Your Life Insurance Questions Answered

what you need to know about life insurance

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.

We want to help you navigate the process and make an informed, confident decision. Below are some of the most common questions we get from customers and our candid answers.

Does term life insurance go up every year?

Most term 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 becomes.

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 policy term length. This ensures that what you pay each year remains the same regardless of your age or health. 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.

To think of it comparatively, annual term insurance is a bit like signing a year contract with a cable company and once you hit month 13, you may see a significant increase in your rate (everyone hates when they get that bill) that’s often hard to drop without lessening your services. Ideally, you’ll get a rate and stick with it because that’s what your budget allows. We think it should be the same with your term life insurance policy.

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 is dead.

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 is correct. Death is hard on our loved ones. Make getting those life insurance proceeds easy.

Is life insurance taxable to the beneficiary?

Typically, a life insurance death benefit is received free from federal income tax. 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 the policy on your spouse and then 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.

Does term life insurance require a medical exam?

There are some life insurance policies that don’t require a medical exam. However, they are significantly 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 can reach well over $1 million. For most people, it’s best to get a non-medical exam insurance only if you don’t qualify for a medical one.

Medically underwritten term life insurance policies require a medical exam. These  policies are less expensive because the life insurer has insight into the risk you represent to the company. When we know your current health state, medical history and more, we’re able to have a more accurate assessment of the likelihood of you dying. If you’re healthy, this is the type of policy you should consider first in order to get a low premium price.

Our Haven Term policy is medically underwritten which is why pricing is very affordable for most people.

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 spouse 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. Don’t worry; we’ll let you know if you don’t need coverage.

Does term life insurance expire?

Yes, term life insurance expires at the end of your designated policy term length – typically 10, 20 or 30 years – or if you’ve failed 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 lapses. 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 acquiring significant debt. 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, when you really need it, and at a great price. No frills. No unnecessary costs.

With term life insurance, you pick a term length and coverage amount that you need, you pay your monthly premium and you’re covered. The coverage ends once the term length is up. This way, you no longer have the added cost of insurance but you sure had peace of mind during the time you were covered.

Did we also mention how affordable it is? Think: much less than your cable bill per month. A 20-year, $500,000 Haven Term policy for a healthy 35 year old would cost about $24 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.

Learning about life insurance and choosing a policy shouldn’t be confusing or a hassle. And we’re working hard to make sure it isn’t. Feel free to shoot us an email if you have further questions about life insurance, and we’d be happy to answer them:

Life insurance that's actually simple.

Estimate your rate

Get the latest news

Get your real rate