Answers to popular questions

Life Insurance

Why to get Life Insurance?

Every few seconds a child or partner loses the relative they are financially dependent on.

If anything happened to you, your life insurance would pay a lump sum to your family to help cover the financial loss of losing you.

Does Life Insurance really pays out?

The only time life insurance doesn't pay out is when you're not 100% open and honest during your application.

Otherwise, you shouldn't worry.

How much does it really cost?

It's free to use our website to find and save on insurance - we'll never charge you for quotes.

Life insurance could cost the same each month as a couple of cups of coffee and the price will remain the same throughout the duration of your policy. Regardless of your age or changes in your health.

What are the types of life insurance?

Term Life
Provides coverage for a specific period of time and pays out a death benefit if the policyholder dies during that time.

Whole Life
Provides lifetime coverage and builds cash value over time, which can be borrowed against or used to pay premiums.

Universal Life
Similar to whole life insurance, but with more flexibility in premium payments and death benefit amounts.

Final Expense
Provides coverage for end-of-life expenses such as funeral and medical costs.

Group Life
Coverage provided to a group of people, such as employees of a company, as a benefit from the employer.

There are other variations but for the majority of people, Term Life is the best choice.

When should I get life insurance?

Life insurance rates increase as you age, so the sooner you get it, the lower your premium will likely be. Applying soon means you can lock in your lowest rate.

Owning life insurance is important if you have just purchased a home and need to cover the mortgage, if you've recently had a baby or have plans to in the future, or if you would like to provide income replacement for your family in the event of your untimely death.

Where to buy a life insurance policy?

Once you’ve compared multiple quotes for life insurance, the next step is to buy your policy. You can buy a life insurance policy directly from a company, affiliated agents, or an independent broker.

Through an independent broker like heycompare and our affiliates: We work for you, offer unbiased advice, and provide a wider array of quotes from many of the best life insurance companies on the market instead of just a single insurer. 

Directly from the insurer: You can also work with a specific insurance company and apply through one of their agents. They’ll be familiar with that company’s products, but you’ll only be able to compare policies from that particular insurer.

Through an affiliated agent: Finally, you can work with an agent who is affiliated with one or more insurance companies. They’ll have access to those insurers’ product guides, but they might work on commission, which could influence their advice and the policies they offer you.

How much life insurance do I need?

It’s different for everyone. In general, you can find your ideal coverage amount by calculating your long-term financial obligations and then subtracting your assets.

The remainder is the gap that life insurance needs to fill.

There also are a few rules of thumb that can help guide you. One easy way is to multiply your annual income by 10. You can also use the DIME formula as a starting point in calculating your life insurance needs.

DIME is an acronym for Debt, Income, Mortgage, and Education.

Debt: Total monetary value of all debt (student loans, credit cards, car loans, etc.) You’ll likely want to include anticipated funeral expenses here.

Income: Take your annual income and multiply it by the number of years your family will need the support (e.g., until your youngest child reaches a predetermined age, such as 18, 21, or 25).
For example, if you make $50,000 per year after taxes and your youngest child is 10, and you want income protection until he or she is 21, then the income formula would be $50,000 x 11 years = $550,000. If you’re a stay-at-home parent, include the cost to replace the services that you provide, such as child care.

Mortgage: Having enough life insurance can help keep your family in your home. With this step, simply add up the remaining balance on your mortgage. If you are renting, consider adding 10 years of rental income to your plan as a substitute.

Education: Estimate the cost of sending your children to college or private school. It is common to estimate $100,000 per child for a four-year university education at a state school. That includes tuition fees, room and board, and books.

What does life insurance exclude?

Although life insurance usually covers nearly all deaths regardless of circumstances, there are some situations where it may not. Here are a few examples of what may be excluded from a life insurance policy.

Suicide: Suicide isn’t always excluded, but most insurance companies will not pay out the death benefit if the suicide occurred within 2 years of the policy’s purchase.

Dangerous activity: If the policyholder dies in what is deemed a dangerous activity, their insurer may not pay out the death benefits. Examples of activities that are often viewed as dangerous include rock climbing, scuba diving, and hang gliding, though what’s considered dangerous can vary greatly depending on the policy’s language.

Illegal activity: If the policyholder dies while engaged in illegal activity, such as a bank robbery, the payout of death benefits is almost always excluded.

Aviation: If the policyholder dies in a private plane crash, it’s likely the death benefit payout will be denied. However, most insurance companies will pay out the benefits if the policyholder dies in a commercial plane crash.

Misstatement of age: If you lie about your age on your policy, the insurance company might not pay out your death benefit, or the death benefit may be changed to reflect your correct age and any change in premium associated with the age correction.

Material misrepresentation: If you knowingly lied about information within your life insurance policy to ensure you’d be approved, the insurer might deny the payout.

How does life insurance pay out?

When the policy owner passes away, the life insurance policy pays out the death benefits to the designated beneficiaries. The beneficiary must file the proper paperwork, usually including a claim sheet to begin the process of the claim.

1. Document collection
There are several important documents the beneficiary should collect to engage the payout. The key forms to have on hand are:
• The certified death certificate. This is crucial to prevent fraud.
• The insurance policy. This details the benefit amount, the names of the beneficiaries, and the policy number.
• The claims form, also known as a “request for benefits.” This document is usually what gets the claim process started and includes information such as cause of death, your relationship to the deceased, and how you’d like to receive your payout.

2. Contact the policy provider
Once the necessary documents are compiled, the next step is to reach out to the insurance company to file your claim. Although there is typically no time limit to do so, the sooner you file the claim, the sooner the payout will arrive.

3. Wait for claim approval
The claims approval timeframe can range from a few days to a couple of months. This is why it’s best to start the claims process as soon as possible.

Do I need life insurance?

Personal finance experts recommend that you have savings and/or coverage that are at least ten times your annual salary, if not more. If you have already built up enough savings to provide that safety net on your own, then you may not need life insurance. If your savings falls a bit short, getting a term or guaranteed issue whole life insurance policy can help protect your family’s future.

Most of our customers are one or more of the following:

Parents: It costs tens of thousands to raise a child to adulthood, not including college tuition. A life insurance policy can help ensure financial security for your family.

Homeowners: A mortgage is likely the most significant debt you will ever take on. If you are a homeowner, consider a life insurance policy that lasts the same length as your mortgage term so your family is not stuck in a financially unsustainable situation.

Partners: You’d do anything for your partner, which means ensuring they are taken care of if you die unexpectedly. Be sure to take into account any shared debt, expenses, and future financial plans.

Students: Your debt doesn’t disappear when you die. If you had a private student loan, your parents or other cosigners might be on the hook for your debt if you pass away.

Business owners: It’s not just your family that depends on you when you own a business. Ensuring your business can still run even after you're gone is a smart move.

Retirees: It’s natural to have concerns with covering your final expense if you’re at or approaching retirement age. A whole life insurance policy can help cover these expenses, giving you and your loved ones valuable peace of mind.

Caretakers: If someone depends on you, like an elderly parent or family member with a disability, what would happen to them if you weren’t around? You may want to consider coverage to make sure they’d be taken care of.

What is a life insurance rider?

A rider is a document that becomes a part of a life insurance policy, which can provide additional coverage or benefits.

Endorsements and amendments are additional documents that can become part of your policy.

They can also provide benefits or confirm changes made to your coverage.

What is a beneficiary?

A beneficiary is a person or trust designated as the recipient of the policy proceeds after the death of the insured.

The beneficiary submits a claim to the life insurance company for the policy proceeds.

You, as the policy owner, can decide who to designate as your beneficiary (or beneficiaries).

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