Are you an Illinois resident in need of life insurance? Life insurance is one of the best ways to protect your family financially. However, there is a lot more you’ll need to know about purchasing life insurance in Illinois. There is a wide variety of policies to consider, as well as multiple regulations to be aware of.
It is in your best interest to obtain as much information as you can about the market in Illinois before you make a decision regarding your life insurance policy. This will help ensure that you make an informed decision, but we get that it can feel overwhelming. EZ is here to help, though! First read our comprehensive guide below, then speak to an EZ agent about finding the right policy for you.
How Life Insurance Works in Illinois
When you buy life insurance, you are entering into a legally binding contract with your chosen insurance company. You agree to pay the necessary premiums to the company. In exchange, if you die while your insurance policy is still active, your loved ones will receive a lump-sum death benefit. They can use the money for anything they choose. Including paying off debts to saving for the future to simply replacing your income.
If you have dependents, debts, or other financial obligations that will have to be met even after your death, you should seriously consider purchasing life insurance. And if you are the primary or sole provider for your family, you should absolutely have life insurance. Having the right policy will mean that if you die unexpectedly, your loved ones will be able to maintain their current standard of living.
Types of Illinois Life Insurance
Because there are so many different types of life insurance policies available today, almost anyone can find one that is suitable for them. With the help of an EZ agent, you’re sure to find the right policy for you. But you’ll have a lot of decisions to make. The first is between the two main types of insurance policies:
- Term life insurance
- Permanent life insurance
When choosing between these two, it’s important to think about how far in the future you anticipate needing the policy’s protection. As well as how much you’re willing to pay for your premiums.
Term life insurance is the cheaper of the two types of policies, and has become extremely popular for that reason. This type of life insurance tends to be cheaper because term life policies do not cover you indefinitely. Instead, when you purchase term life insurance, you can specify how long you want to be covered for. The term of a policy is typically 15, 20, 25, or 30 years. Your monthly premium will not change for the duration of your policy, which is another reason these policies are popular. Your beneficiaries will receive a tax-free death benefit if you die while the policy is still in effect.
There are several types of term life policies available, including:
Level Term Life Insurance
The death benefit and premiums for level term policies are both fixed and will not change for as long as you have the policy. The majority of people choose level term life insurance policies when purchasing term life.
Annual Renewable Term Life Insurance
Annual renewable life insurance is a one-year term life insurance policy. You can renew your policy every year, but the premiums will go up each year.
Increasing Term Life Insurance
The death benefit of an increasing term life insurance policy will increase periodically throughout the policy’s term. For example, your benefit might increase by 5% each year. Unlike with other types of term life, the cost of increasing term insurance premiums may fluctuate over time.
Decreasing Term Life Insurance
The death benefit of decreasing term life insurance gradually decreases over the course of the policy. While the premiums remain constant. These policies are often bought for coverage during the repayment of a loan or mortgage. The death benefit attached to the policy will lose value as the loan is repaid.
Return-of-Premium Life Insurance
Return-of-premium (ROP) insurance allows you to get your premium payments back if you don’t pass away prior to your policy’s expiration date. A lot of 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 that of other types of term life policies.
Permanent Life Insurance
There are a few major differences between permanent life insurance and term life insurance. First of all, your permanent life insurance policy will remain in effect for the rest of your life. As long as you continue to pay your premiums. Next, you can build up a cash value with permanent life policies. Which is like a savings account that accrues interest. Finally, because of these features, premiums for permanent life policies are usually higher than for term policies.
But like term life, there are numerous types of permanent life insurance policies to choose from, including:
Whole life insurance not only provides a benefit to beneficiaries upon death, but it also includes a savings component, which means that when you pay your premiums, you will accumulate a cash value. Your cash value will accrue interest on a tax-deferred basis at a predetermined rate.
Universal life insurance (UL) policies offer a lot of flexibility. You will have the option of changing the amount of your death benefit, as well as the amount of your premium payments. Premiums for UL policies go toward both the cost of insurance (COI) and a savings component (also called the cash value), and you will be able to eventually use your cash value toward your COI, lowering your premium payments. You can also lower your premium payments by lowering your death benefit amount, if you so choose.
Indexed Universal Life Insurance
Indexed universal life (IUL) insurance is another type of permanent life insurance that includes a cash value. Unlike with whole life, IUL’s cash value is usually invested in a stock index, which is a predetermined grouping of different stocks. An IUL premium is adjustable in the same way that a universal life policy premium is: it rises and falls in tandem with the policy’s cash value. You might not have to pay a premium one day because the cash value could eventually 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 the premium can also be changed. But variable universal life insurance policies include investment subaccounts, which are similar to mutual funds, that allow the cash value to be invested.
A final expense insurance policy is a type of whole life insurance policy that pays out a small benefit upon the policyholder’s death. The average range of death benefits payable is $2,000 to $35,000, and is intended to cover final expenses such as a burial, cremation, or funeral services. But if you have one of these policies, 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.
These policies have their drawbacks: they are more expensive than comparable policies, and they only payout a small amount, as noted above. But they can be very good options for those who are older or in poor health, since they don’t require a medical exam, and they are generally easier to get than other types of more traditional life insurance.
Illinois Life Insurance Laws
When it comes to life insurance, the federal government generally leaves consumer protection and insurance industry regulation up to the individual states. And Illinois has consumer protections in place to protect you when you purchase life insurance. In Illinois, the insurance industry is primarily governed by the Illinois Insurance Code (Chapter 215 of the Illinois Compiled Statutes), though other consumer protection laws have also been enacted. The insurance industry in Illinois is regulated by the Illinois Department of Insurance.
You’ll have the following rights when it comes to your life insurance policy in Illinois:
Free Look Period
If you purchase a life insurance policy in Illinois, you’ll be given a 10-day free look period, during which you’ll be able to “test drive” your policy. During these 10 days, you’ll have the option of canceling the policy and receiving a full refund from your insurance provider.
If you live in Illinois, your insurance company will also be required to give you a 30-day grace period if you miss a premium payment. Your coverage cannot be terminated if you make up your payment during those 30 days. And, if you pass away during the grace period, your insurer is obligated to pay out your death benefit. This grace period means your beneficiaries can’t be denied their claim, even if your past due on your payments, and that you will be able to avoid the hassle of applying for and being underwritten for a new policy.
The Illinois Life and Health Insurance Guaranty Association will back your policy’s cash value up to $100,000 and your death benefit up to $300,000 in the case that your life insurance company goes out of business. This cap applies to each individual, regardless of how many policies they have or how much money is associated with each one.
All life insurance claims in Illinois must be settled and paid out promptly per state law. If an insurance claim is not settled within 30 days in Illinois, your beneficiaries will be entitled to both the original claim amount and interest for the time the claim was delayed. Interest will begin to accrue on the death benefit after the first month of nonpayment by the insurance company.
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 quotes. Simply provide them with some basic information about yourself and what you’re looking for, and they will be able to use that information to find you free personalized quotes. But to give you an example, a 30-year-old man in good health who does not smoke could pay anywhere from $20 to $56 per month for a 20-year $769,000 policy in Illinois.
Illinois Life Insurance Resources
In Illinois there are several state and federal resources in place to help you if you have any problems with your insurer or policy. These resources include:
- Illinois Department of Insurance – The Illinois Department of Insurance is responsible for customer service and insurance industry oversight. Customers who are unhappy with their insurance provider can file a complaint with the Department.
- Illinois Life and Health Guaranty Association – The Illinois State Legislature established the Illinois Life and Health Guaranty Association to protect Illinois residents if their insurance company faces financial problems. Consumers can check an insurer’s licensing status to make sure their policy qualifies for protection from the ILHGA.
Does Illinois require life insurance?
No, you will never be forced to get life insurance. It is always your choice.
What are the best life insurance companies in Illinois?
In Illinois, there are many good ways to get life insurance. Northwestern Mutual, Transamerica, Nationwide, AIG, and Liberty Mutual are at the top of the list.
How much does life insurance cost in Illinois?
There are many things that can affect how much life insurance costs, but here’s an example. A woman in Illinois who is 30 years old and in good health and buys a $769,000 20-year term policy will pay an average of $24.74 per month. A healthy 30-year-old man, on the other hand, will pay about $34.34 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. And we do everything 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.