or the insured) then the death benefit can be deemed a gift and may be subject to gift tax.

We must disclaim that we don’t provide legal or tax advice, but we think the above information provides you with considerations when selecting a beneficiary. If you have additional questions, consider consulting a financial advisor.

Does term life insurance require a medical exam?

There are some life insurance policies that don’t require a medical exam. However, they are more expensive than medically underwritten policies because the insurer is acquiring significant risk of you dying within the term length without knowing your current health state or medical history.

Typically, these “simplified issue” policies also have a low cap for policy amounts at around $250,000, whereas medically underwritten policies from Haven Life can reach $3 million. (For what it’s worth, Haven Simple — a 100% no-exam-required policy — is available for up to $1 million. Note that you need to be truthful during your application; otherwise, you risk the issuance of the policy or payout of the death benefit.)

Most medically underwritten term life insurance policies require a medical exam. However, some Haven Term applicants may qualify for the InstantTerm process, which lets some eligible applicants (up to age 45 and up to $1 million in coverage) finalize coverage without the need for an exam. (Keep in mind that issuance of the policy or payment of benefits may depend upon the answers given in the application and the truthfulness thereof.)

This sophisticated technology analyzes the health information provided in your application and other industry-standard data to make a decision in real time. Once you submit your application online, you’ll be informed if a medical exam is needed.

If you do end up needing a medical exam to finalize coverage… no big deal. The exam only takes 20-30 minutes and can be done (for free) from your home or office. You may even end up getting temporary life insurance coverage while you wait to complete the exam.

Is life insurance necessary for a single person?

Life insurance often isn’t necessary for an unmarried and childless person. But there are some circumstances when, if single, you should still consider purchasing a policy, as financial dependents span more than just your partner or children.

If you have significant cosigned debt, such as student loans or a mortgage that would fall to your parents or loved ones if you died, then you may want to consider term life insurance to cover those debts. Additionally, if you are single and the primary caretaker of an elderly person, then you should consider how much it would cost to care for them if you died.

If you’re single and still unsure, you can use our life insurance calculator to help determine if you need coverage. Relax, no air-math required.

Does term life insurance expire?

Yes, the policy’s term expires at the end of your designated term length – typically 10, 15, 20, or 30 years. The policy itself lapses if you fail to pay your premiums.

We mentioned above that there are certain policy features you should look for. Another one to make sure you have is guaranteed renewability, which most top insurers provide. Guaranteed renewability ensures that you can still get covered after the policy term length expires. However, it’ll likely be significantly more expensive as you’ll be older and potentially less healthy than you were when you bought the policy.

This is why it’s so important that you get ample coverage while you’re young and healthy and that you continue to revisit your life insurance needs during major life milestones: like having another child or buying a house. This will keep you from being in an expensive bind 30 years down the road.

Why is term life insurance often the best value for customers?

Term life insurance is a great value for most people because it provides you with the coverage you need for the years you’ll need it most.

With term life insurance, you pick a term length and coverage amount that fits your needs, you pay your monthly premium and you’re covered.

The other thing about term life insurance is that it’s often more affordable than you think. Much less than your cable bill per month. For example, a 20-year, $500,000 Haven Term policy for a 35-year-old woman in excellent health would cost $17.50 per month.

Does term life insurance cover death from illness?

Yes, a term life insurance death benefit will be paid if a policyholder dies from an illness. That’s the entire point of a life insurance policy: to provide financial protection to your loved ones in the event of your untimely death.

Worth mentioning, it can be difficult to acquire coverage if you already have a life-threatening illness or chronic disease of some sort. In addition, it may be significantly more expensive.

However, if you were healthy when you bought a policy and many years into the term length, were to, unfortunately, uncover that you are very ill, you need not worry about a policy being paid out due to that illness. This is the risk that life insurers accept when covering something as unpredictable as a person’s life.

There you have it.

We know that our industry hasn’t always done the best job of streamlining options and offering the facts you need to make life (insurance) less hard. We’re trying to change that. If ever have any questions, check out our Term Life Insurance 101, FAQ or, just shoot us an email at help@havenlife.com. We’d be happy to help.