Life Insurance FAQs

What exactly is life insurance?

A life insurance policy pays money to a person or persons you designate if you die, and is generally used to provide protection to the deceased’s family.

I know there are different types of life insurance. What are the differences, and which one should I get?

A term life policy is the most common type, and it covers you for a fixed amount of time for a fixed amount of money. The general time span of a term life policy is 15, 20 or 30 years. For a 30-year term life policy, if you purchase a policy at age 30, you will pay the same price until the policy expires when you are age 60, and the policy will pay out the same amount to your designee during those 30 years.

A universal or whole life policy is a more complicated financial instrument that allows you to build up equity in the policy. Many people use it to leave an estate to family or for financial flexibility in the later years of the policy. For example, you can take a loan out against your policy, and some policies even allow you to use some of the coverage for long-term care. Although this sounds enticing, the cost of these policies is considerably high, commonly 5 times more than a commensurate term life policy.

Can life insurance be cashed in before death?

On a universal or whole life policy, typically yes, on a term life policy typically no, but you can cancel coverage and stop paying on a term life policy without penalty.

How old should I be when I get life insurance?

The smartest financial tactic is to purchase life insurance when you are young and in good health, which allows you to lock in a very low rate for up to 30 years. It typically costs more to purchase a life insurance policy as you get older as most people’s health declines with age. You can always add on a second policy if your needs change, and you can cancel policies at any time without penalty. For instance, many people purchase life insurance when they buy their first house, as a spouse would be left alone with the financial commitment if anything where to happen to them.

My mortgage company wants me to purchase mortgage protection insurance. If I get this, do I still need life insurance?

While this is helpful for your spouse or family to pay your mortgage if you die, it provides no additional funds to your family. In fact, this type of policy is of most benefit to the mortgage company, not your family. Your family will still need to pay bills, funeral expenses, education costs, etc. We do not recommend that you purchase mortgage insurance. A term life insurance policy is a more cost-effective way to protect your family and home, and the pay-out can be used for any necessary expenses as well as paying off the home.

I only make a small income, and my spouse is the breadwinner. Do I still need life insurance?

Yes. Because if you die, your spouse will have to pay to replace what you do and also pay your funeral expenses. For instance, if you are caring for children or elderly parents, care will still need to be provided. You may not be providing much income in the traditional sense, but you are doing something of great value.

If I don’t have many assets, do I still need life insurance?

If you have debts or other obligations that you share with a spouse, and/or if you have children who will want to attend college, life insurance is highly recommended.

How do I get the best rates for life insurance?

A licensed insurance agency has access to a multitude of policies and pricing from different insurance carriers. For instance, agents at Esposito Insurance Group work with over 30 A-rated carriers, and will shop around to find you the best price given your health profile and the amount of coverage you are seeking.

Can I take out a life insurance policy on someone besides myself?

Yes, with their permission. For example, if you have a business partner, it is common to take policies out on each other so if one of you dies, the other partner can take ownership of the company through a payout to the deceased partner’s family or estate. This allows the surviving partner to keep control of the business.

I don’t have any kids. Do I still need life insurance?

This depends on your individual situation. If you have a spouse, parents, siblings, or anyone else that you wish to provide for, or debts you share with a spouse, life insurance is recommended.

I have had cancer. Can I still get life insurance?

Once you are in remission and maintaining good health, it gets easier to get a policy, and the longer you are in remission, the easier it gets.

Will the cost of my life insurance go up as I get older or if I get sick?

If you lock in your rate, it will remain the same for the life of that policy. But if you shop for a new policy at a time when you are older or your health has deteriorated in some way, the cost will be substantially higher. This is why it’s financially prudent to acquire a policy when you are young and healthy.

Should I get life insurance for a child?

It can be a great idea to purchase a universal or whole life policy for a child because they will always have insurance at a low cost. The policy can even be pre-paid, and gives the child protection for their entire life. So even if they suffer bad health later, it will still provide protection for their family.

Do I need a medical exam to get life insurance? Can my doctor perform the exam?

You will need an exam, and your personal doctor cannot perform it. The exam is paid for and conducted by the insurance company you are applying to.

How can I make sure that the life insurance application process goes smoothly?

Be truthful about your health conditions up front, or the insurance companies can increase your cost or substantially delay your application. To speed up the application process, let all of your doctors know that you have applied for life insurance so they can release your records promptly. Some will also require additional authorizations.

Where can I go if I have more questions or want to apply for life insurance?

I am happy to answer your questions or get the process started. As a licensed agent representing over 30 companies, I can customize your coverage and provide you with the best rate, so you can rest easy, knowing that your family is protected. I can be reached via phone or text at 973-284-1083, or email at madeline@espositoinsurance.com