Purchasing life insurance is a great way to protect your family’s financial security. But there are a number of things to think about before purchasing a policy in Delaware. There are so many policies to choose from, as well as many different regulations that apply to policyholders based in Delaware. So, you’ll need to learn as much as you can about the life insurance industry in Delaware before making a purchase. But don’t worry, EZ is here to help. First, read our comprehensive guide to life insurance in Delaware. Then speak to an EZ agent, we can answer any questions you may have, and find the best policy for you.
How Life Insurance Works in Delaware
When you buy life insurance, you and your insurance company enter into a legally binding contract. You commit to paying the insurer the required premiums. And if you pass away while your policy is active, your family will receive a lump-sum payment from the insurance company. This sum is known as a death benefit. They can use this payout for anything they want. Including mortgage payments, income replacement, or saving for retirement or college tuition.
Life insurance is necessary for people who have dependents, debts, or other financial responsibilities that will have to be met even after death. And, if you are the sole provider for your family, you absolutely need life insurance. Having a policy will ensure that your family can maintain their current standard of living.
Types of Life Insurance in Delaware
There are so many different types of life insurance policies available these days that almost anyone can find one that suits them. The first decision you’ll have to make is which main type of life insurance you should purchase:
- Term life insurance
- Permanent life insurance
There are multiple differences between these types of policies, as laid out below.
Because of its low premiums, term life insurance is the most popular type of life insurance. Premiums for these types of policies tend to be cheaper because they do not cover you indefinitely. Instead, when you buy term life insurance, you can choose how long you want to be covered for. A policy’s term is typically 15 years. But it can be as short as one year or as long as 30 years. Your premium will generally remain the same throughout the term of your policy. If you die while the policy is active, your beneficiaries will receive a tax-free death benefit.
There are several types of term life policies:
Level Term Life Insurance
The death benefit, as well as the premiums, for level term life insurance are fixed at the time of purchase. They will remain unchanged for the duration of the policy. The vast majority of people choose level term policies when purchasing life insurance.
Annual Renewable Term Life Insurance
Annual renewable life insurance is a one-year term life insurance policy. You will be able to renew your policy on an annual basis, but the premiums will rise with each passing year.
Increasing Term Life Insurance
The death benefit of an increasing term life insurance policy will increase over time. Your benefit could, for instance, increase by 5% annually. Unlike with other types of term life, the cost of increasing term insurance premiums is likely to change over time.
Decreasing Term Life Insurance
While the death benefit of decreasing term life insurance declines over time, the premium stays the same. It is standard procedure to use a plan like this to safeguard a loan or mortgage. Then as the loan is repaid, the death benefit will decrease.
Return-of-Premium Life Insurance
Return-of-premium (ROP) insurance is a type of term life insurance in which your premium payments are refunded if you do not die before the policy’s expiration date. Many people find the return of premiums feature appealing. But be aware that ROP policies are significantly more expensive than other types of term life insurance.
Permanent Life Insurance
Unlike with a term life insurance policy, your permanent life insurance policy will remain in effect for the rest of your life if you pay your premiums on time. Because of this, and because these policies usually include a savings account that accrues interest (known as cash value), the premiums are typically higher than those of a term policy.
There are numerous types of permanent life insurance policies available, including:
Whole life insurance includes a guaranteed death benefit and set premiums. A whole life insurance policy can accumulate cash value that accrues interest at a predetermined, tax-free rate, in addition to providing a death benefit.
Universal life (UL) insurance is a very flexible type of permanent life insurance. You’ll have the option to modify the death benefit and premium payment amounts. Your UL premiums will go toward both the cost of insurance (COI) and the savings component (also called the cash value). Additionally, you’ll eventually be able to use your accumulated cash value to pay your premiums. In addition, you’ll also be able to lower your premium payments by decreasing the amount of your death benefit if you so choose.
Indexed Universal Life Insurance
Indexed universal life insurance (IUL) is another type of permanent life insurance with a cash value. Which can increase based on investment in a stock index. 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
Like the cash value of other permanent life insurance policies, the cash value of a variable universal life (VUL) policy can be invested. And the premium can be changed, just like with conventional universal life insurance. But variable universal life insurance policies offer subaccounts. Which are similar to mutual funds, in which you can invest the cash value.
Final expense insurance is a type of whole life insurance that pays a small benefit upon your death. Typically, between $2,000 and $35,000. These policies are a good option for people who are older or in poor health, because they do not require a medical exam. But they tend to be relatively expensive and, again, only pay out a modest amount. The final expense insurance death benefit is intended to cover final expenses. Such as a burial, cremation, or funeral service. But your beneficiary will be able to spend the death benefit on whatever they want, such as a vacation or property taxes.
Delaware Life Insurance Laws
The federal government has largely given the states the responsibility of supervising the insurance industry and of protecting consumers when it comes to life insurance policies. So, in Delaware, you will be protected by numerous life insurance laws. The primary regulatory framework for the state’s insurance market is Title 18 of the Delaware Code. But other legal provisions have also been enacted as consumer protection laws. The industry is regulated by the state Department of Insurance.
If you have a life insurance policy in Delaware, and you miss a payment, you will be given a grace period of 30 days to make a payment and keep your policy active. The grace period begins when the payment is past due or the policy has no cash value to borrow against.
The Delaware Life and Health Insurance Guaranty Association will work with you to get compensation in the event that your life insurance provider goes out of business. As long as your insurer held the appropriate licenses to conduct business in Delaware, you will be covered for lost death benefits up to $300,000, and for cash value up to $100,000.
If a life insurance policy in Delaware is kept active for at least two years after the date it was issued, the policy is then considered incontestable by the state. After this two-year period has passed, your insurer will no longer be able to challenge your policy for any inaccuracies or discrepancies your application may have contained. Only policies that have outstanding premiums are exempt from this rule.
In the state of Delaware, it is mandatory for insurance companies to settle life insurance claims within sixty days of receiving notification of a policyholder’s passing away. It is against the law to delay making a payment to the beneficiary, and doing so will subject the insurer to significant financial penalties.
The amount you pay for your premium will be affected by factors such as your age, health, and even your gender. The quickest way to learn about potential costs is to get in touch with one of our EZ agents. If you give them some details about what you need, they can use that information to find you free quotes that are tailored to you. To give an example, though, a healthy 33-year-old man who does not smoke could pay anywhere from $18 to $58 per month for a 20-year $740,000 policy in Delaware.
Delaware Life Insurance Resources
In Delaware there are several state and federal resources available to help you with any problems with your insurer or policy. These resources include:
- Delaware Department of Insurance – Consumers who want to learn more about state policies governing life insurance, or who have questions or concerns about an insurer, can contact Delaware’s Department of Insurance. This department, which was established to inform, protect, and advocate for state policyholders, has a consumer services division to handle complaints. It also has a policy locator tool.
- Delaware Life & Health Insurance Guaranty Association – The Delaware Life & Health Insurance Guaranty Association is made up of licensed insurers and annuity providers from across the state. The guaranty association is responsible under Delaware law for servicing policies from member organizations that go out of business. Policyholders and beneficiaries with plans from bankrupt providers can contact the association for more information.
Does Delaware require life insurance?
No, life insurance is not required no matter where you live.
What are the best life insurance companies in Delaware?
In Delaware, there are many good ways to get life insurance. Prudential, Nationwide, Pacific Life, MassMutual, and Metropolitan are at the top of the list.
How much does life insurance cost in Delaware?
There are many things that can affect how much life insurance costs, but here’s an example. A healthy 33-year-old woman in Delaware who buys a $740,000 20-year term policy will pay an average of $27.65 per month. A healthy 33-year-old man, on the other hand, will pay about $34.87 for the same policy.
EZ Can Help!
At EZ, we get that everyone has unique requirements, priorities, and financial constraints, and also know that you want the best financial security for yourself and your family without depleting your savings account. So we make every effort to simplify the process of purchasing life insurance, and we do it all for 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.