Life Insurance Questions

Question 1

How much life insurance coverage do I need?

Accepted Answer

Your coverage needs depend on factors such as your age, financial strength and family circumstances. In general, the earlier you are in life and the more financially dependent your loved ones are on you, the more coverage you need. Here are some key considerations to help you figure out the right amount: Income replacement: Calculate how much income your family would need to maintain their standard of living if you were no longer around. A common rule of thumb is to have coverage that’s five to 10 times your annual income. Debt and expenses: Consider any outstanding debts, such as mortgages, car loans or credit card balances, and add these to the coverage amount. You should also account for ongoing expenses, including child care, education costs and any other financial commitments. Existing savings and insurance: Factor in your current savings, investments and any other life insurance policies you already have. Funeral expenses: Funerals can be expensive and the costs can add up quickly. Insurance helps alleviate the financial burden on your family during a difficult time. Check out our final expense needs calculator to give you a better idea of the coverage amount you may need.

Question 2

How do I balance life insurance coverage and cost?

Accepted Answer

Balancing coverage and cost for life insurance involves finding a policy that provides adequate protection, while fitting within your budget. Here are some steps to help you achieve that balance: Assess your needs: Start by determining how much coverage you need based on factors such as income replacement, debt, future expenses and any other financial obligations. Understand policy types: There are different types of life insurance policies: Term life insurance: Provides coverage for a specified period (e.g., 10, 20 or 30 years). It is generally more affordable and suitable if you need coverage for a specific time frame. Whole life insurance: Offers lifelong coverage with a savings component that builds cash value. It is typically more expensive, but premiums are locked in on a set schedule with a portion of your premiums going toward cash value that grows over time. Universal life insurance: Combines flexible premiums with a cash value component. It allows you to adjust the coverage amount and premiums but can be complex and variable in cost. Consider your budget: Based on your needs assessment, decide on a coverage amount that provides adequate protection but does not exceed what you can afford. Ensure the premium fits within your monthly or annual budget without compromising your financial stability. Balancing coverage and cost requires careful planning and consideration, but by taking these steps you can find a life insurance policy that offers the protection you need at a price you can afford. We can work with you to identify an affordable life insurance policy that meets your familys coverage needs.

Question 3

How do I apply for life insurance?

Accepted Answer

The first step before applying is to determine how much coverage you need and what type of life insurance policy suits your goals (e.g., term life, whole life or universal life). Consider factors like income replacement, debt, future expenses and other financial obligations. Several of Mutual of Omaha life insurance products allow you to get a quote or apply online. For more complex coverage needs, you should discuss your unique situation with an agent and build a policy that will protect your family. Compare our life insurance products to get started. It is easy to get a quote online, or if you prefer, you can contact an agent.

Question 4

What should I consider when selecting a life insurance policy and provider?

Accepted Answer

First, the insurance policy you are considering has to meet your needs and budget. Does the policy have the benefits you are looking for? Is the policy affordable? Does it have the coverage amount you desire? Second, a companys strength and stability are key in choosing an insurance company to do business with. Has the company been in business a long time? Is the company reliable? Does it have a good track record of paying claims? At Mutual of Omaha, we understand the importance of offering the right plans to protect you and your family. And we are here when you need us with prompt and reliable claims payments, most of which are paid within 24 hours. We are also proud of our strong ratings, which showcase Mutual of Omaha and United of Omaha Life Insurance Company solid financial strength. You can rest assured you will be cared for now and for years to come.

Question 5

What does “underwritten by” mean?

Accepted Answer

When a life insurance policy is described as underwritten by (Insurance Company Name), it means the named insurance company is responsible for evaluating the applicant's risk and setting the premium rates. The company handles the underwriting process, which includes assessing health information, lifestyle and other relevant factors to determine the policy terms. The underwritten company is responsible for the payment of claims and financial obligations for the policies it underwrites. Our underwriters work closely with insurance professionals to ensure they have the proper documentation when reviewing an application.

Question 6

What's the difference between whole life insurance and term life insurance?

Accepted Answer

Whole life insurance and term life insurance are two of the most common types of life insurance and they differ significantly in terms of coverage, cost and features. Your choice between whole life and term life insurance will depend on your financial goals, coverage needs and budget. If you need affordable, temporary coverage for a specific period, term life insurance might be more suitable. Here’s a breakdown of the key differences: Whole life insurance Coverage duration: It will last the entire lifetime of the policyholder, as long as premiums are paid. Your beneficiary may use the proceeds for any purpose, funeral expenses, unpaid medical bills, credit cards bills, mortgage payments and more. Premiums: Premiums are generally higher compared to term life insurance. However, they are typically fixed and do not increase as you age. Cash value: Whole life insurance includes a cash value component that accumulates over time. You can borrow against this cash value in case of an emergency. Money can be borrowed against the policy at an interest rate of 5.66%. And any unpaid loan balance will be subtracted from the benefit amount in the event of death. This might be a good option if you want coverage for end-of-life expenses. Term life insurance Coverage duration: Term life insurance provides coverage for a specific period or term (e.g., 10, 20 or 30 years). Once the term ends, the coverage expires. Term life is designed to replace lost income in the event of an unexpected loss of life. Premiums: Premiums for term life insurance are generally lower than those for whole life insurance. They are often fixed for the length of the term, but the cost can increase significantly if you renew for another term or as you age. Cash value: Term life insurance does not have a cash value component. It is purely a protection policy with no savings feature. This might be a good option if you want to replace lost income in the event of an unexpected loss of life.

Question 7

What is the difference between whole life insurance and universal life insurance?

Accepted Answer

Whole life and universal life are both types of permanent life insurance, so they have many characteristics in common. Both whole life and universal life provide a death benefit for the rest of the insured person’s life. However, they differ in terms of flexibility, cost and how they handle cash value. Here’s a detailed comparison of the two: Whole life insurance Coverage duration: It will last the entire lifetime of the policyholder, as long as premiums are paid. Your beneficiary may use the proceeds for any purpose, funeral expenses, unpaid medical bills, credit cards bills, mortgage payments and more. Premiums: Premiums are generally higher compared to term life insurance. However, they’re typically fixed and don’t increase as you age. Cash value: Whole life insurance includes a cash value component that accumulates over time. You can borrow against this cash value in case of an emergency. Money can be borrowed against the policy at an interest rate of 5.66%. And any unpaid loan balance will be subtracted from the benefit amount in the event of death. This might be a good option if you want coverage for end-of-life expenses. Universal life insurance Coverage duration: Universal life insurance also provides lifetime coverage as long as the premiums are paid. However, it offers more flexibility in terms of premium payments and death benefits compared to whole life insurance. Premiums: Premiums in universal life insurance are flexible and the premium can be increased. Cash value: Universal life insurance also has a cash value component, but it grows based on a variable interest rate, which can change periodically based on market conditions. This might be a good option if you want flexibility, but are okay with premiums increasing.

Question 8

How can I use my guaranteed whole life insurance benefits?

Accepted Answer

The primary purpose of a whole life policy is to provide a guaranteed sum of money to your beneficiaries upon your death. Your benefits can be used to cover: Burial/funeral expenses: Grave plot, grave opening and closing, headstone/marker, cremation, funeral home services, caskets, urns and more. Final expenses: Medical expenses, legal and administrative costs, estate taxes, outstanding debts and credit card debt. Provide financial support: Your loved ones can utilize the benefits to address their financial needs, offering you peace of mind. Having a plan does not just help with the money part — it also takes a huge burden of your family during their time of grief. It is often wise to discuss these costs with a funeral director to understand what options are available and how they fit within your budget. As a gauge, the average cost of a funeral is more than $9,000, according to the National Funeral Directors Association. As you continue paying premiums on your policy, you also receive benefits, including the ability to access the cash value. Money can be borrowed against the policy at an interest rate of 5.66%. You will also receive benefits through Mutual Perks, a program that offers discounts on healthy living products and services.

Question 9

What factors affect the price of guaranteed whole life insurance?

Accepted Answer

In general, whole life is a highly affordable type of insurance and the premium will never increase. The cost of guaranteed whole life insurance and the calculation of monthly premiums is simple. There are only three factors impacting the cost of monthly premiums: Age: Current age at the time of issue. Younger policyholders typically pay lower premiums because they are considered lower risk. Gender: Premiums may vary based on gender due to differences in life expectancy. Coverage amount: The higher the death benefit, the higher the premium. Apply early for life insurance because policy rates increase each birthday. Once you apply, your premiums are locked in for life.

Question 10

What is the process for applying for guaranteed whole life insurance online?

Accepted Answer

It is just three simple steps to apply: Enter your personal information (your name, address, phone number and email address). Name your beneficiaries. People frequently choose to name their spouse or adult children. You can change your beneficiaries at any time. Choose your preferred payment method and submit your application. Coverage is immediate once payment is confirmed and there is no waiting period.

Question 11

What is whole life insurance cash value and how can I use it?

Accepted Answer

Cash value is a feature of permanent life insurance policies, such as whole life insurance. It represents the amount of money accumulated in the policy that can be accessed while you are still alive. Here is a more detailed explanation: Accumulation: Every time you pay your premium, part of that payment goes to the cash value. The cash value of your policy builds over time through fixed interest rates. This is similar to how a savings account works. Loans: You can access your cash value if needed at 5.66%; however, withdrawal fees may apply. If you choose to use the cash value, your graded death benefit will be decreased should you not pay the amount borrowed back in full. You are still responsible for paying the interest rate on the loan even if you choose not to repay the loan. You can use the cash value for an emergency expense, to help pay your premiums and to supplement your retirement portfolio. Understanding how cash value works and how it fits into your overall financial plan can help you make the most of your life insurance policy. Always consult with an insurance advisor to fully understand the implications and benefits specific to your policy.

Question 12

Why do guaranteed whole life policies have lower benefit amounts?

Accepted Answer

A guaranteed whole life insurance policy is different from other policies in the market. It typically provides some peace-of-mind, while helping to pay for final expenses, leftover medical bills and small debts. This policy is not intended to replace lost income or leave a financial legacy. The lower benefit amount is also due to the policy providing lifelong coverage without any health questions or medical exam and providing a cash value benefit while the insured is alive. If you already have a guaranteed whole life policy with a benefit amount of less than $25,000, you may be eligible to purchase more coverage. Each insured may own up to $25,000 of this type of coverage.

Question 13

What if I choose to cancel my whole life insurance policy?

Accepted Answer

If you choose to cancel your whole life insurance policy, you could leave your loved ones without financial protection in the event of your death. This means they could be left with your final expenses, unpaid medical bills, credit card bills and more. Here is what you should consider when deciding to cancel your policy: Within the 30-day grace period: You will receive a refund on premiums paid. This is due to the free-look period provided to allow new policyholders time to carefully examine the terms, coverage and benefits of their new policy to ensure it meets their needs and expectations. After the 30-day grace period: You will not receive a full return of premiums paid. You may receive a cash value if you have held the policy long enough to build up value. In summary, canceling a whole life insurance policy involves understanding the potential loss of coverage, the impact on cash value and any associated tax or financial consequences. Should you choose to return, you will need to apply for a new policy. Exploring alternatives and consulting with professionals can help you make an informed decision that best meets your needs. Call us at 800-377-9000 to speak to a sales specialist.

Question 14

When does my whole life insurance coverage start and how long does it last?

Accepted Answer

Your coverage starts as soon as we receive your application and first month premium. Your coverage lasts your entire lifetime, as long as premiums are paid each month. This policy includes a graded death benefit. During the first two years, if you die from natural causes (any cause other than accidental), your beneficiaries will receive all premiums paid, plus 10%. After two years, the full benefit is paid for death due to all causes. For accidental death, independent of sickness and all other causes, full benefits are paid from the first day your policy is issued. (All benefits will be paid less any outstanding policy loan.) The death benefit will not be paid if the death of the insured results from suicide, while sane or insane, within two years from the date the policy is issued (one year in North Dakota and one year in Minnesota). However, all premiums paid for the policy would be returned.

Question 15

What is the difference between term life insurance and universal life insurance?

Accepted Answer

Term life insurance and universal life insurance are two different types of life insurance policies, each with unique features and benefits. Here is a comparison to help you understand their differences: Term life Coverage duration: Term life insurance provides coverage for a specific period or term (e.g., 10, 20 or 30 years). Once the term ends, the coverage expires. Term life is designed to replace lost income in the event of an unexpected loss of life. Premiums: Premiums are often fixed for the length of the term, but the cost can increase significantly if you renew for another term or as you age. Cash value: Term life insurance does not have a cash value component. It is purely a protection policy with no savings feature. This might be a good option if you want to replace lost income in the event of an unexpected loss of life. Universal life Coverage duration: Universal life insurance also provides lifetime coverage as long as the premiums are paid. However, it offers more flexibility in terms of premium payments and death benefits compared to term life insurance. Premiums: Premiums in universal life insurance are flexible and the premium can be increased. Cash value: Universal life insurance also has a cash value component, but it grows based on a variable interest rate, which can change periodically based on market conditions. This might be a good option if you want flexibility, but are okay with premiums increasing. Choosing between term life and universal life insurance depends on your financial goals, coverage needs and how much flexibility you want in your policy. Term life is often preferred for short-term needs or budget-friendly coverage, while universal life is suitable for those seeking permanent protection with the ability to adjust coverage and premiums over time.

Question 16

How affordable is term life insurance?

Accepted Answer

Term life insurance is the most affordable life insurance product per dollar of coverage, which is why it is often a preferred option for people who are just entering their prime earning years, allowing them to protect against loss of income. In addition to the death benefit amount, factors that may affect the price include your age at the date of issue, gender, term duration, overall health and tobacco use. Its cost-effectiveness stems from several factors: Limited duration: Term life insurance provides coverage for a specific period (e.g., 10, 20 or 30 years). Since it does not offer lifelong coverage, the risk for insurers is lower compared to permanent policies like whole or universal life insurance. No cash value: Term life insurance does not build any cash value or have a savings component. The premiums paid go entirely toward the death benefit and insurance coverage, making the policy more affordable. Term life insurance can be a cost-effective solution for individuals needing substantial coverage for a specific period. The premiums for term life insurance are often fixed for the duration of the term, which helps keep costs predictable and manageable.

Question 17

What factors affect the price of term life insurance?

Accepted Answer

As with any other life insurance product, the price of term life insurance is affected by the death benefit amount as well as your predicted life expectancy. Some factors that we take into account include: Age: Generally, the younger you are when you purchase the policy, the lower your premiums will be. This is because younger individuals are considered lower risk. Gender: Rates are higher for men because they have a lower life expectancy than women. Tobacco use: You will receive lower premiums if you do not use tobacco products. Overall health: Your current health condition and medical history play a role in determining your premiums. Individuals with preexisting conditions or a history of serious health issues may face higher premiums. When evaluating a term life insurance policy, it is important to consider how it aligns with your financial goals and needs. Working with a financial advisor or insurance professional can help you understand the potential costs and benefits based on your specific situation.

Question 18

What factors affect the price of universal life insurance?

Accepted Answer

As with any other life insurance product, the price of universal life insurance is affected by the death benefit amount as well as your predicted life expectancy. Some factors that we take into account include: Age: Generally, the younger you are when you purchase the policy, the lower your premiums will be. This is because younger individuals are considered lower risk. Gender. Rates are higher for men because they have a lower life expectancy than women. Tobacco use: You will receive lower premiums if you do not use tobacco products. Overall health: Your current health condition and medical history play a role in determining your premiums. Individuals with preexisting conditions or a history of serious health issues may face higher premiums. A universal life policy will include a minimum and maximum premium amount, and you have the flexibility to choose a payment amount within that range. Universal life insurance offers flexibility in premiums and coverage, but this flexibility can lead to variations in cost based on how the policy is managed and how external factors affect the policy's cash value and costs. When evaluating a universal life insurance policy, it's important to consider these factors and how they align with your financial goals and needs. Working with a financial advisor or insurance professional can help you understand the potential costs and benefits based on your specific situation.

Question 19

What are the steps to own a universal life policy?

Accepted Answer

Owning a universal life insurance policy involves several steps, from assessing your needs to finalizing the policy. On average, you will have a policy about a month after you apply, assuming you are approved. Here is a guide to help you through the process: You simply need to contact an agent to help you complete your application for review. If a medical examination or more questions are required, we will contact you within a week. We will evaluate your application after all requirements are submitted. If approved, your insurance policy is then issued and delivered to you. Call us at 800-377-9000 to speak to a sales specialist.

Question 20

How can an agent help me with universal life insurance?

Accepted Answer

An insurance agent can be an invaluable resource when purchasing life insurance. Because universal life is such a personalized product that needs to be tailored to your individual needs, we require you work with an agent instead of offering an online universal life insurance quote. Here is how an agent can assist you through the process: Your agent will ask you questions about your family, life situation and financial needs to help you develop your goals. The agent will then clarify your options and help you choose the right policy to achieve your goals. Your agent will be a continued resource, helping answer any questions you have about the policy, now and in the future. An insurance agent helps you purchase life insurance by assessing your needs, explaining policy options, comparing quotes, guiding you through underwriting and the application process, and providing ongoing support and advice. They simplify the complex process of buying life insurance and ensure that you select a policy that aligns with your financial goals and provides the coverage you need. Call us at 800-377-9000 to speak to a sales specialist.

Life Insurance Questions

Life Insurance Questions

Give us a call