What is the best type of life insurance to buy?

This is not a simple this one or that one answer. Your 'best' life insurance may be different from someone elses 'best' life insurance. Our agents will help you to determine the best type of insurance for your specific need.

Do I get a discount if both my spouse and I apply?

That’s a reasonable question, since for some types of insurance, you can get better rates by insuring multiple assets under a single company. For life insurance, however, there is no special discount.

Usually, it's more cost effective to shop for coverage for each individual separately. The cheapest insurer for you might not be the cheapest insurer for your spouse, after all. By shopping for each of you separately, we at Wholesale Insurance can get the cheapest life insurance rates for everyone.

Some insurers offer spousal riders and child riders which you can attach to their products to extend your policy's coverage to your spouse and/or children. Unless these riders are joint-and-survivor insurance riders, however, it is still usually cheaper to shop for each individual's coverage separately.

Joint-and-survivor life insurance (also called joint life insurance, survivor life insurance, second-to-die life insurance, and last-to-die life insurance) insures multiple lives under a single policy and pays a death benefit only when the last of the insureds passes on. It's cheaper not only because it provides just a single death benefit for two lives but because it only pays off in the unlikely event that both of the insureds die during the term of coverage.

Do I get a discount if I pay annually?

Technically, no, but buying a life insurance policy on a yearly payment plan is less expensive than buying one on a semi-annual, quarterly, or monthly payment plan. It makes sense that processing fewer payments costs the insurer less. And when the insurer saves money, it passes the savings on to the customer in order to win a competitive edge.

Do you take credit cards?

We don’t take any money from customers at all, and that includes credit cards.

The company that takes your money—the financial company that actually insures you—is called a life insurance carrier. That's the company that receives your premium payments, and while most life insurance carriers do not accept credit cards, some do.

For the first premium payment (your life insurance contract is not binding until you've made this payment), most carriers require a check drawn on a bank account. Thereafter, you can opt for automatic payment (automatic withdrawal).

How do I answer the "tobacco use" question?

You've probably heard the phrase – "Once a smoker always a smoker." If you've smoked for any length of time, then you know how true that statement can be for some of us. We specialize in trying to help smokers obtain the most competitive smoker life insurance by knowing the rules and definitions of all the life insurance companies that offer policies for smokers.

When attempting to get smoker insurance, tobacco use can usually be accurately determined through an insurance exam, which includes a urine specimen, so be sure to answer the tobacco use questions accurately. Although cigarette smokers almost always pay higher rates than non-smokers, occasional cigarette smokers can sometimes obtain "non-smoker" smoker life insurance rates. As a result there are actually great opportunities for lower insurance rates for tobacco users.

Additionally, "other tobacco" users (pipe, cigar, chewing tobacco, dip, snuff, nicotine patches and nicotine gum) are almost always looked at more favorably than heavy or moderate cigarette smokers. If you use tobacco only in this way, you have a good chance to markedly reduce your smoker life insurance rates.

While we in no way promote smoking, we understand the difficulty of trying to break the habit and are willing to help you obtain good smoker insurance through our extensive knowledge of the insurance market place. Please answer the tobacco use questions as accurately as possible so we can have the ammunition to help you find the insurance company with the most competitive rates for your situation.

How is my rate class determined?

When your application arrives at the life insurance company, it is passed to a special employee known as a life insurance underwriter. The underwriter's job is to assess your mortality risk and assign you to a rate class (health class) which reflects that risk.

When evaluating your mortality risk, the underwriter will consider the information you provided on your application and the results of your life insurance medical exam, as well as your medical history and your family history. No, you don't need to send in these materials; part of the underwriter's job is to contact your health care provider and request these records for himself or herself. (The time spent waiting for these requests to be filled is the primary reason why the underwriting process takes as long as it does.)

The underwriter might not stop at just reviewing your medical records, however. If your rate class remains in question (and if your policy is large enough to merit further investigation) the underwriter may consider your driving record, your credit history, and anything else that gives him/her a clue as to your life expectancy.

In choosing a rate class, the underwriter follows guidelines created by the life insurance company. For example, the company might dictate that any breast cancer survivor must undergo regular screenings for a period after remission before being considered for standard rates.

Underwriting guidelines differ from one company to the next, so a thorough understanding of the guidelines for each company will best point to the insurer with the lowest rates. At Wholesale Insurance, we pride ourselves on our underwriting expertise. We specialize in hard-to-place cases and can help you find the best life insurance rates possible.

I quit smoking 3 months ago. Why am I still considered a smoker?

To be considered a non-smoker for life insurance purposes, it is essential that you abstain from smoking for a significant duration. If not so, every human being would be a "non-smoker" except while he or she was actively smoking. That may seem like a silly distinction, but in fact, many smokers quit for short periods of time and then return to smoking.

Suffice it to say that three months is not a long enough abstention to qualify a person for non-smoker life insurance rates at most life insurance companies. Each insurer sets its own minimum requirement for non-smoker life insurance rates, based on its own medical knowledge and financial capacity. One year without smoking is a common benchmark. Some insurers set the bar at three-to-five years.

At least one of the insurers with whom we contract awards a non-smoking rate class to occasional smokers or smokers who have only recently quit. If you smoke, be sure to inform us of your smoking habits forthrightly so that our efforts to find the most competitive insurer for your particular circumstances can be efficacious and you can have the lowest life insurance rates possible.

If I die, can the insurer refuse to pay?

The life insurance industry holds the claim of having never failed to pay a valid claim. In most cases, a death claim is validated quite easily: if the insured is dead and the policy still in force, the claim is valid, and the death benefit will be summarily paid.

How many death claims are actually resisted

Occasionally, an insurer resists paying a death claim is resisted because it believes that the claim is invalid. Of the billions of dollars in death claims each year, though, only 0.00160% is actually contested. That's less than one percent of one percent. And 2/3 of that percentage is eventually paid anyway.*

What makes a death claim invalid

There are two reasons why a death claim could be valid (not counting the possibility that an insured is still alive).

First is that the circumstances of death fall under an exclusion. An exclusion is a clause in an insurance contract which stipulates circumstances which are not covered. For instance, a policy might exclude death while piloting a private plane. If the insured dies while piloting a private plane, then, the policy won't pay out. Any other death, however, will still result in a death benefit. Exclusions can be added to a policy to decrease the cost of insurance.

The second reason is that some fraud was committed in the application for insurance. Perhaps the applicant concealed the knowledge of a serious health problem. Even if the applicant commits fraud, however, the insurance company must catch the misrepresentation before the contestability period ends, and the fraud must be a material misrepresentation.

_{* These data are based on the ACLI tabulations of NAIC data from 2007.}

If I replace my coverage, will the new insurer cancel my existing coverage?

No, your new insurer won't cancel your old life insurance coverage for you.; But you or we can do it. If you decide to cancel your existing policy, hold off until after your new policy is issued and in force. It would be terribly regretable to find yourself vulnerable to an unprotected death because of a delay in your application process or a denial of coverage.

If both your existing and future policies are cash value life insurance, then you should be elligible for a tax-free Section 1035 Exchange. If this is the case, we'll handle all the required paperwork for you. A Section 1035 Exchange allows you to transfer all of the cash value from an existing cash value life insurance policy to a replacement policy, without exposing your gains to income taxes and without treating the cash value transfusion as a premium.

The latter point is of significance because federal regulations place limits on how much may be paid in premiums per year before a life insurance policy loses its tax-advantaged status.

It is wise to review the life insurance market periodically in order to see whether replacing your coverage can save you money. Life insurance rates drop as life expectancies rise, and the market has come out with cheaper products as time passes.

Is my rate guaranteed?

Term life insurance and whole life insurance guarantee your life insurance rates. Universal life insurance does not. Regardless of which of these three types of life insurance you purchase, however, your rate class is guaranteed for as long as the policy is in force.

Term life insurance and whole life insurance

A guaranteed rate does not necessarily mean a fixed rate (one that is constant throughout the force of a given policy). Rather, what is meant is that all of the premiums for the entire lifetime of the policy are set at the time the policy goes in force. They're not calculated at the time they're due.

Standard term life insurance and traditional whole life insurance have level premiums, which means that every premium is in the same amount. However, policies with increasing premiums can also be found for whole life insurance. Modified premium and graded premium life insurance allow you to pay lower premiums initially and make up for that lenience by paying greater premiums later. Still, the amount of each premium is guaranteed from the start of the policy.

Universal life insurance

Universal life insurance does not offer guaranteed life insurance rates. With universal life insurance, you pay whatever amount you please, whenever you please. Your payments increase the cash value of your policy, so making payments is your prerogative.

There is no requirement that you be regular in your payments, but the life insurance company will periodically levy charges against your policy to pay for your cost of insurance and administration, so you had better keep enough money in your policy to cover said charges.

The charges which the insurer makes against your policy are not guaranteed on amount, though they are periodic. Charges vary from one pay period to the next because they are based (in part) on the difference between your policy's face value and your accumulated cash value. The higher your cash value, the cheaper your coverage. The lower your face value (death benefit), the cheaper your coverage.

What "coverage amount" do I need?

The amount of coverage you select should be equal to the financial loss which the death of the insured will impose upon you (or your beneficiary). Because human lives don't equate to monetary values, life insurance shoppers often stumble over the task of choosing an appropriate death benefit, but the process of calculating a proper amount of coverage is actually straightforward with a bit of instruction.

First of all, understand that the financial loss that an individual's death may impose does not always correspond to a loss of income. For instance, a homemaker may not earn wages, but he/she can still be insured because the death of a homemaker can bring a great financial loss on a family. How much will it cost to keep the family functioning without the homemaker? Consider the cost of a nanny, a housekeeper, a chef, etc., and you've got an idea of what financial loss is about.

If your family or business already has sufficient assets to cover all or part of the financial loss, you may not need life insurance, or you may need less than you think. If the family in the foregoing example had a lot of investments, they might choose to liquidate their assets in order to pay the costs of the nanny, housekeeper, and chef, rather than buying a lot of life insurance.

For wage-earners, current income is a good clue as to the financial loss that needs to be covered. When evaluating your coverage amount, however, reflect that the wage-earner's current level of income is probably lower than the level of income that he/she will make in ten years. The financial loss for such a person is really greater than a simple multiple of current income, then, and with inflation eating your assets from the bottom up, it's really important to involve such a factor in your calculations.

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