Purchasing life insurance is one of the best things you can do to protect your family’s financial future. But if you’re looking for a New Jersey life insurance policy, you’ll need to carefully consider a number of factors. Such as the various types of policies available, as well as the regulations that you and your insurance company must follow.
Before making a final decision about a policy, it’s in your best interest to learn everything you can about the New Jersey life insurance market. This may feel like a difficult task, but EZ is here to help! Read our in-depth guide below first. Then contact an EZ agent for help finding the best life insurance policy for you.
How Life Insurance Works in New Jersey
When you purchase life insurance, you are entering into a legally binding contract with the insurance company of your choice. You agree to pay premiums to the company in exchange for your family receiving a lump-sum payment if you die while your policy is still in effect. Your beneficiaries can use this death benefit for anything they want. From mortgage payments to retirement or college savings to replacement for your income.
If you have dependents, debts, or other financial obligations that must be met even after your death, you should seriously consider life insurance. But if you are the primary or sole provider for your family, having life insurance is critical. Your policy will ensure that your loved ones can maintain their current standard of living even after you are gone.
Types of Life Insurance Available in New Jersey
There are so many different types of life insurance policies available today. So, almost anyone can find one that is right for them. There will be many decisions to make regarding your policy, but the first one will be between the two main types of policies:
- Term life insurance
- Permanent life insurance
To make this decision, consider how long you want the coverage for, as well as how much you’re willing to spend.
Because of its lower premiums, term life insurance is more popular than permanent life insurance. Term life insurance premiums are typically lower because this type of policy will not be in effect indefinitely. Instead, when you buy term life insurance, you specify how long you want to be covered for. The term of a policy is typically 15 years. But policies with terms as short as one year and as long as 30 years are available. If you die while the policy is still in effect, your beneficiaries will receive a tax-free death benefit.
With most term life policies, the amount of your monthly premium will not change for the entire term of your policy.
There are several types of term life policies available, including:
Level Term Life Insurance
The death benefit and premium payments for level term life insurance are both set at the time of purchase. They will not change at any point during the policy’s term. Level term is the most common type of term life insurance policy.
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 grows over the term of the policy. For example, your benefit could increase by 5% per year. Increasing term insurance premiums, unlike those of other types of term life policies, will fluctuate over time.
Decreasing Term Life Insurance
The death benefit associated with decreasing term life insurance decreases over the policy’s term. But the premiums will remain the same. These policies are typically purchased to provide protection while repaying a loan or mortgage. As the loan is repaid, the value of the death benefit decreases.
Return-of-Premium Life Insurance
Return-of-premium (ROP) insurance is a form of term life insurance in which the premium payments you make are reimbursed if you don’t pass away prior to the expiration of the policy. The cost of ROP policies is significantly higher than that of other types of term life policies. But many people find the prospect of getting their premiums back appealing enough that it outweighs the extra cost.
Permanent Life Insurance
Unlike a term life insurance policy, your permanent life insurance policy will remain in effect as long as you continue to make premium payments. Because of this, and because permanent life insurance policies typically include a type of savings account that earns interest (known as cash value). Premiums for permanent life are typically higher than premiums for term life.
There are numerous types of permanent life insurance policies to choose from, including:
Whole life insurance not only provides a death benefit, but it also includes a savings component. Which means that when you pay your premiums, you will accumulate a cash value. Interest on your cash value will be accrued on a tax-deferred basis at a predetermined rate.
This type of policy is very flexible, because you’ll have the ability to adjust both the amount of the death benefit and the amount of the premium payments. Your premium payments will go toward both the cost of insurance (COI) and the cash value. Eventually, as your cash value builds up, you’ll be able to use it to pay your premiums. You’ll also be able to lower your death benefit amount to lower your premiums.
Indexed Universal Life Insurance
The cash value of an indexed universal life insurance (IUL) policy earns interest based on investment in a stock index. The premiums for an IUL policy can be adjusted in the same way that the premiums for a universal life policy can. They can increase and decrease with the cash value of the policy. It’s possible that one day you won’t have to pay a premium because the cash value will cover the entire cost.
Variable Universal Life Insurance
The cash value of a variable universal life (VUL) policy, like the cash value of other universal life insurance policies, can be invested. But VUL policies include investment subaccounts that are similar to mutual funds. And, as with traditional universal life insurance, you’ll be able to adjust your premium payments based on how much cash value you have accrued.
A final expense life insurance policy is a type of whole life insurance that pays a small death benefit. The death benefit is typically between $2,000 and $35,000. This death benefit is intended to cover final expenses such as a burial, cremation, or funeral service. But with that being said, your beneficiary will be free to spend the death benefit money however they see fit. Such as on a trip or to pay their taxes.
Because you will not be required to undergo a medical exam or wait for coverage to begin, this type of policy is often a good choice for those who are older or in poor health. But keep in mind that these policies are frequently more expensive than comparable policies. And the death benefit is typically small.
New Jersey Life Insurance Laws
Life insurance companies in New Jersey are required to follow certain regulations under Title 17 of the New Jersey Revised Statutes, with oversight provided by the State of New Jersey Department of Banking and Insurance. Title 17 statutes are intended to encourage industry standardization, healthy competition, and a level playing field for consumers.
Among the rights and protections that you are guaranteed are:
Free Look Period
Residents of New Jersey have 10 days after purchasing a life insurance policy to “return it” and receive a full refund. This 10-day period, known as a free look period, can be viewed as an opportunity to “test drive” your recent purchase. If you are unhappy with the policy in any way, shape, or form, you are entitled to a full refund.
Residents in New Jersey should not be concerned if they are accidentally late on their life insurance premium payments. The state requires New Jersey life insurance companies give a 30-day grace period to make up for a late payment before your policy is canceled. This grace period allows for accidental missed payments and “reasonably” late payments to be made without resulting in policy cancellation.
If your life insurance company in New Jersey goes bankrupt, your policy will still be guaranteed by the New Jersey Life and Health Insurance Guaranty Association. You must be up-to-date on your premium payments and your (former) insurance company must have been licensed to operate in the state to qualify. The New Jersey Life and Health Insurance Guaranty Association will insure your policy for up to $500,000 in death benefits and up to $100,000 in cash value losses.
Life insurers in the state of New Jersey are required to expedite the claims payment process whenever possible. Insurers are required to make claims payments within two months of receiving proof of death, as stipulated by state law.
There are a number of variables that can impact the price 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. If you provide them with some information, they will be able to use that information to find you free quotes that are tailored to you. But to give you an example of how much you might pay, a 32-year-old non-smoking man in good health could pay anywhere from $24 to $77 per month for a 20-year $965,000 policy in New Jersey.
New Jersey Life Insurance Resources
In New Jersey, there are several resources available that can help you if you have any problems with your insurer or policy. These resources include:
- The State of New Jersey Department of Banking and Insurance – In addition to issuing licenses and maintaining oversight of insurance companies operating within the state, the Division of Insurance within the Department of Commerce handles general inquiries, educates customers, and investigates complaints lodged against insurance companies.
- New Jersey Life & Health Insurance Guaranty Association – Policyholders who are residents of New Jersey and whose insurance provider has filed for bankruptcy may seek assistance from the New Jersey Guaranty Association. They will cover up to $500,000 in death benefits and up to $100,000 in cash value. The benefits of an annuity can also be guaranteed.
- The National Association of Insurance Commissioners – The NAIC assists customers across the country in making educated decisions regarding their insurance coverage. Its website features learning guides, a company search, and a lost policy locator service, all of which are designed to assist beneficiaries in locating policy information for departed loved ones.
Does New Jersey 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 New Jersey?
There are a lot of good ways to get life insurance in New Jersey. At the top of the list are Prudential, MassMutual, Northwestern Mutual, Guardian, and Lincoln Financial.
How much does life insurance cost in New Jersey?
There are many things that can affect how much life insurance costs, but here’s an example. A healthy 32-year-old woman in New Jersey will pay an average of $36.62 per month for a 20-year term policy that costs $965k and lasts for 20 years. A healthy 32-year-old man, on the other hand, will pay about $39.02 for the same policy.
EZ Can Help!
We at EZ know 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 guarantee that all of our services will always be 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.