Things You Need To Understand About Life Insurance

Life Insurance Arlington provides a lump sum of money to your loved ones upon your death. This money can help them pay for funeral costs and outstanding debts.


It’s important to understand how life insurance works so that you can decide whether it’s right for you. This article will cover the basics of Life Insurance, including Premiums, Coverage, Cash value, and Lapsing.

Premiums are the financial fuel that powers your life insurance policy, ensuring that it stays active and that your beneficiaries receive the benefits you’ve designated. They’re usually made on a monthly basis, although some policies (such as universal life) offer flexible payment options.

Several factors go into determining the cost of life insurance premiums. One is the mortality factor, which is based on the company’s experience with past claims. This information is combined with the average life expectancy for each age group to calculate rates. Another factor is interest earnings. Companies invest part of their premiums in bonds, stocks, mortgages and real estate, and they assume that they’ll earn a certain rate of return on those investments.

The amount of time you’re covered by a life insurance policy also affects its cost. Term policies are generally less expensive because they provide coverage for only a set period of time. On the other hand, permanent policies have higher premiums because they cover a longer period of time. Females also tend to live longer than males, so their life insurance premiums are often lower.

Other factors that influence the cost of your premium include your health and lifestyle. Having an unhealthy lifestyle increases the risk you pose to insurers and raises your premium. For example, smoking and high-risk hobbies like motorsport or skydiving can raise your premiums. But if you make healthy choices and improve your health, you may be able to lower your premiums.


Regardless of your current financial situation, life insurance can help protect your family from debt and other financial obligations in the event of your death. This coverage provides your beneficiaries with a lump sum death benefit that can be used to pay for funeral costs, debts, and other expenses. It can also provide income replacement or a fund for your children’s college education.

The amount of the death benefit varies depending on the policy you choose and your budget. Generally, it is based on your age and gender, as well as any hazardous activities that you engage in. A life insurance agent can help you determine the right coverage for your needs and lifestyle.

There are several types of life insurance policies, including term and whole life. Both can offer a permanent lump sum death benefit, but term life has more flexibility than whole life. You can change the duration of the policy, and most of these policies are not canceled as a result of changes in health status.

You can find a number of different life insurance policies at affordable prices. You can even get a policy with no medical exam and receive a decision within minutes. In addition, you can get supplemental life insurance to cover any gaps in your coverage. These policies are often offered through your employer or a private insurer. You can use an online calculator to estimate your needs and compare your options.

Cash value

Cash value is an investment component that grows tax-free within a permanent life insurance policy. It can provide a flexible source of funds for many financial needs. However, accessing it may cause the death benefit to be lowered and can also generate interest charges on an ongoing basis.

Whole life and variable universal life insurance are examples of policies with a cash value component. Term life insurance does not have this feature. When you pay your premium, one portion goes toward the death benefit, another pays the insurance company’s fees and costs, and the rest is invested in the policy’s cash value account. The money in this account grows based on a fixed amount and/or investment gains.

You can borrow against your cash value in most permanent life insurance policies, provided the loan does not exceed the basis of your contract (the total amount you’ve paid in premiums minus previous withdrawals and dividends). The amount of money you withdraw is generally income-tax free, but it may be subject to a surrender charge if you are still paying the premium for the policy. Your policy’s accumulated cash value can also be used to purchase “paid-up additions” that increase your death benefit. However, the amount of the additional death benefit is subject to federal and state income taxes.


When a policy lapses, it means that the insurance company has no legal obligation to pay out your beneficiaries if you die. This is a common problem, but you can avoid it by making sure your premium payments are up to date. In addition, some life insurance companies have options to help you keep your policy active, including a grace period and the ability to make up for lost premiums.

The majority of life insurance policies provide a grace period for the first missed payment. This period is typically 30 or 31 days, depending on the insurer. After the grace period, your policy will lapse, meaning that it is no longer in force and that the beneficiaries will not receive a death benefit if you die.

Lapsed life insurance can be expensive. If you do not reinstate your policy, you will have to pay the premiums that you missed plus interest. Depending on the life insurance company, you may also have to go through new underwriting if you want to reinstate your policy after the lapse.

To avoid lapsing, you should sign up for automatic payments or designate a trusted person to receive late-payment notifications. All major life insurance companies offer this service. Some even allow you to assign a different account or bank to process the payments. Additionally, you can ask your life insurance company for more flexibility with your payment schedule if you have a financial emergency.

Contestable period

The contestable period is a two-year period during which the life insurance company can investigate your claim and verify your information before they pay out any benefits. This is to prevent fraud and ensure that the insurer has accurate information on file. During this time, the life insurance company can deny your claim or reduce the amount of your death benefit if they discover any misrepresentation. However, in most cases, the life insurance company must honor the death benefit and give your beneficiaries the amount they deserve.

While many people lie on their applications to get better prices, the fact is that there are times when a misrepresentation can be accidental. These mistakes can also be misleading, but they don’t excuse life insurance companies from investigating a claim and providing the correct death benefit to your beneficiaries.

For example, Emma accidentally checked “non-smoker” on her application when she actually smoked for several years before applying for her policy. Tragically, she died of a heart attack just six months after buying her policy. The life insurance company conducted a thorough investigation and discovered her misrepresentation. They decided to deny her claim and return her premiums.

Some life insurance policies have an incontestability clause, which means that you won’t be investigated after a certain number of years, such as two. This is a good idea for families that want to protect their finances. However, you should know that if you transfer your life insurance policy or fail to pay your premiums, the new policy will start a fresh contestability period.


Depending on your financial situation, you may want to cancel or cash out your life insurance policy. However, this is a decision that should be made carefully, as it can have significant implications for your financial future. In most cases, you should try using the methods discussed in this article to lower your premiums before deciding to cancel or cash out your policy.

Cancelling your life insurance will affect your family’s finances and could leave them unprotected in the event of your death. You can typically use the money from your life insurance policy to cover funeral costs or offset mortgage payments. However, it’s important to remember that you will have to pay income taxes on the amount you borrow.

There are several reasons why you might want to cancel your life insurance policy. It may be that you are no longer able to afford the premiums, or your financial goals have changed. If this is the case, you should talk to your agent to discuss alternative options. You may be able to revive your whole life policy within the free look period, or you can choose a term insurance policy that better suits your needs. Alternatively, you can also consider using the money from your life insurance policy as an investment in another savings account. This is a good option if you are planning to retire or become financially independent in the near future.