Paul Sciacca Licensed Insurance Broker

Nation Producer Number: NPN 19453211

Life Insurance Information

Not all Life Insurance is created equally.

Learn the important differences in insurance coverage.

Differences that can mean your family getting paid or your claim getting denied.

Differences between being able to afford your coverage and having to let it drop because your “Guaranteed” rates went up again!

These are just some of the key words Insurance agents use to sell you a policy, know what they mean.

Know that there is a difference between an agent and a broker, and what it can mean for your coverage!

We have spent hours taking an in-depth look at insurance ads that look too good to be true.

And guess what, they are!  Let me explain, when the rate sounds to good to be true, you need to read the whole policy. Most of them will give you a come on or bait and switch. Have you seen ads advertising some ridiculous amount like $500,000 for a premium payment of $16.00 or $20.00 a month? Most of these are Graded Policies that wont take full effect for a period of 2 to 5 years. Ya that’s right 2 to 5 years of “NO” coverage, plus that’s the period that is “Guaranteed” not to go up! After that your premiums “WILL” increase and they will go up every few years, until one day you are no longer able to afford your coverage.

Another common ad we have run across claims you can get $100,000 in coverage for just $1.00. That should raise all kinds of red flags for you, and if it doesn’t you’ll walk right into whats called a “modified premium term policy”. So what is a “modified premium term policy”?  Let me explain. Firstly your come on rate of a $1.00 a month is “ONLY” for your first month, after that it’s based off your current age and health. You’ll be asked basic heath and prescription information which they will confirm with the “MIB” or Medical Information Bureau, now as long as your information when you apply matches the “MIB” report you should be issued a policy

Basic Life Insurance Terms

Accelerated Death Benefits:
Sometimes called Living Benefits, they are usually accessible in cases of chronic or terminal illness. These are the benefits available before death.

Accidental Death Insurance:
Generally an add-on to a regular life insurance policy, Accidental Death Insurance is a pretty accurate name. It is only paid if the death of the insured occurs as the result of an accident. (people often confuse these with actual Life Insurance policies)

Accidental Death and Dismemberment Insurance:
A policy that pays out only if the insured dies, becomes blind or is dismembered in an accident.

Agent:
A person licensed by the state to negotiate insurance contracts. Most of the time they are direct writers who sells policies for only one company.

Application:
Life insurance companies use the information from applications to determine the risk of each potential policy-owner, general questions on the application are about age, health and prescription history.  Companies then determine an applicant’s underwriting classification and premium rates.

Beneficiary:
The person or persons who receives proceeds from a life insurance policy upon the death of the insured. A beneficiary under 18 years old must be represented by a legal guardian or a public official. Anyone can be named as a beneficiary.

Broker:
A person licensed by one or more states to negotiate insurance contracts. They work with multiple companies and represent the insured to multiple companies to get their client the best price and coverage.

Coverage Period:
The period of time the life insurance covers the policy-holder.

Death Benefit:
The money paid to the beneficiary when the insured dies. If loans are taken on these benefits, the payable amount will decrease. The amount of the benefit might also increase if there are more benefits payable when certain conditions are met. (Common Carrier, Accidental Death, etc)

Final Expense Insurance:

A type of whole life insurance that has both a permanent life insurance and an investment component. These policies are designed for senior usually 50 to 85 years old. Most are “day one coverage” meaning coverage starts the day the application is submitted and the poliy is in force as long as the insured is approved. Upon the death of the insured person, the life insurance company makes a payment to the beneficiary. The investment component accumulates a cash value that the policyholder may withdraw or borrow against.

Group Life Insurance:
The life insurance that is often offered by an employer (or organization) to its employees. Employers usually offer group life insurance as part of a larger employer benefit package and is usually owned by the employer, after your employment (retire,layoff, quit) your coverage usually ends. Some insurance companies will offer to continue your coverage. Usually at a much higher rate.

Incontestable Clause:
The clause in a life insurance policy that allows an insurance company to cancel the contract for up to two calendar years from the original policy issuing date if the policy-holder did not disclose critical information that would have made them ineligible for coverage.

Joint First or Last to Die:

(first to die) A life insurance policy that provides coverage for two people and makes payment to the survivor as soon as the first person dies. Then the policy is Void.

(last to die) A life insurance policy that provides coverage for two people and makes payment only after both people have passed away.

Life Insurance:
A form of protection from risk that guarantees payment upon the death of the policyholder.

Insurable Interest:
Proof that a person who takes out a life insurance policy on someone else has a substantial and lawful emotional or financial interest in that person’s continued well being. An insurable interest is mandatory when applying to purchase life insurance on another person.

Medical Information Bureau (MIB):
A non-profit group of life insurance companies that deters fraud by alerting member companies of potential problems.

Non-Smoker Rates:
A lower rate acknowledging that non-smokers are expected to live longer than smokers. Anyone who hasn’t been a smoker for at least a year before applying for a life insurance policy can receive this discount.

Owner:
The person who purchased the life insurance policy. He or she is usually the same person as the insured but in some cases, the owner could be a different person who has been authorized to be the owner, such as a spouse, a child, a parent, a business partner with an insurable interest or a corporation.

Premium:
The payment required by the life insurance company in order for the insured’s policy to remain in effect. Depending on the terms agreed upon, the premium might be paid at once or in a series of scheduled payments.

Rider:
A provision of an insurance policy that can be purchased separately to provide further benefits beyond those included in the original policy, at additional cost.

Term Life Insurance:
A life insurance policy for a specific time period that stipulates the insurance company must deliver a tax-free payment if the insured person dies within that period of time. Many term policies only cover periods of  10, 20 or 30 years but can be renewed, usually for a higher cost, at the end of the policy.

Whole Life Insurance:
A type of life insurance that has both a permanent life insurance and an investment component. Upon the death of the insured person, the life insurance company makes a payment to the beneficiary. The investment component accumulates a cash value that the policyholder may withdraw or borrow against.

Paul M Sciacca  |  Insurance Broker  | Nation Producers Number: NPN 19453211 

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