How will my
beneficiary file a death claim?
What
will my beneficiary need to file a death claim?
How much life insurance
do I need?
What's the difference between whole life and term insurance?
What are
the three main types of permanent insurance?
What should I consider in naming life insurance beneficiaries?
Does it make sense
to replace a policy?
What happens if I fail to make the required premium payments?
As a single
person, do I need insurance?
I have the option of retiring early. How can I be sure to make the right
decision?
Is a buyer's guide
available?
How do accelerated
death benefits work?
How will my
beneficiary file a death claim?
The
beneficiary or beneficiary's representative can call 1-800-234-5433 and
ask for Life Claims. We will ask your beneficiary a series of questions
about your policy and the manner and cause of your death. We will
carefully guide the caller through the steps necessary to file the life
insurance claim. A packet will be sent within one business day to the
beneficiary or his/her representative with explicit instructions.
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What will
my beneficiary need to file a death claim?
Keep all life
insurance/annuity policies, telephone numbers of the insurance
companies, your will, and any final instructions in one place that is
known to your immediate family members. Maintain your medical history,
including doctors' names and dates of visits. The life insurance company
may need your medical history at the time of your death. We will also
require a certified copy of the death certificate. A large postage-paid
envelope will be included in the packet to the beneficiary, along with
the letter-writer's name and extension, in the event your beneficiary
needs assistance in completing the claim forms. Our goal is to make this
process as easy as possible for your beneficiary.
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How much life insurance do
I need?
If you are
providing financial support for people who are depending on you, you
most probably need life insurance. For the most part, life insurance
needs can be categorized into two types: immediate cash needs (last
expenses, education needs, etc.) and ongoing income needs. The American
Council of Life Insurers recommends that, as a rule of thumb, an
individual should have five to seven times their income in life
insurance. Amica Life has provided you with an
on-line
life insurance needs calculator to help you determine your specific
needs.
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What's the difference between whole life and term insurance?
Whole life
insurance, the most traditional form of "permanent" insurance, can be
kept in force for as long as you live. The face amount and the premium
(the amount you pay for protection each year) usually are fixed at the
time you buy your policy and stay the same even as you age. The policy's
cash value grows as guaranteed by the schedule in the policy and can be
used as collateral to borrow against your policy. It also provides other
nonforfeiture values which may keep your coverage in force in the event
your policy lapses due to nonpayment of premium.
While permanent insurance is usually recommended as the core of an
insurance program, term insurance is good for people who need coverage
for short periods of time – younger families, say, who need large
amounts of protection for one year, five years, or more. Lower premiums
at younger ages increase as policyholders age and renew their policies.
Benefits are paid only if death occurs during the period covered. If you
stop paying premiums, in most cases the insurance stops. Term policies
generally have no cash value and no residual rights if the policy is
canceled or lapses due to nonpayment of premium.
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What are the
three main types of permanent insurance?
Whole life
(discussed above), universal life, and variable life are all permanent
insurance and can provide lifetime protection and accumulate cash value.
Unlike most whole life policies, the cash value in universal life is
linked to interest rates, and the cash value of variable life is linked
to investment options. With universal life insurance, you can reduce or
increase the amount of the death benefit and vary the amount or timing
of premium payments, subject to policy limitations. Variable life allows
you to allocate your premiums among a variety of investment options
offering varying degrees of risk. The cash value of universal life and
variable life policies is not guaranteed, although some policies set a
minimum death benefit.
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What should I consider in naming life insurance beneficiaries?
(a) Select
a specific beneficiary, rather than having the proceeds of your life
insurance paid to your estate. One of the great advantages of life
insurance is that it can be paid to your beneficiary immediately. If it
is payable to your estate, however, it will have to go through probate
with the rest of your assets.
(b) Always name a "contingent" (or secondary) beneficiary, just in case
you outlive your primary (first) beneficiary.
(c) Be very specific in wording beneficiary designations. Saying "wife
of the insured" could result in an ex-spouse getting the proceeds.
Naming specific children may exclude those born later. If your child
dies before you, do you want the proceeds to go to that child's
children; or do you want that child's portion shared among your
surviving children? Changing the beneficiary designation is easy, but
you have to remember to do it. Due to the various issues involved, an
insurance professional can be an excellent source of information to help
you properly set up your beneficiary designations.
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Does it make sense to
replace a policy?
Think twice
before you do, because in many situations it may not be to your
advantage. Before dropping any in-force policy, consider:
If your health
status has changed over the years, you may no longer be insurable at
standard rates.
Your present
policy may have a lower premium rate than is required on a new
policy of the same type, if for no other reason than that you are
older now.
If you
replace one cash-value policy with another, the cash value of the
new policy may be relatively small for several years and may never
be as large as that of the original one.
You will be
subject to new contestability and suicide exclusion periods.
You should ask your insurance representative
for a detailed listing of cost breakdowns of both policies, including
premiums, cash surrender values, and death benefits. Compare these as
well as the features offered by both policies.
If you decide to cancel, surrender or reduce
the value of the policy you now own and replace it with other insurance,
be sure that:
the agent making
the proposal puts it in writing;
you pass any
required medical examination; and
your new policy is in
force before you cancel the old one.
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What happens if I fail to make the required premium payments?
If you miss a
premium payment, you typically have a 31-day grace period during which
you can pay the premium with no interest charged and during which
coverage remains in force. After that, the company (with your
authorization) can draw from a permanent policy's cash value to keep
that policy in force. In some flexible-premium policies, premiums may be
reduced or skipped as long as sufficient cash values remain in the
policy. However, this will result in lower cash values and, possibly, a
shortened coverage period.
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As a single person,
do I need insurance?
The answer
almost definitely is "yes." You may want to consider these options:
Disability
income insurance – especially important for self-supporting singles
without sizable assets, this can replace a good part of the income
you would lose if you were unable to work because of accident or
illness. If you don't have long-term disability coverage at work,
ask your life insurance representative about an individual policy
designed to replace at least 60 percent of your income.
Health
insurance – if you don't have on-the-job coverage, an individual
policy is your first line of defense against ever-escalating medical
and hospital costs. You can keep premium costs down by electing a
large deductible, thereby "self-insuring" as much as you can afford.
Life insurance –
even if you have no dependents now, you may later. If you buy now
when you are younger and healthier, you can "lock in" coverage at a
reasonable rate.
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I have the option of retiring early. How can I be sure to make the right
decision?
Work out a
detailed budget: mortgage payments, daily living expenses, loan
repayments, college tuition, etc. Will you need a new car in the next
few years? Determine your exact income from all sources. You'll probably
need 75 to 85 percent of your present income to live comfortably in your
retirement. How much can you expect from your company pension? Remember,
Social Security won't start until age 62, and even then, at a lower rate
than it would for normal retirement at 65 or older. Ask if your company
will offset that loss until the normal Social Security retirement age.
Will it offer you an additional bonus for taking early retirement? Also,
look at your health insurance. Health care costs can eat up a major
portion of a retiree's budget. Will your company continue your health
insurance into retirement? If so, will it continue to fund premiums as
costs go up? You can't afford to be uninsured in the years before you
become eligible for Medicare. Even then, Medicare covers only about
one-half of health care costs, so you will need supplemental insurance.
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Is a buyer's guide available?
Most states
require companies to give consumers a buyer's guide to help them
understand life insurance terms, benefits, and costs. Ask your agent for
a free copy.
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How do accelerated
death benefits work?
More than 200
insurers now offer this "living benefits" option to ease the financial
burdens of the seriously ill or incapacitated. It allows policyholders
to receive all or part of the policy's proceeds prior to death under
certain circumstances. Because payments may affect tax status and
Medicare eligibility, and will be deducted from the overall benefits
paid later to beneficiaries, policyholders should thoroughly investigate
using this benefit in advance.
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Have a question? E-mail Us
Industry Resources
American Council of Life Insurers
This Web site offers information on how to shop on-line for insurance
products including long-term care insurance. An interactive personal
financial checkup is also offered to help individuals assess their own
fiscal futures.
Life and Health Insurance Foundation
Find out about life, health, and disability insurance, and their roles
in a sound financial plan.
National Association of Insurance Commissioners
This Web site provides consumers with access to their state insurance
regulators, who protect insurance consumers in their jurisdictions. It
also provides links to publications of interest to insurance consumers.
