There are a lot of misconceptions about life insurance. In fact, a majority of people don't buy a life insurance policy because they grossly overestimate how much it's going to cost. For the record, life insurance is surprisingly affordable for most Americans.
Cost aside, there are still a lot of lingering questions that people have about this important coverage, some questions they'd rather not ask anyone in person. If you're still on the fence about protecting your family's financial future, here are just six common questions about life insurance and their answers.
Am I too old to buy a life insurance policy?
Unless you're over the age of 75, you can still purchase a term life insurance policy. In fact, there's really no age cut off to buy a whole life policy that covers burial expenses. It's important to understand, however, that life insurance is much more affordable the younger you purchase a policy, so locking in a rate early is the best strategy.
Am I too overweight to buy life insurance?
Even if you're overweight, you can still qualify for a life insurance policy at some favorable rates. Some agents recommend that you lock in coverage as soon as possible, regardless of your weight, in case something unforeseen happens. If you lose weight, you can always ask the insurer to adjust your rates later.
Can I buy life insurance on someone else?
It depends. Yes, you can buy life insurance on someone else, and even list yourself as the beneficiary, if you can meet two conditions. The first is that you must have an "insurable interest" and the second is that the other person has given their consent. The exception to this is purchasing a policy on your own minor child.
Can I leave the proceeds to anyone, even if I'm married?
You can leave your life insurance policy proceeds to whoever you'd like, with one consideration. If you live in a community property state, your spouse may be entitled to a share of the proceeds. If this is something that you want to do, it might be wise to consult a local estate attorney.
Are life insurance proceeds taxable?
Generally speaking, no. Policy proceeds that are paid out as a death benefit are not taxable. However, if you have earnings, either in cash value or interest earned in a beneficiary account, these could be subject to taxes.
How fast are life insurance policy benefits paid out?
Most insurance companies pay out benefits within 30 to 60 days of the claim being filed. They can ask for additional information if needed and there are delays in some cases. This could happen if the insured dies within the first two years after the policy is issued or if the death occurred under suspicious circumstances.
A life insurance policy is an important tool to protect your family's financial future. Get started today with a simple needs assessment or try our term life calculator now.