If you’re looking to protect your family’s financial security and future, your best bet is a life insurance policy. But you might be unsure of where to begin, and there are a lot of things to know about these types of policies. So, to get you started we’ve got a guide to the basics of what you need to know when purchasing an Alaska life insurance policy.
Keep in mind that policyholders and insurance companies in Alaska are subject to a variety of laws when it comes to life insurance. Just as they are in any other state in the country. Taking this into consideration, you should educate yourself as thoroughly as you can on the life insurance market in Alaska. And if you need more help, get in touch with an EZ agent. Who can answer all of your questions and guide you through the whole process!
How Life Insurance Works in Alaska
In a nutshell, life insurance is a contract between you and an insurance company that says you’ll pay the insurer a regular payment (your premium) in exchange for a death benefit. A death benefit is money that will be given to a beneficiary of your choosing after you die.
Those who have financial responsibilities to others, dependents, or debts that will have to be paid off after death should seriously consider purchasing life insurance. Life insurance is especially important if you are the sole provider for your family. Because it will ensure they are taken care of financially in the event of your death. Your beneficiaries will be able to use the money they receive from your policy to pay off their mortgage or student loans. Or they can put it toward retirement or education savings, or simply use it to cover their living expenses and replace your income.
Types of Life Insurance in Alaska
The first thing you should know is that there is a huge variety of different kinds of policies. This might feel a bit overwhelming. But having so many choices means that it’s possible to find one that precisely matches the requirements and preferences of virtually any individual.
Your first choice will be between the two main types of life insurance:
- Term life insurance
- Permanent life insurance
This decision will be heavily dependent on your specific needs, especially whether those needs for short-term or long-term coverage.
Term life insurance is the cheaper of the two options, making it the most popular. This type of policy is cheaper than permanent life insurance because it does not cover you for your entire life. In fact, with term life insurance, you get to decide how long you want to be covered for (or, your “term”), usually 10, 15, 20, 25, or 30 years. The amount that you pay for your premiums will usually not change during your term. If you pass away while the policy is still active, your beneficiaries will be able to make a claim for the death benefit and receive the money tax-free.
There are several types of term life policies:
Level Term Life Insurance
The death benefit and premiums for level term life insurance are determined at the time the policy is purchased. Meaning they do not change for the duration of the policy. The vast majority of policyholders with term life insurance choose level term policies.
Annual Renewable Term Life Insurance
Annual renewable life insurance is a one-year term life insurance policy. You can renew your membership every year, but the cost increases with your age.
Increasing Term Life Insurance
The death benefit from your increasing term life insurance policy will grow in value at predetermined intervals. For example, your benefit amount could increase by 5% each year. But it’s important to note that premiums for variable term insurance are more expensive than for other types of term life. They may also fluctuate over time.
Decreasing Term Life Insurance
While the premium for decreasing term life insurance remains constant throughout the policy’s duration, the death benefit gradually decreases. Decreasing term life insurance provides protection for a loan or mortgage. And the death benefit decreases over time as the loan is repaid.
Return-of-Premium Life Insurance
Return-of-premium (ROP) insurance allows you to receive a refund of your premium payments if you do not die during the policy’s term. ROP policies are significantly more expensive than other types of term life insurance. So, you’ll have to weigh their cost against the benefit of having your premiums returned to you.
Permanent Life Insurance
In contrast to term life insurance, a permanent life insurance policy will remain in effect for your entire life. As long as you pay your premiums. Because of this, and because many permanent life policies include a cash value, the premiums for permanent life tend to be higher than those of term policies.
Like with term life, there are various types of permanent life insurance policies available, including:
The death benefit from whole life insurance is guaranteed to be paid out, as long as you pay your premiums. In addition to the death benefit, whole life also can include a cash value. These cash value accounts are tax-free. And they accrue interest at a predetermined rate for as long as you have the account.
Universal life insurance policies offer more flexibility than many other types of life insurance. Since you can change your premium payments and death benefit amount. This is because your premiums go toward both the cost of insurance (COI) and a cash value. This cash value can then eventually be used to help pay your premiums. You can also choose to lower your death benefit amount in order to pay less in premiums.
Indexed Universal Life Insurance
Indexed universal life (IUL) is another type of permanent life insurance that includes a cash value. But with this type of policy, your cash value can grow based on a stock index. This stock index is a predetermined grouping of different stocks. It is an alternative to a type of account that grows solely based on non-equity earned rates. The premium for an IUL can be adjusted in the same way that it can be for a universal life policy. As the cash value of the policy rises you can use the money in that account to pay your premiums. In this case, your policy could eventually turn into a zero-premium policy. Meaning the cash value covers all of your premiums.
Variable Universal Life Insurance
The cash value of a variable universal life (VUL) policy can be invested like the cash value of other permanent life insurance policies. In addition, the premiums can be adjusted in the same way they are with traditional universal life insurance. To put the cash value to work, variable universal life insurance policies feature investment subaccounts. The structure of the subaccounts is similar to that of a mutual fund. Meaning you can make money if the money is invested well, or you could lose money if the market fluctuates.
There is another type of whole life insurance that is important to be aware of, known as final expense insurance. This type of policy is simple to obtain and will pay out a modest death benefit to your beneficiaries. The death benefits with these policies generally range from $2,000 to $35,000. They are intended to cover final expenses, such as those associated with a burial, cremation, or funeral services. But your beneficiaries are free to spend the death benefit on anything they like. Including a vacation or the payment of property taxes.
Alaska Life Insurance Laws
Life insurance policies in Alaska must be in compliance with state law. The insurance industry in Alaska is primarily governed by Title 21 of the Alaska Statutes. Though other provisions have been adopted as consumer protection laws. The insurance industry in Alaska is regulated by the Alaska Division of Insurance, which is a division of the Department of Commerce, Community, and Economic Development.
Title 21 grants certain rights to you (and your insurance company), including:
Free Look Period
The “free look” period granted life insurance policyholders serves as a kind of test drive. It allows you to cancel your coverage and receive a full refund of your premium payments within a specified time frame if you change your mind about it. In Alaska, your free look period is required to last for 10 days, but some insurers can offer a longer period. In most cases, though, your premiums will be nonrefundable after your initial 10 days.
This free look period can be very helpful in case of unforeseen circumstances, such as finding a more desirable policy immediately after enrollment in your policy. In addition, your beneficiaries can still receive the death benefit from your policy even if you pass away during the free look period.
You will also be granted a grace period, which means that you will be given a certain amount of time between missing a premium payment and having your policy terminated. In Alaska, if you miss a premium payment, you will have 30 days to make the payment before your insurer can cancel your policy or refuse to provide coverage.
Even in the event that the life insurance company you have purchased coverage from goes out of business, the Alaska Life and Health Insurance Guaranty Association will continue to cover your benefits. This organization provides support for all insurance policies offered by Alaska insurers who are in compliance with state regulations and hold valid business licenses.
This association will cover a maximum of $300,000 in lost death benefits and a maximum of $100,000 in lost cash value, but they will only cover these amounts if your insurance premium payments are up-to-date.
The contestability period refers to the amount of time your insurer has to contest any claims that might be fraudulent or anything you might have misrepresented on your policy application. After this time period has passed, the policy is typically considered incontestable, which means that the insurance company is no longer able to investigate claims, regardless of the circumstances surrounding your death.
The contestability period generally only lasts for the first 2 years of your policy. If you pass away after the 2 year mark, your insurance company will no longer be able to contest or withhold death benefit payments while they investigate your application.
When a life insurance claim is made in the state of Alaska, the insurance provider has to make the payment to the beneficiary as quickly as possible. If claims are not settled in a timely fashion that is also fair and equitable, the insurer may be subject to severe penalties. Payments are typically issued within two months after the provider has been provided with proof of death.
Your age, your overall health, and even your gender can all have a significant impact on the cost of your premiums. Contacting one of our EZ agents is the best way to find out how much you might end up paying for a policy. They can use the information you provide to find you free quotes that are customized to meet your specific needs. But to give you an example of prices, a 25-year-old healthy man who doesn’t smoke could pay between $22 and $60 a month for a 20-year $860,000 policy in Alaska.
Alaska Life Insurance Resources
In Alaska, there are several state and federal resources you can use to help you if you have any problems with your insurer or policy. These resources include:
- Death Benefit Protection – If a life insurance company in Alaska is unable to honor its policies due to financial difficulties, the Alaska Life & Health Insurance Guaranty Association will pay death benefits up to a specific amount.
- Complaint Resolution – You have the option of filing a complaint with the Alaska Division of Insurance. You can also request an investigation in the event that you have a disagreement with a life insurance company.
- Consumer Protection – Your life insurance complaint can be investigated by the Consumer Protection Unit of the Alaska Department of Law if you end up being a victim of a fraudulent life insurance scheme.
Does Alaska require life insurance?
No, life insurance is completely optional no matter what state you’re in.
What are the best life insurance companies in Alaska?
Alaska has a lot of great options for life insurance. LIA Holdings, Prudential, State Farm, Metropolitan, and Lincoln National are at the top of the list.
How much does life insurance cost in Alaska?
There are a lot of things that can affect your costs, but here’s an example. A healthy woman who is 28 years old and lives in Alaska will pay an average of $36.11 per month for a 20-year term policy that covers $860,000. A healthy 28-year-old man, on the other hand, will pay about $36.15 for the same policy.
EZ Can Help!
Everyone has a unique set of needs, priorities, and constraints on their financial resources. We at EZ are aware that you are trying to find the best possible financial security for you and your loved ones without having to empty your savings account. We will always work our hardest to make buying life insurance as uncomplicated as possible for you. Plus, we’ll do everything at no cost to you. You won’t have to pay anything extra to receive assistance with anything. From getting answers to your most fundamental questions to navigating policy selection to the enrollment process and beyond. To get started, simply enter your zip code in the space provided below or give us a call at 877-670-356.