SLA Insurance Agency - Life Insurance

Life Insurance FAQ

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What is Whole Life Insurance?


	This is life insurance that remains in force during the lifetime of the insured, provided premiums are paid as specified in the policy. Whole Life provides a guaranteed premium, a guaranteed death benefit, and a guaranteed cash value. While a Whole Life policy is in force you may take out a policy loan against the cash value or receive the cash value (less any policy loans and accumulated interest) should you need to surrender the policy. In addition, a Whole Life policy can pay dividends, which may be used to enhance both the death benefit and the cash value or may be used to reduce your premium payment. Dividends are not guaranteed and policy loans accrue interest and reduce the death benefit.

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What is Term Insurance?


	This is life insurance, that pays a death benefit provided the insured dies during a specified period, and premiums are paid as designated in the contract. No death benefit is payable if the insured survives past the end of the term. Since premiums paid are used entirely to cover the cost of insurance, there is no cash value on a term insurance policy. Premiums may increase or decrease, depending on the type of term insurance owned.

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What is Universal Life Insurance?


	This is adjustable life insurance that allows flexible premium payments. Insurance company pays the life insurance benefit if the insured dies before the maturity date, and pays the cash value if the insured is living at the maturity date. A flexible premium is one that may be paid at a scheduled or unscheduled time. When a premium is paid, an expense charge is immediately deducted and the balance is placed in a cash value fund to earn interest at the current rate. Each month, all insurance expense charges necessary to keep the policy in force are paid internally from the cash value, regardless of whether or not the premium was paid. The cost of insurance will increase each year on the policy anniversary based on the attained age of the insured. This is a non–participating policy on which no dividends are payable. A policy will terminate at any time if the cash surrender value is insufficient to pay the monthly deductions. This can happen due to insufficient premium payments, if loans or withdrawals are made, or if current interest rates or charges fluctuates.

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What is Variable Universal Life Insurance?


	This is a form of universal life insurance that combines the premium and death benefit flexibility of traditional universal life insurance and the investment flexibility and risks of variable life insurance. These products are considered securities because the policy owner assumes investment risk associated with the variable investment divisions, whose performance will fluctuate with market conditions. When a Variable Universal Life policy is offered a complete information about the product including charges and expenses will be provided to the insured.

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What is Cash Surrender Value?


	This term refers to the amount payable to the permanent life policy owner upon surrender of the policy. It is equal to the current Cash Value, less any surrender charges that may apply, any monthly contract charges, and any outstanding loans and accrued interest.

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What is Surrender Charge?


	During the surrender charge period of a permanent life policy, an amount of money that is deducted from a policy's Total Accumulation Value if you: Surrender your policy Decrease the face amount of your policy

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	Possibly. Companies may contest statements made in the application up to two years from the effective date of the policy. If there was an omission, inaccurate, or incomplete information on the application that was material to underwriting the risk, the company may rescind the contract, and refund the premiums. Generally, if a company offers a smoker policy, then the death benefit should be adjusted to reflect the amount of insurance that the premium paid would have bought at the smoker rate.

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How do I take out a loan on my policy?


	Loan Value is the amount of cash value that can be borrowed on a policy. A policyowner may be able to make a loan against the cash value of the policy, based on the type of policy owned. A loan allows access to the cash value of the policy, while still maintaining the insurance coverage. When a loan is made against a policy, the death benefit is reduced by the amount of the loan plus any interest that is owed. Loan interest rates vary and specific provisions are generally explained in the policy itself. Generally, a policyowner can request a loan by calling the insurance company.

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What happens if I get a loan from my life insurance policy, and never pay back the interest?


	Unpaid interest is added to the loan balance. If the loan balance ever grows to exceed the amount of policy cash value, the contract will terminate without value. Also, if you should die before paying back any loans made against the cash value of your policy, the outstanding loan balance will be subtracted from the death proceeds.

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Can anyone insure your life?


	No. In order to purchase a life insurance policy on anyone, there must be an insurable interest. A relative who might suffer financial loss if you died, a debtor who may be at risk of repayment, a business partner, a spouse, son, daughter, or parent are examples of those who may have an insurable interest.

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How can I find out if a person who has passed away had any life insurance?


	This Department does not have that information on file. There is not a state agency that maintains or provides this information.

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