Are you an Iowa resident who’s looking to financially protect your family with life insurance? That’s a great decision, but purchasing life insurance in the state of Iowa requires careful attention to a number of different considerations. In the state of Iowa, there are a lot of policies to choose from, and a lot of regulations to be aware of.
Before you make your choice, you should do as much research as possible on the life insurance market in Iowa. But don’t worry, EZ is here to help you make the most well-informed decision possible. First, read our comprehensive guide below, then speak to an EZ agent about the right policy for you.
How Life Insurance Works in Iowa
When you buy life insurance, you are entering into a legally binding contract with your chosen insurance company. You agree to pay the required premiums to the company. In return, your loved ones will receive a tax-free, lump-sum payment known as a death benefit if you pass away while your policy is still in effect. Your chosen beneficiary (or beneficiaries) will be able to use the money however they choose. From paying off a mortgage or other loan to saving for the future to simply replacing your income.
If you have financial obligations that will continue after your death, such as a mortgage or student loans, you should seriously consider purchasing life insurance. And life insurance is an absolute necessity if you are the sole or primary provider for your family. Having a policy will allow your loved ones to maintain their current standard of living if you pass away unexpectedly.
Types of Iowa Life Insurance
Because there are so many different policies and insurance providers to choose from, it is now possible for virtually anyone to find a life insurance policy that works for them. But since there are so many policies out there, you’ll have to make a lot of choices. The first will be between the two main types of life insurance:
- Term life insurance
- Permanent life insurance
When choosing between term and permanent life insurance, some of the most important factors to take into consideration will be how long you want the policy to last. As well as how much you are willing to pay for your premiums.
Term life insurance is more popular than permanent life insurance because it tends to be the more affordable of the two. It’s cheaper because term life policies do not cover you indefinitely. Instead, when you purchase term life insurance, you select the period of time you will be covered by the policy. In most cases, the length of a term will be 15, 20, 25, or 30 years. In most cases, with these policies, your monthly premiums are guaranteed to remain the same throughout the term of your policy. If you pass away while the policy is still active, your beneficiaries will receive a tax-free death benefit.
There are several types of term life policies available, including:
Level Term Life Insurance
Both the death benefit and the premiums for level term life insurance remain the same throughout the policy’s term. Most people who purchase term life insurance purchase level term 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 your premiums will rise with each passing year.
Increasing Term Life Insurance
An increasing term life insurance policy’s death benefit will increase over the life of the policy. For example, the policy’s death benefit might increase by 5% each year. Unlike with other term life policies, the premiums for increasing term life insurance will increase or decrease over the course of the policy’s term.
Decreasing Term Life Insurance
With this type of policy, the death benefit will gradually decrease over the course of the policy, but the premiums will remain the same. These policies are usually purchased for coverage while repaying a loan or mortgage, and the death benefit will lose value as the loan is paid back.
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 feature appealing, but you should be aware that the cost of ROP policies is significantly higher than that of other term policies.
Permanent Life Insurance
Unlike with term life insurance, with permanent life insurance, your policy will remain in effect for the rest of your life, as long as you continue to pay your premiums. Because of this, and because permanent life policies also include a type of interest-bearing savings account known as cash value, premiums for these policies are usually higher than for term policies.
There are numerous types of permanent life insurance policies to choose from, including:
Whole life insurance provides a guaranteed death benefit and can accumulate cash value. This cash value will accrue interest at a predetermined, tax-free rate. This basic type of permanent life policy tends to be the most popular choice.
Universal life (UL) is an incredibly flexible type of policy. With UL, you change not only the amount of the death benefit, but also the amount of your premium payments. For example, you can choose to lower your death benefit amount to lower your premium payments. In addition, you can use the cash value that accrues with UL to pay your premiums, thus lowering your payments.
Indexed Universal Life Insurance
Indexed universal life (IUL) insurance is similar to UL, but the cash value of an IUL policy can be invested in a stock index, which is a predetermined grouping of different stocks, and so you have an opportunity to make more money than with a set interest rate. An IUL premium is flexible in the same way that a universal life policy premium is: it rises and falls 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 types of universal life insurance policies, can be used to make investments, but with VUL you can invest in subaccounts, which are similar to mutual funds. Premium payment adjustments are possible, just as they are with traditional universal life insurance.
A final expense insurance life insurance policy is a type of whole life insurance policy that pays out a relatively small death benefit, usually between $2,000 and $35,000. This death benefit is intended to pay for final expenses such as a burial, cremation, or funeral services, but your beneficiary will have complete control over how the death benefit money is spent. The funds could, for example, be used to pay the beneficiary’s taxes or to take a vacation.
These policies are a good option for those who are older or in poor health, since they do not require a medical exam and offer immediate coverage. But you should be aware that they can cost more than comparable policies.
Iowa Life Insurance Laws
In the case of life insurance policies, the federal government has largely delegated the responsibility of regulating the insurance industries and protecting consumers to the states. That means that in Iowa, the state has life insurance laws in place to protect consumers. Title 13 of the Iowa Code (Chapters 505 to 523) is the primary regulating force for the state of Iowa’s insurance industry, but other legal provisions have also been adopted as consumer protection laws. The Iowa Insurance Division is in charge of overseeing the state’s insurance industry.
You will have the following rights when you purchase life insurance in :
Free Look Period
The Iowa free look period is 10 days, which is the same as in most states. This mandatory free look period means you will have a full 10 days to “test drive” your policy at no risk to you. You’ll have to make a premium payment to your insurance provider to put your policy into effect, but if you cancel within the first 10 days, your insurance provider will have to allow you to cancel your policy with no penalties, and refund any premiums paid.
As in the majority of states, in Iowa you will have a 30-day grace period for late premium payments. This means you’ll have 30 days to make up for a late premium payment without having your insurance policy terminated. During this period, your policy cannot be canceled, and if you pass away during this time, your insurance company will be required to pay out your death benefit.
As is the case in a number of other states, there is an organization in Iowa that will guarantee your life insurance policy. In Iowa, the Iowa Life and Health Insurance Guaranty Association offers a guarantee to policyholders in the state of Iowa, so if your insurance company declares bankruptcy or becomes insolvent, they will pay up to $300,000 in death benefits per insured, and reimburse cash value up to $100,000 per person.
The state of Iowa mandates that all claims must be paid within a reasonable amount of time. After 30 days, the death benefit will begin accruing interest. This is meant to encourage insurance companies to pay claims in a timely manner. It also means the majority of claims are resolved in Iowa within a period of around a month after the claim has been filed.
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 prices. Simply provide them with some basic information, and they will use that information to find you free personalized quotes. But to give you some idea, a 30-year-old man in good health who does not smoke could pay anywhere from $16 to $50 per month for a 20-year $644,000 policy in Iowa.
Iowa Life Insurance Resources
In Iowa there are several resources in place to help you if you have any problems with your insurer or policy. These resources include:
- Iowa Life and Health Guaranty Association – The Iowa State Legislature established the nonprofit Iowa Life and Health Guaranty Association to protect Iowa residents in case their insurance company faces financial problems. Consumers can check an insurer’s licensing status and if their policy qualifies for protection by consulting the ILHGA.
- Market Regulation Bureau – The Market Regulation Bureau of the Iowa Insurance Division provides consumer advocacy services and assists citizens in understanding their insurance options. You can contact the Market Regulation Bureau for help with problems or questions about your life insurance policy. Or you can file a complaint against your insurer.
Does Iowa 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 Iowa?
In Iowa, there are many good ways to get life insurance. Northwestern Mutual, the Iowa Farm Bureau Federation, Lincoln Financial, Principal Financial Group, and Transamerica are at the top of the list.
How much does life insurance cost in Iowa?
There are many things that can affect how much life insurance costs, but here’s an example. A 30-year-old woman in good health who buys a 20-year term policy for $644,000 in Iowa will pay an average of $26.69. A healthy 30-year-old man, on the other hand, will pay about $30.63 for the same policy.
EZ Can Help!
At EZ, we get that everyone has unique requirements, priorities, and financial constraints. We also understand that you want the best for your family without depleting your savings account. So we make every effort to simplify the process of purchasing life insurance, and we 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.