If you’re looking to protect your family’s financial future, a life insurance policy is a must. But there is a lot to consider when looking for a policy, since there are so many types of life insurance policies available at a wide variety of price points. In addition, Connecticut policyholders are subject to a wide variety of laws. So, before purchasing a policy in Connecticut, you should educate yourself as much as possible about the state’s life insurance market. We’ve provided a guide to this market below. Once you’ve read it, contact an EZ agent to find the best policy for you.
How Life Insurance Works in Connecticut
Essentially, when you purchase life insurance, you enter into a binding agreement with your insurance company. You agree to pay the required premiums to the insurer. And if you pass away while your policy is still in effect, your insurance company will pay an agreed-upon lump-sum “death benefit” to your loved ones. They can use this lump-sum payment for things like mortgage payments, college tuition, retirement savings, or replacing your income.
Those with debts, dependents, or other financial obligations that will have to be met even after death should purchase life insurance. If you are the sole breadwinner for your family, life insurance is especially crucial. Having a policy will ensure that they can continue to live comfortably in the event of your death.
Types of Life Insurance in Connecticut
There are so many different types of life insurance policies available today that almost anyone can find one that works for them. The first decision you’ll need to make is between the two main types of life insurance:
- Term life insurance
- Permanent life insurance
Your decision will be heavily dependent on how much you’re willing to pay, as well as how long you’d like to be covered for.
Term life insurance is very popular because of its affordable premiums, and because these policies usually have set premiums that do not change.
These types of policies tend to be more affordable because they do not cover you for your entire life. Instead, when you purchase term insurance, you get to decide how long you want to be covered for. The term of a policy is typically 15 years, but you can also find policies that last for as little as one year or as long as 30 years. If you pass away while the policy is active, your beneficiary will receive a tax-free death benefit.
There are several types of term life policies:
Level Term Life Insurance
Both the death benefit and the premiums for level term life insurance are set at the time of purchase. For as long as the policy is in effect, they will remain unchanged. The vast majority of people who choose term life go with level term policies.
Annual Renewable Term Life Insurance
Annual renewable life insurance is a one-year term life insurance policy. You can renew your policy on an annual basis, but the premiums will rise with each passing year.
Increasing Term Life Insurance
If you have an increasing term life insurance policy, the death benefit will grow over time. For example, your benefit amount could rise by 5% per year. Unlike other types of term life insurance, the premiums for increasing term life policies are likely to fluctuate in price over time.
Decreasing Term Life Insurance
The premium for decreasing term life insurance remains constant while the death benefit decreases over time. These policies are usually purchased for protection while repaying a loan or mortgage; the death benefit will be reduced as the loan is paid off.
Return-of-Premium Life Insurance
Return-of-premium (ROP) insurance is a type of term life insurance that refunds your premiums if you don’t die before the policy’s expiration date. Many people find the return of premiums appealing but be aware that ROP policies are significantly more expensive than other types of term life insurance.
Permanent Life Insurance
Unlike with term life, your permanent life insurance policy will remain in effect for the rest of your life if you pay your premiums on time. For this reason, the premiums for these policies are typically higher than those of term policies. They are also more expensive because they usually include a type of savings account that accrues interest, known as cash value.
There are numerous types of permanent life insurance policies available:
Whole life insurance has set premiums and provides a guaranteed death benefit. A whole life insurance policy can accumulate cash value, which will accrue interest at a predetermined, tax-free rate.
Universal life insurance policies are very flexible, since they allow you to adjust your premium payments and death benefit amount. UL premiums go toward both the cost of insurance (COI) and a savings component (also called the cash value), and eventually you will be able to use your cash value to pay your premiums. You can also lower your premiums by choosing to decrease your death benefit.
Indexed Universal Life Insurance
Indexed universal life insurance is another type of permanent life insurance (IUL). The cash value of IUL can increase based on investment in a stock index, and as the cash value of the policy increases, the premium for an IUL can be adjusted in the same way that it is for a universal life policy. It may one day become a no-premium policy, with the cash value covering the entire premium.
Variable Universal Life Insurance
The cash value of a variable universal life (VUL) policy, like the cash value of other permanent life insurance policies, can be invested. But with these policies you can invest in subaccounts, which are similar to mutual funds. In addition, the premium payments, like those of traditional universal life insurance, can be adjusted by using your cash value to pay them.
Final expense life insurance is another type of whole life insurance. Which is often a good choice for those who are older or in poor health. This type of policy does not require a medical exam and can usually be issued immediately. However, it pays a relatively small benefit. Death benefits typically range between $2,000 and $35,000, and are intended to cover final expenses. Such as a burial, cremation, or funeral service. Your beneficiary, though, will be able to spend the death benefit on whatever they want. Such as a vacation or property taxes.
Connecticut Life Insurance Laws
In the case of life insurance policies, the federal government has largely delegated the responsibility of regulation and protecting consumers to the states. In Connecticut, there are numerous life insurance laws in place to protect consumers. The primary regulating force behind Connecticut’s insurance industry is Title 38 of the General Statutes of Connecticut. But other legal provisions have also been adopted as consumer protection laws. The state Insurance Department regulates the industry.
In Connecticut, you’ll have the following protections when you purchase life insurance:
Free Look Period
New policyholders in Connecticut are afforded a lengthy free look period. In Connecticut, you have 20 days to evaluate a policy risk-free and get your money back if you decide to return it. You can give the policy a try without making a full commitment thanks to this clause. This is significantly longer than the free look period provided by the majority of states.
You’ll also have a grace period of 30 days after missing a payment before your insurer can cancel your policy or refuse to pay a claim. This grace period begins when the payment is past due, or the policy has no cash value left to borrow against. If you make your payment during these 30 days, your policy will remain active. Your insurer will also have to honor any claims.
If your life insurance company declares bankruptcy, your policy will be protected by the Connecticut Life and Health Insurance Guaranty Association. Your policy’s death benefit, up to $300,000, and cash value, up to $100,000, are both backed by this association. But be aware that these are the absolute maximums for each individual. No matter how much your policy (or policies) was worth.
The contestability period is the time frame within which an insurer can file a dispute over your policy application or claim for possible fraud or misrepresentation. After two years, a policy is generally considered incontestable in Connecticut.
After a claim is filed, the state of Connecticut is obligated to pay it as soon as possible. This occurs typically within a 2-month time frame, though claims are often paid sooner. The insurance company could face penalties if it fails to pay valid claims in a timely manner.
The amount you pay for your premiums will be affected by factors such as your age, health, and even your gender. The quickest way to learn about potential prices is to get in touch with one of our EZ agents. Once you give them your information, they will be able to find you free quotes that are tailored to your requirements. To give an example, though, a healthy 33-year-old man who does not smoke could pay anywhere from $24 to $71 per month for a 20-year $975,000 policy in Connecticut.
Connecticut Life Insurance Resources
In Connecticut there are several state and federal resources in place to help you if there are any problems with your insurer or policy. These resources include:
- State of Connecticut Insurance Department. – The Insurance Department of the State of Connecticut has a wealth of information available on their website, such as an archive of insurance-related articles and a summary of current and proposed regulations. Residents of the state can also sign up to receive email updates on specific issues. If you have any concerns about your life insurance policy or the company that issued it, you can get in touch with the department in a number of different ways.
- Connecticut Life and Health Insurance Guaranty Association – When a Connecticut insurance company goes bankrupt and can’t pay its policyholders and beneficiaries as promised, this statutory entity steps in to help.
Does Connecticut require life insurance?
No, you do not have to have life insurance, no matter where you live.
What are the best life insurance companies in Connecticut?
There are a lot of good ways to get life insurance in Connecticut. At the top of the list are Haven Life, Ethos Life Insurance, Nationwide, AIG, and Everyday Life.
How much does life insurance cost in Connecticut?
There are many things that can change how much life insurance costs, but here’s an example. A healthy 33-year-old woman in Connecticut will pay an average of $30.68 per month for a $975,000 20-year term policy. On the other hand, a healthy 33-year-old man will pay about $37.73 for the same policy.
EZ Can Help!
At EZ, we know that everyone has unique requirements, priorities, and financial constraints, and we understand that you want the best financial security for yourself and your family without depleting your savings account. We make every effort to simplify the process of purchasing life insurance. And guarantee that all of our services are completely free. You will not be charged any additional fees for assistance with anything. From answering basic questions to navigating policy selection to the enrollment process and beyond. Simply enter your zip code in the space provided below or call us at 877-670-3560 to get started.