From D.O.K. Insurance Agency
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Do You Or a Loved One Have Special Life Insurance Needs?
Frequently Asked Questions
Does the financial strength of a life insurance company matter?It depends. In our opinion, a company’s track record (history) and financial strength matter when it comes to whole and universal life policies. Since a company’s ability and – quite frankly – willingness to provide a desirable growth on the cash value for the life of the policy, we want to take a close look at their portfolio. Term and Final Expense policies are very straight forward and leave essentially no risk to the consumer that, for example, the company cannot pay out the benefit or tries to avoid paying a claim. Life insurance is a very strictly regulated insurance product that protects the consumer very well.
Can a life insurance claim be denied?Yes, but under only a handful of circumstances. If a client passes away during the first two years of a life insurance policy, the insurance company has the right to review the claim. The company would want to make sure that the applicant didn’t lie, for example, about a cancer diagnosis right before applying for the policy. This two-year timeframe, which is also called period of contestability, ensures that applicants cannot simply apply for a life insurance policy right after they have been diagnosed with a (terminal) illness or are planning on committing suicide. However, once the contestability period expires, the life insurance company must pay out a death benefit, no matter the cause of death (including suicide) or if the client lied on the application.
What is the point of life insurance for babies and children?You have probably seen commercials from a well-known baby food producer about buying a life insurance policy for a baby. The main point is that the policy will accumulate cash and that cash value can be used for the child’s college, wedding, down-payment on a house or whatever else you desire. It is a very good idea to compare these types of policies to college savings plans since life insurance policies have no restrictions as to what the cash value can be used for. More importantly, the right policy may also provide a larger benefit than other saving plans.
Benefits Of Child Life Insurance
Locking In A Low Rate
Due to the child’s age, the rate charged for the policy is as low as they can get during their lifetime. Qualifying for life insurance isn’t a guarantee, especially to qualify with the best available rate.
With an in-force policy, as long as the premium payment is made, no health issue or other life event will negatively impact the policy. There are also options for a one-time single pay premium that allows for the fastest cash value growth without needing to make another payment during the life of the child.
As long as you continue to make the required premium payments, the cash value in your child’s policy has the potential to grow over time. You can also pay off a policy to take advantage of fast cash value growth without making premium payments in the future.