Life Insurenace


Why do you need Life Insurance

A life insurance policy is a contract with an insurance company. In exchange for premium payments, the insurance company provides a lump-sum payment, known as a death benefit, to beneficiaries upon the insured's death. Typically, life insurance is chosen based on the needs and goals of the owner.

In general, there are three main types of life insurance policies: term life, whole life, and universal life.

Term life is a policy that covers you for a set period of time, typically 10, 15, 20, or 30 years. Once the policy expires, so does the coverage.
Whole life policies provide permanent coverage that lasts a lifetime as well as guaranteed premiums and a guaranteed cash value.
Universal life insurance also provides permanent coverage and a cash value, as well as more flexibility in premiums, death benefits, and investing.

We didn’t include accidental death insurance in this article because for most folks, this type of insurance is best used in addition to another type of life insurance policy. In fact, many insurers offer accidental death riders (add-ons).

Fully underwritten life insurance

Life insurance is an agreement between the policy owner and the insurance company. In exchange for paying premiums, the insurer agrees to take on the financial risk of your death, up to the agreed-upon death benefit.

So how much does it cost to lift that risk off your shoulders and place it onto the insurer? That depends on factors such as the insured person’s age, lifestyle, and health.

To fully underwrite a policy and arrive at a price for coverage, insurers need to measure each of these factors. (Check out our life insurance rates by age article to see the sorts of prices they come up with). Measuring health in a fully underwritten policy typically means submitting to a medical exam.

The insurer usually pays for this exam, which a technician can conduct at your home or office at your convenience. The technician may draw blood, take a urine sample, ask medical questions, and more.

Unfortunately, scheduling an appointment and reviewing test results can lengthen the application process to one or more weeks. You won’t be insured in the meantime, and many folks are too busy to schedule an exam right away.

And let’s face it: a medical exam doesn’t sound like a great way to spend an afternoon, does it?

So why in the world would you want to take a medical exam? Because if you’re in good health, insurers are more likely to give you a better rate. See for yourself by checking out our life insurance quotes page.

Having more information about your health allows an underwriter to feel more confident in estimating their risk level. When insurers can underwrite with confidence, they don’t have to add as large a margin of error into rates.

Unfortunately, if you have preexisting medical conditions, an exam could result in a higher rate than if you chose a no exam policy instead.

No medical exam life insurance

No exam policies, also known as simplified life, usually cost more than exam required policies. Still, there are several reasons someone might choose the former. The application process is typically much shorter (sometimes just minutes long), and you may be able to complete it online.

Additionally, people with health issues may especially benefit from a no medical exam policy.

To keep rates low for healthy folks, many insurers hesitate to cover people with significant health challenges. Insurers that do cover these folks usually do so at much higher prices.

No medical exam life insurance can be a real boon for those who’ve been turned down for fully underwritten policies in the past. Unfortunately, not all companies offer life insurance without a medical exam. Those that do may offer it only for term life.

Luckily, we’ve put together of the best no exam life insurance companies to help you find a great insurer and avoid getting stuck with a needle.

Term life insurance

Term Life Insurance policies typically provide the most bang for your buck.

While it’s not always the case, we find term insurance gives most people exactly what they need: a substantial death benefit later without making you turn your pockets out today.

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So what is term life insurance? In a nutshell, it’s a straightforward insurance policy with typically low premium payments for coverage that ends after a certain period.

Most folks choose 10-, 15-, 20-, 25-, or 30-year terms because that lines up with when their youngest leaves the nest or the final mortgage payment leaves their bank account.

Choosing the right term could help you avoid leaving loved ones with a pile of bills when you’re gone—without adding much to that stack in the meantime.

In short, term life allows people to protect loved ones during higher-risk periods, such as child-rearing years or while they build up savings to cover final expenses. And the best part? Many people can get this coverage for the cost of eating out once a month.

Because term life coverage ends after a certain period, however, most people outlive their insurance. In fact, some experts say the number of term life policies that ever pay out is just 1%–5%.1 Unless you purchase a Return of Premium (ROP) rider (more on that later), you don’t get those premiums back.

As a result, some folks see term life as wasteful and opt for permanent life insurance with a cash value instead.

Whole life insurance

Whole life insurance is well named: it’s designed to cover you for your entire life instead of ending after a number of years like term life does. As such, whole life can cost more and be more complicated than term life.

Many folks treat their whole life policy as an investment.

As a type of permanent life insurance policy, whole life builds cash value that grows as you pay your premiums.

Many folks want to know which is better: term life vs. whole. Term life is straightforward, life insurance designed to cover a temporary need. Whole life is designed to cover you for life while simultaneously providing a small return in the form of cash value.

Whole life premiums are usually much higher than even the most extended term life policies for the same death benefit.

In part, the higher price tag is because you’re locking in the same rate for life. The possibility of death increases as you age, especially as you approach and hopefully surpass average life expectancy.

A policy’s cash value is another reason whole life insurance is more expensive than term life. A portion of your premium goes into a separate account as your cash value.

The cash value portion of your policy is yours to keep if you cancel the policy (you’ll be taxed on any value above the total paid). Or you can take out a policy loan against your cash value.


Find the right policy with our Life Insurance

Life insurance is important at any age, but it’s top-of-mind for senior citizens. You may have heard that life insurance premiums, options, and available policies can change as you get older, and that’s true. But you can find life insurance to meet your needs at any age, so that you and your family will have peace of mind, knowing you’ve planned for the future.

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