Purchasing life insurance is one of the best things you can do to protect your family’s financial future. But before you do so, you will need to give it some careful thought. There’s a lot to know about life insurance: not only are there multiple types of policies to look into, but policyholders and life insurance companies in the state of Idaho are also subject to a wide range of regulations that you should know about.
So, before you make a choice regarding your life insurance policy, it is in your best interest to obtain as much information as you can about the market in Idaho. If that task feels overwhelming, don’t worry EZ is here to help! First read our comprehensive guide below. Then speak to an agent about finding the right policy for you.
How Life Insurance Works in Idaho
When you purchase life insurance, you enter into a legally binding agreement with your chosen insurance company. You agree to pay your insurer the required premiums. Then if you die while the policy is in effect, your chosen beneficiaries will receive a lump-sum death benefit. They will be able to use this money however they choose. For things like mortgage repayment, saving for retirement or college, paying down debts, or simply replacing your income.
If you have dependents, debts, or other financial obligations that will have to be taken care of even after your death, you should seriously consider purchasing life insurance. This is especially true if you are the primary or sole provider for your family. Since having life insurance will mean your loved ones will be able to maintain their current standard of living if you die unexpectedly.
Types of Life Insurance Available in Idaho
Because there are so many different types of life insurance policies available on the market today, almost anyone can find one that is right for them. There is a policy out there for you, but you’ll have a lot of decisions to make. The first being which of the two main types of life insurance to purchase:
- Term life insurance
- Permanent life insurance
When deciding whether to purchase term or permanent life insurance, it is critical to consider how far in the future you anticipate needing the policy’s coverage. As well as how much you are willing to spend.
Term life insurance is generally more popular than permanent life insurance because of its lower premiums. Which usually do not change for the duration of the policy. This type of policy has lower premiums because it does not cover you for the entirety of your life. Instead, when you buy term insurance, you can choose how long you want to be covered. For example, a policy’s term is usually 15 years. But you can find policies to cover you for as little as one year, or as much as 30 years. If you die while the policy is still in effect, your beneficiaries will receive a tax-free death benefit.
There are several types of term life policies available, including:
The amount of level term’s premiums and the death benefit are both fixed. Meaning they do not change over the life of the policy. The majority of people who purchase term life insurance opt for level term life insurance 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
An increasing term life insurance policy will accumulate an ever-increasing death benefit over the course of the coverage period. For example, the death benefit might increase by 5% each year. There is a chance that the cost of this policy’s premiums will fluctuate.
Decreasing Term Life Insurance
The death benefit associated with decreasing term life insurance gradually decreases, while the premiums remain constant. These policies are commonly purchased for financial protection while you repay a mortgage or other loan, and the death benefit will decrease as the loan is repaid.
Return-of-premium (ROP) insurance is a form of term life insurance that allows you to be reimbursed for your premiums in the event that you do not pass away prior to the expiration of the policy. Many people find the return of premiums feature to be appealing. But you should be aware that the cost of ROP policies is significantly higher than other term life policies.
Permanent Life Insurance
Permanent life insurance differs from term life insurance in a few ways. First, with permanent life, your policy will remain in effect for the rest of your life. As long as you continue to pay your premiums. Next, these policies usually include a savings component, known as cash value, that allows you to accrue money (and interest) that you can use to borrow against or to pay your premiums with. Finally, because of these features, premiums are usually higher than the premiums for term life policies.
There are numerous types of permanent life insurance policies to choose from, including:
If you continue to pay the required premiums, your whole life insurance policy will remain active for the rest of your life. You will also get a cash value account that accrues interest at a predetermined, set rate. Whole life is generally the most popular type of permanent life insurance policy.
If you select universal life (UL) insurance, you will get a policy with a lot of flexibility. With UL, you will be able to change the amount of the death benefit as well as the amount of your premium payments. Premiums for UL policies go toward both the cost of insurance (COI), and also a savings component (also called the cash value). You can eventually lower your premiums by using the cash value you build up to pay them. You can also lower your premiums by choosing to lower the amount of your death benefit.
Indexed Universal Life Insurance
This is another type of permanent life insurance with a cash value associated with it. Unlike with whole life, the interest you accrue with indexed universal life (IUL) is based on a stock index. Which is a predetermined grouping of different stocks. IUL’s premiums can be adjusted in the same way that a universal life policy premium can: it rises and falls in tandem with the cash value of the policy. Eventually, you may not have to pay a premium because the cash value will cover it all.
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, and your premium payments can also be changed. But with variable universal life insurance policies, you can invest your cash value in investment subaccounts. Which are similar to mutual funds. This means you could make or lose money, depending on the fluctuations of the market.
A final expense life insurance policy is a type of whole life insurance that pays out a small benefit upon the death of the policyholder. The average death benefit generally ranges between $2,000 and $35,000, and is intended to cover final expenses such as a burial, cremation, or funeral services. With that being said, your beneficiary will be free to spend the death benefit money however they see fit, such as on a vacation or to pay their taxes.
This type of policy has pros and cons. It can be a good option for those who are older or in poor health, because you will not be required to undergo a medical exam to get immediate coverage. But final expense policies can cost more than comparable policies, and the death benefit is generally pretty small.
Idaho Life Insurance Laws
In the case of life insurance policies, the federal government has largely delegated the responsibility of regulating the insurance industry and protecting consumers to the states. So that means Idaho has life insurance laws in place to protect consumers.
The primary regulating force behind the insurance industry in the state of Idaho is Title 41 of the Idaho Statutes, but other legal provisions have also been adopted as consumer protection laws. The Idaho Department of Insurance regulates the state’s insurance industry.
If you purchase life insurance in Idaho, you’ll have the following protections:
Free Look Period
A free look period is kind of like a test drive for your life insurance policy. Idaho residents are afforded a longer than usual 20-day free look period, during which you’ll have the option to cancel your policy and receive a full refund, without any cancellation fees. If you cancel your policy during this time, you will be entitled to a prompt refund of any premiums paid to your insurance provider. And if you pass away during the free look period, your beneficiaries’ claim will still be valid and will have to be paid by the life insurance company.
The state of Idaho gives its residents a 30-day grace period after a missed payment. This means that, as long as you make up your missed payment within these 30-days, your policy cannot be terminated. A grace period allows you to avoid coverage gaps that could force you to reapply for insurance and pay a higher premium as a result of the underwriting process.
If your life insurance company declares bankruptcy, the Idaho Life and Health Insurance Guaranty Association will pick up the slack and pay your claim, as well reimburse you for your cash value. Be aware that death benefits up to $300,000 per insured, and cash value losses up to $100,000, will be covered: this limit is the maximum per person, regardless of the size of your policy and cash value amount.
According to Idaho’s Title 41, insurance companies have a legal obligation to resolve all claims in a timely fashion. All legitimate claims must be settled within 60 days of a claim being filed. Any insurance company taking longer may be subject to penalties and fines.
There are a number of variables that can impact the cost of your premiums, including your age, current health, and even your gender. Get in touch with one of our EZ agents to receive the quickest and most accurate information regarding potential costs. All you have to do is give them some basic information, and they will be able to use that information to find you free personalized quotes. But to give you an example of prices, a 30-year-old nonsmoking man in good health could pay anywhere from $16 to $49 per month for a 20-year $667,000 policy in Idaho.
Idaho Life Insurance Resources
In Idaho there are several state and federal resources available to you if you have any problems with your insurer or policy. These resources include:
- Idaho Department of Insurance (DOI) – The Department of Insurance in Idaho provides a variety of services and resources that can assist you in navigating life insurance. The vast majority of resources can be found online. Including the ability to check on the current licensing status of a business, file a complaint, or report fraud.
- Idaho Life & Health Insurance Guaranty Association – This organization will protect you in the event that your life insurance company goes under, so check its list of members to see if your life insurance provider is included on it. If they are, you are assured of receiving a payout even if the company goes out of business.
Does Idaho require life insurance?
No, you will never be required to have life insurance; it is completely optional.
What are the best life insurance companies in Idaho?
There are a lot of good ways to get life insurance in Idaho. At the top of the list are Prosperity, Sons of Norway, Transamerica, Mutual of Omaha, and Lincoln Financial.
How much does life insurance cost in Idaho?
There are many things that can change how much life insurance costs, but here’s an example. A 30-year-old woman in good health in Idaho who buys a $667,000 20-year term policy will pay an average of $22.37 per month. On the other hand, a healthy 30-year-old man will pay about $26.96 for the same policy.
EZ Can Help!
At EZ, we know that everyone has unique requirements, priorities, and financial constraints. We also understand 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 for you and offer all of our services 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.