Purchasing life insurance is one of the best things you can do to ensure your family’s financial security. But finding the right policy for you can be difficult because you’ll need to carefully consider a number of factors. Including the different types of policies available, as well as the regulations that you and your insurance company must follow.
It is in your best interest to learn everything you can about the New Mexico life insurance market before making a final decision. Although this can feel like a difficult task, EZ is here to help! Read our comprehensive guide first. Then contact an EZ agent for assistance in finding the best life insurance policy for you.
How Life Insurance Works in New Mexico
When you buy life insurance, you are entering into a legally binding contract with your chosen insurance company. You agree to pay the monthly premiums to your insurance company in exchange for a lump-sum payment to your loved ones if you die while your policy is still in effect. This death benefit can be used by your beneficiaries for anything they want. From mortgage payments to retirement or college savings to replacement for your income.
You should seriously consider purchasing life insurance if you have dependents, debts, or other financial obligations that must be met even after your death. But having life insurance is critical if you are the primary or sole provider for your family. Your policy will ensure that your loved ones can maintain their current standard of living if you die unexpectedly.
Types of New Mexico Life Insurance
There are so many different types of life insurance policies on the market today that almost anyone can find one that is right for them. As you search, there will be many decisions to make. But the first will be between the two main types of policies:
- Term life insurance
- Permanent life insurance
To make this decision, consider how long you want your coverage to last. As well as how much you’re willing to spend.
Term life insurance is more popular than permanent life insurance because of its lower premiums. Premiums are typically lower because this type of policy will not cover you indefinitely. Instead, when you purchase term life insurance, you specify the length of time you want to be covered. A policy’s term is typically 15 years, but policies with terms ranging from one year to 30 years are available.
These policies are fairly straightforward. The amount of your monthly premiums will not change for your entire term, in most cases. 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
Level term life insurance has a set death benefit and premium payments. They will be determined when you purchase the policy, and will not change at any time during the policy’s term. This 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
An increasing term life insurance policy’s death benefit grows over the policy’s term. Your benefit, for example, could rise by 5% per year. Increasing term insurance premiums, unlike those of other types of term life policies, will rise and fall over time.
Decreasing Term Life Insurance
The death benefit of decreasing term life insurance decreases over the course of the policy while the premium will stay the same. Typically, these policies are purchased to provide protection while repaying a loan or mortgage. The value of the death benefit decreases as the loan is repaid.
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 expires. ROP policies are significantly more expensive than those of other types of term life policies. But many people find the prospect of receiving their premiums back appealing enough to outweigh the extra cost.
Permanent Life Insurance
Your permanent life insurance policy, unlike term life insurance, 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), permanent life premiums are typically higher than term life premiums.
There are numerous types of permanent life insurance policies to choose from, including:
Whole life insurance not only provides a death benefit to beneficiaries, but it also includes a savings component that you can borrow against while you’re alive. When you pay your premiums, this cash value accumulates. Interest on your cash will accrue at a predetermined rate on a tax-deferred basis throughout your life with these policies.
This type of policy is very adaptable because you can change both the amount of the death benefit and the amount of your premium payments. Your premium payments will be applied to both the cost of insurance (COI) and the cash value, and as the cash value grows, you will be able to use it to pay your premiums. You’ll also be able to lower your premiums by lowering the amount of your death benefit.
Indexed Universal Life Insurance
The cash value of an indexed universal life insurance (IUL) policy can accrue more interest than a whole life policy, because it can be invested in a stock index. An IUL policy’s premiums can be adjusted in the same way that universal life policy premiums can: they can rise and fall with the cash value of the policy. Eventually, you may not 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. Usually between $2,000 and $35,000. The death benefit from final expense insurance is intended to cover final expenses such as a burial, cremation, or funeral service. Your beneficiary, though, 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 is often a good choice for those who are older or in poor health, because you will not be required to undergo a medical exam or wait for coverage to begin. Keep in mind, though, that these policies are frequently more expensive than comparable policies, and the death benefit is usually small.
New Mexico Life Insurance Laws
New Mexico has life insurance laws in place to protect consumers. The primary regulating force behind the insurance industry in the state of New Mexico is Title 13 of the New Mexico Administrative Code and Chapter 59A of the New Mexico Statutes. But other legal provisions have also been adopted as consumer protection laws. The New Mexico Public Regulation Commission’s Division of Insurance regulates the state’s insurance industry.
The most important rules that may apply in your situation are as follows:
Free Look Period
A “free look” period is the time after you purchase a new life insurance policy, during which you can return it for a full refund of all premiums. Many states mandate a free look period, but New Mexico does not. Life insurance companies are not obligated to provide policyholders with a free look period, but many of them do so as a courtesy, so the length of the free look period varies from insurer to insurer. In New Mexico, if a company offers a free look period, it must treat all policyholders equally.
The standard grace period offered by New Mexico life insurance companies is 31 days. This means that if you miss a policy payment, you will be given that amount of time to make up your missed payment. Your insurance company will not be able to cancel your policy during this time. If you pass away within the grace period and a valid death claim is filed, they will be obligated to pay the claim. This gives policyholders a chance to get their policies back in good standing with their insurers before they are forced to look for alternative insurance. The number of times a policy can enter a grace period is unlimited.
The New Mexico Life Insurance Guaranty Association guarantees up to $300,000 in death benefits and up to $100,000 in cash value per person for those who have insurance policies with companies that go bankrupt or become insolvent. Keep in mind that the caps apply to each individual, no matter how many policies they have or how much coverage each one provides.
The state of New Mexico is firm in its belief that all claim payments should be made promptly. Because of this, New Mexico goes so far as to specify a hard deadline by which a claim must be resolved. The maximum allowed delay for an insurance company to avoid financial penalties is 60 days. This is why claims are typically resolved rapidly, usually within a month.
Your premiums will depend on a number of factors, such as your age, health, and even your gender. For the quickest and most accurate quotes, please contact one of our EZ agents. If you give them some basic information, they can find you free quotes that are specifically tailored to you. But to give you an example of what life insurance premiums look like in New Mexico, a healthy, nonsmoking 25-year-old man in New Mexico could pay anywhere from $15 to $42 per month for a $230,000 policy with a 20-year term.
New Mexico Life Insurance Resources
In New Mexico, there are several resources available that can help you if you have any problems with your insurer or policy. These resources include:
- New Mexico Office of the Superintendent of Insurance – The primary function of the New Mexico Office of the Superintendent of Insurance (OSI) is the enforcement of insurance laws. But the office also provides assistance to policyholders and beneficiaries in the state who have questions or complaints.
- New Mexico Life & Health Insurance Guaranty Association – Policyholders who are residents of New Mexico and whose insurance provider has filed for bankruptcy may seek assistance from the New Mexico Guaranty Association.
- National Association of Insurance Commissioners – If consumers have questions or concerns that the OSI is unable to address, they can go to the National Association of Insurance Commissioners website. Where they will find a policy locator service and other helpful resources.
Does New Mexico 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 Mexico?
In New Mexico, there are many good ways to get life insurance. New York Life, Northwestern Mutual, State Farm, Prudential, and MassMutual are at the top of the list.
How much does life insurance cost in New Mexico?
There are many things that can change how much life insurance costs, but here’s an example. A healthy 30-year-old woman in New Mexico will pay an average of $23.78 a month for a 20-year term policy that costs $612,000 and lasts for 20 years. On the other hand, a healthy 30-year-old man will pay about $29.51 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 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. We 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.