How Life Insurance Works
Life insurance is special because it takes a small amount of money, called a premium, and increases it into a large sum of money, called a death benefit or retirement income. Then, it provides that increased value tax-free when a business or family needs it most — upon the passing of a key associate or earner, or as a source of income in retirement.
When you apply for life insurance, whether term or permanent, you will be asked questions about your lifestyle and medical and family history before you’re offered coverage. Qualifying for a policy and the rates you would pay to depend on your designated risk level and health rating (more on this below). These ratings are decided during the underwriting process and medical exam (if required).
Therefore, there two types of life insurance are whole and term life insurance policies. Whole life insurance policies are also known as pernament.
Different Types of Life Insurance Policies
There are different types of whole life insurance policies that you can purchase through us, including:
Final Expense Insurance
Final expense insurance, also known as burial insurance, is a type of insurance policy that is specifically designed to cover the costs associated with end-of-life expenses. These expenses can include things like funeral and burial costs, outstanding medical bills, and other debts that may be left behind after a person passes away.
These policies are often marketed towards seniors because they might be more concerned about leaving a financial burden on their loved ones. However, anyone can purchase a final expense insurance policy, regardless of age.
Also, final expense insurance policies are divided into several types such as:
No Exam Life Insurance
No exam life insurance, also known as “guaranteed issue life insurance” or “simplified issue life insurance,” is a type of life insurance policy that does not require the policyholder to undergo a medical examination before coverage is issued. This means that anyone can qualify for a no-exam life insurance policy, regardless of their health status or medical history.
These policies also typically have lower death benefit limits, meaning that the policy will pay out a smaller amount to the beneficiary in the event of the policyholder’s death.
Despite these drawbacks, no exam life insurance can be a good option for individuals who may have difficulty obtaining traditional life insurance coverage due to health issues or other factors. It can also be a convenient option for those who don’t want to go through the hassle of scheduling a medical examination or providing detailed medical information.
High-Risk Life Insurance
High-risk life insurance is a type of life insurance policy that is designed for individuals who may be considered higher risk by insurance companies due to their health, occupation, or other factors. These individuals may have difficulty obtaining traditional life insurance coverage due to their increased risk of death or may have to pay significantly higher premiums for coverage.
Examples of factors that may make an individual a higher risk for life insurance purposes include:
- Pre-existing medical conditions, such as diabetes or heart disease
- Dangerous occupations, such as working in law enforcement or as a professional athlete
- High-risk hobbies, such as skydiving or extreme sports
- A history of substance abuse or mental health issues
High risk life insurance policies may have higher premiums and may also have lower death benefit limits compared to traditional life insurance policies. However, they can provide an important source of financial protection for individuals who may not be able to obtain coverage through other means.
Simplified Issue Insurance
Simplified-issue insurance policies are typically offered for life insurance, accidental death and dismemberment insurance, and short-term health insurance. These policies are typically quicker and easier to obtain than traditional insurance policies, as they do not require the policyholder to provide medical underwritting.
Policies tend to be more expensive than traditional insurance policies because the insurer is taking on more risk by offering coverage to individuals who may have pre-existing health conditions. These policies may also have lower coverage limits or exclusions for certain conditions.
Guaranteed Issue Insurance
This policy is guaranteed to be issued to any applicant, regardless of their health status or medical history. This means that anyone can qualify for a guaranteed issue insurance policy. Guaranteed issue insurance focuses on covering funeral and burial costs without taking from an inheritance or estate.
Final Expense Insurance Cost
The cost of final expense insurance will vary depending on a number of factors, including the policyholder’s age, health status, and the type of policy chosen. In general, final expense insurance policies tend to be more expensive than traditional term life insurance policies, as they are designed to cover the specific costs associated with end-of-life expenses.
Some other factors that may impact the cost of final expense insurance include:
- The amount of coverage desired: Higher coverage amounts will typically result in higher premiums.
- The type of policy chosen: Whole life insurance policies tend to be more expensive than term life insurance policies, as they offer coverage for the entirety of the policyholder’s life and also have a cash value component.
- The policy term: Some final expense insurance policies may have a fixed term, while others may offer coverage for the entirety of the policyholder’s life. Longer-term policies may have higher premiums.
However, Final Expense Insurance policies can be purchased between 5000$ and 25000$.