What is Life Insurance?
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When you hear the words “life insurance”, it can be a bit of an intimidating phrase. Understanding what it means, what’s involved, what kind of coverage you need, and why you even need life insurance in the first place can feel overwhelming—especially when there are so many other things on your plate! But here’s the thing: life insurance is important. It provides financial security for your family in case something should happen to you, giving them peace of mind that if tragedy strikes they will still have resources to rely on. We’re here to break it down for you—from what it is to how much coverage is necessary and what type of policy best fits your needs—so let’s dive into some knowledge about life insurance!
What is Life Insurance?
A Life Insurance Policy is a contract (a unilateral contract) between the Insurance Company and the Owner of the policy where the Insurer promises to pay what is known as a death benefit, typically as a lump sum, to whomever you name as a beneficiary upon the death of the Insured while the contract remains in force.
Who are the Parties involved in a Life Insurance Contract?
There are several Parties to the Life Insurance Contract that are important to be aware of:
- The Insurer also referred to as the Life Insurance Company or Carrier, creates the life insurance products (contracts) and pays the benefits to the beneficiaries on the contract.
- The Agent is an insurance licensed representative who is contracted by the insurer to sell their products.
- The Owner has all of the rights to the Life Insurance policy and can; change the beneficiaries, change the payor, stop payment, borrow from policy values if any, transfer ownership, and much more.
- The Insured is the person whose life the insurance policy has been purchased on.
- The Payor is the person or entity responsible for paying the life insurance premium.
- The Beneficiary(ies) are the people or entity to whom the death benefit will payout to if the insured were to pass away. At the time of application, they must be someone who would suffer a financial loss if the insured passes away.
How does Life Insurance work?
First, you have determined the amount of life insurance you want (the death benefit), then you will need to apply for life insurance. Once you apply, you will need to qualify for the death benefit chosen, both financially and medically. Once you have completed the application process and the Life Insurance Company has made an underwriting offer to you, all that is left is for you to accept the offer and set up your payment.
Remember when we said, “Life insurance is a Unilateral Contract”? This is where that works in your favor. As long as you told the truth in your application and continue paying your premiums, the insurance company is obligated to pay the death benefit you qualified for and paid for, to the beneficiaries you chose, in the percentage you stated. These benefits payout even if your health or lifestyle has changed AFTER you applied and were approved. Most often these benefits also payout income tax-free which is part of what makes Life Insurance so unique and attractive. This makes it important that you update your beneficiary information every couple of years so the death benefit pays the way you want it to.
What are the different types of life insurance?
You may hear life insurance called by many different names but the different types of life insurance are generally categorized into two categories; Term Life Insurance and Permanent Life Insurance.
Term Life Insurance received its name because you are buying a death benefit for a specific number of years and typically your premium and death benefit is guaranteed to be the same throughout that specific timeframe. For example, the common term lengths you will see are 10-year term, 15-year term, 20-year term, 25-year term, and 30-year term. Term Life Insurance is the most affordable coverage option and is a good solution when you have a known timeframe of need that you will likely not need coverage beyond that point. You can click here to run a term life insurance quote.
Whole Life Insurance is often referred to as a “Permanent Policy”. This is because a Whole Life Insurance Policy is designed to stay in force through your life expectancy (often to age 121). The typical Whole Life contract will guarantee that your policy will endow (cash value in the policy will equal death benefit) at age 100 or 121 or more depending on the company. This type of contract also has guaranteed cash growth, and non-guaranteed dividend-based cash growth. Whole Life is often more expensive than Term, Universal Life, or Indexed Universal life due to the contractual guarantees. Whole Life is attractive for its guarantees and can provide predictable cash value and death benefits.
Universal Life Insurance is another type of policy also referred to as a “Permanent Policy”. This is because the typical Universal Life contract will accumulate cash value at a fixed interest rate and as long as there have not been loans against the policy or withdrawals taken out of the policy, it is designed to stay active past typical life expectancy. Through product innovation and design, there are now Universal Life contracts that can guarantee your that your death benefit last as far as age 120. Universal Life is more expensive than Term Life Insurance, but often less expensive compared to Whole Life Insurance or Indexed Universal Life Insurance. Universal Life is attractive for its flexibility and can provide competitive cash value accumulation.
Indexed Universal Life is another type of life insurance that is referred to as a “Permanent Policy”. This is because the typical Indexed Universal Life contract will accumulate cash value and as long as there have not been loans against the policy or withdrawals taken out of the policy, it is designed to stay active past typical life expectancy. Indexed Universal Life is all called “Indexed” because cash value accumulates inside the policy based on the growth of an Index, such as the S&P 500. Through product innovation and design, there are now Indexed Universal Life contracts that can guarantee your premiums and your death benefit as far as age 120. Universal Life has gained and maintained popularity due to its upside potential for cash growth and flexibility of the contract as well.
Variable Universal Life is another type of life insurance referred to as a “Permanent Policy”. This is because the typical Variable Universal Life contract will accumulate cash value and as long as there have not been loans against the policy or withdrawals taken out of the policy, it is designed to stay active past typical life expectancy. Variable Universal Life is all called “Variable” because cash accumulates inside the policy based on the growth of Sub-accounts. These sub-accounts, though they may seem like they are mutual funds, they are not. They do however function similarly and are based on the underlying securities or markets for the investment. These Sub-accounts also carry a fee for the investment company managing them. Through product innovation and design, there are now Variable Universal Life contracts that can guarantee your premiums and your death benefit as far as age 120. You need to work with a Registered Representative of a broker-dealer to purchase Variable Universal Life Insurance.
What does Life Insurance cover?
Life Insurance provides peace of mind to your loved ones or business partners. In our education article 37 Uses of Life Insurance we reference may more uses for life insurance, but here are a few popular reasons people like you buy life insurance:
- Mortgage Replacement
- Debt Elimination
- Income Replacement
- Education Funding
- Funeral Expenses
- Estate Planning
- Buy-Sell Agreements
- Key Person Insurance
- Chronic Illness
- Critical Illness
- And more!
How do I Buy Life Insurance?
Thankfully we have made buying life insurance fast and easy, the entire process takes less than 10 minutes for most. Here are 5 easy steps to buy life insurance through Quote Bot:
Step 1: Start a quote. This process takes less than a minute because we need very little information to instantly show you a quote that you can customize. You just need to know your name, date of birth, state, general health, and tobacco status. We always send you a link to this quote for you to refer back to.
Step 2: Continue application. On your quote, we provide a link to continue to the application. This brings your first through a short pre-qualification so you know if you’re expected to qualify. This process can be as fast as two minutes to complete.
Step 3: Complete application. Once you see the pre-qualification results you can complete the application. This process takes between 5-10 minutes depending on your health history and customizations chosen. You will receive another instant verification of your expected eligibility before you sign your application. You will also put your payment information in on this step, but you are not charged until the insurance company has approved your signed application.
Step 4: Sign your application. After you received your approval you will be able to instantly electronically sign your application. Once you finish your signatures, we bring you back to the final decision page and the Insurance Company will let you know within 90 seconds of your approval status. The insurance company will send your policy for electronic delivery after you’ve been approved!
THAT’s IT! It really is that simple and for most, this can be completed from beginning to end in 10 minutes or less.
Which Type of Insurance is right for you?
Everyone has their own needs, wants, and wishes for buying life insurance. Ultimately the best life insurance policy is the one that pays out to your beneficiaries when you need it to. Working with a Quote-Bot will help you find a budget-conscious life insurance plan to make sure your family members or business partners are properly taken care of when you need them to be. Here are two of our most popular term life insurance products.
How much does life insurance cost?
Age | Gender | $100,000 | $250,000 | $500,000 | |
25 25 25 | Female Male Instant Decision | $7.66 $9.40 Instant Decision! | $10.01 $14.36 Instant Decision! | $13.92 $22.62 Instant Decision! | |
35 35 35 | Female Male Instant Decision | $8.53 $9.40 Instant Decision! | $12.18 $14.36 Instant Decision! | $18.27 $22.62 Instant Decision! | |
45 45 45 | Female Male Instant Decision | $12.09 $14.62 Instant Decision! | $20.23 $24.58 Instant Decision! | $34.37 $43.07 Instant Decision! | |
50 50 50 | Female Male Instant Decision | $17.05 $20.79 Instant Decision! | $29.15 $36.76 Instant Decision! | $51.77 $64.38 Instant Decision! | |
55 55 55 | Female Male Instant Decision | $23.84 $29.58 Instant Decision! | $42.20 $53.29 Instant Decision! | $73.52 $93.53 Instant Decision! | |
60 60 60 | Female Male Instant Decision | $34.02 $46.11 Instant Decision! | $61.77 $84.83 Instant Decision! | $107.88 $148.77 Instant Decision! | |
65 65 65 | Female Male Instant Decision | $51.94 $70.12 Instant Decision! | $95.48 $129.85 Instant Decision! | $164.87 $224.90 Instant Decision! |
These rates are based on a Male and Female in the State of Colorado, Best underwriting class, for 10 Year Term Insurance. This is not and offer, you will need to run your own quote and completed the application to verify your rates.
Fast Quoting Process
Our quoting process takes about a minute to complete and view your quote. We also instantly update your quote with any changes you would like to see, without having to start all over!
Instant Decision Underwriting
For many, you can go from our quote to a completed purchase in less than 10 minutes! Our Instant Decision process keeps you from having to wait around to see if you qualify.
Solutions That Fit Your Needs
We pride ourselves in providing high-quality and well-planned solutions no matter how big or small your need is. Our solutions will bring you from concept to completed purchase in minutes!
Frequently Asked Questions
Nuestro proceso y nuestras soluciones están diseñados para ayudar a eliminar la necesidad de hablar con un agente. Pero sí, puede hablar con un agente si lo desea. Puede utilizar la función de chat de esta página o llamar y hablar con un agente.
Our process and solutions are designed to help remove the need to talk with an agent. But yes, you can speak with an agent if you like. You can use the chat feature on this page or call and speak with an agent.
El impago de una prima es un asunto importante que hay que tener en cuenta y, afortunadamente, existen programas que le ayudan a recibir una notificación en caso de impago. Normalmente, dispone de un periodo de gracia de unos 30 días para efectuar el pago. La compañía de seguros le enviará un correo electrónico, pero también puede enviarle correo en papel, para informarle del problema de pago y darle instrucciones sobre cómo resolverlo. Si no efectúa ningún pago durante el Periodo de Gracia, tendrá que volver a someterse al proceso de suscripción para mantener su cobertura.
Missing a premium is an important thing to know about and thankfully there are programs in place to help notify you if you do miss a payment. Typically you have around a 30-day grace period to make your payment. The insurance company will email you but may send you paper mail, making you aware of the payment issue and giving you instructions on how to resolve it. If you do not make a payment during the Grace Period, you will have to go through underwriting again to keep your coverage.
Si tiene entre 18 y 50 años y solicita una prestación por defunción de hasta 1.000.000 $, o si tiene entre 51 y 65 años y solicita una prestación por defunción de hasta 500.000 $, es posible que no necesite someterse a un examen. Cuando presenta una solicitud fuera de esas edades o prestaciones por defunción, se le exige un examen médico. No te preocupes, te ayudaremos a organizarlo. Estos exámenes son obligatorios (si son necesarios) para que la compañía de seguros pueda comprobar si cumple los requisitos y el importe de la prima.
If you are age 18-50 and applying for up to $1,000,000 of Death Benefit, or ages 51-65 applying for up to $500,000 of Death Benefit, you may not need an exam! When you apply outside of those death benefits or ages, you are required to have a medical exam. Don’t worry, well will help arrange that for you. These exams are required (if needed) so the insurance company can verify your eligibility and your premium amount.
Decisión instantánea significa que le comunicaremos inmediatamente (posiblemente hasta en 90 segundos) si ha sido aprobado o no, si necesitamos más información, si ha sido rechazado o si necesita un examen. No hace falta esperar mucho para obtener respuestas.
Instant decision means that we will let you know immediately (possibly up to 90 seconds) whether or not you are approved, if we need more information, if you were declined or if you need an exam. No need to wait around very long for answers.
Nuestro proceso de Decisión Instantánea tarda 10 minutos en completarse para la mayoría. Algunos son más rápidos, otros más lentos. La buena noticia es que una vez que haya terminado de rellenar su solicitud, le daremos las respuestas al instante o en un plazo de 90 segundos más o menos. Es rápido.
Our Instant Decision process takes 10 minutes for most to complete. Some are faster, some are slower. The good news is that once your done with your application, we give you answers anywhere from instantly or up to a 90 second wait or so. It’s Fast!
No. Nos esforzamos por ofrecer una solución que le permita ir de principio a fin en cuestión de minutos sin necesidad de hablar con un agente.
No. We strive to provide a solution that allows you to go from beginning to end in minutes without the need for speaking to an agent.
