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How Life Insurance Works in North Dakota
Types of North Dakota Life Insurance
Term Life Insurance
Permanent Life Insurance
North Dakota Life Insurance Laws
The Cost
North Dakota Life Insurance Resources
FAQs
EZ Can Help!
How Life Insurance Works in North Dakota
Essentially, a life insurance policy is a legally binding agreement between you and your chosen insurance provider. You agree to pay the company the required premiums in order to keep the policy active. Your insurance company will pay a death benefit to your family (or beneficiaries) if you pass away while the policy is active. The death benefit is paid out as a one-time cash payment. Which your beneficiaries can use for anything from mortgage payments to college tuition to replacing your income.
Life insurance is definitely a good investment for people who have debts, dependents, or other financial obligations that would need to be met even after death. And, if you are the sole provider for your family, life insurance is a must to protect their financial security in the event of your passing.
Types of North Dakota Life Insurance
Almost anyone can find a life insurance policy that suits their specific needs and preferences thanks to the wide range of options currently on the market. But because there are so many options, you’ll have a lot to think about. You’ll have to decide exactly what you want out of your policy. The first decision you’ll have to make is which of the two main types of life insurance is right for you.
The choice between one of the two main types of life insurance policies (term life insurance or permanent life insurance) will be largely dependent on both your budget, and by how far in the future you anticipate needing the coverage.
Term Life Insurance
Term life insurance tends to be the most popular type of life insurance because of its affordable premiums. These policies are usually cheaper than permanent life insurance policies because they don’t cover you for your entire life. Instead, you choose the length of time that the policy will be in effect. The typical length of a policy’s term is 15 years. But it can be as short as one year or as long as 30. If you pass away while the policy is still in effect, your beneficiaries will receive a death benefit that is not subject to federal taxes. These policies are fairly straightforward: your premium will never increase with most types of term life insurance policies.
There are several types of term life policies available, including:
Level Term Life Insurance
With level term life insurance, the death benefit and premiums are set at the time of purchase. They won’t change for the entire term of the policy. The vast majority of people who buy term life insurance opt for level term policies.
Annual Renewable Term Life Insurance
Annual renewable life insurance is a term life insurance policy that lasts for a year. Policies are renewable annually, but the premiums will increase with each passing year.
Increasing Term Life Insurance
Your policy’s death benefit will grow at regular intervals if you have an increasing term life insurance policy. Your benefit amount might increase by 5% annually, for instance. Unlike with other types of term life, the cost of increasing term premiums is likely to fluctuate over time.
Decreasing Term Life Insurance
With decreasing term life insurance, the premium stays the same while the death benefit decreases over time. These policies are usually purchased for protection while you pay off a loan or mortgage. The death benefit will decrease as the loan is paid off.
Return-of-Premium Life Insurance
With return-of-premium (ROP) term life insurance, your premium payments will be refunded if you don’t die before the policy’s expiration date. ROP policies are significantly more expensive than other types of term life insurance. But many people find the return of premiums feature very attractive.
Permanent Life Insurance
The main difference between a permanent life insurance policy and a term life insurance policy is that a permanent policy will remain in effect for the rest of your life. As long as you continue to pay your premiums on time. Because of this, and because permanent life policies also usually include a cash value component that builds over time, the premiums for these policies are typically higher than those of term life policies.
There are numerous types of permanent life insurance policies available, including:
Whole Life Insurance
Whole life insurance includes a guaranteed death benefit and can accumulate cash value. Interest accrues at a predetermined, tax-free rate for as long as the policy is in effect.
Universal Life Insurance
Universal life insurance policies are some of the most flexible policies out there. With this type of policy, you’ll be able to change the amount of your premium payments as well as your death benefit. The premium payments you make will go toward both the cost of insurance (COI) and your cash value. Eventually you will be able to pay your premiums with your cash value if you wish. In addition, if you’d like to lower your premiums you can also lower your death benefit amount at any time.
Indexed Universal Life Insurance
This type of permanent life insurance has a cash value that is tied to a stock index. So, you can earn money if your stocks do well. The premiums for this policy can be adjusted in the same way that they can be for a universal life policy as the cash value of the policy increases. Your indexed universal life insurance (IUL) could eventually become a no-premium policy, with the cash value covering the entire premium.
Variable Universal Life Insurance
A variable universal life (VUL) policy’s cash value, like the cash value of other universal life insurance policies, can be invested. But with VUL you can invest in subaccounts, which are similar to mutual funds. And like traditional universal life insurance, the premiums of VUL policies can be adjusted.
Final Expense Life Insurance
Final expense insurance is a type of whole life insurance that might be a good choice if you are older or have medical issues that could make it difficult to get a traditional policy. These policies do not require a medical exam. but they can be expensive. They also pay a relatively small benefit upon your death, usually between $2,000 and $35,000. This death benefit from final expense insurance is intended to cover final expenses such as a burial, cremation, or funeral service. But, with that being said, your beneficiary can spend the death benefit on whatever they want. Such as a vacation or property taxes.
North Dakota Life Insurance Laws
The federal government mostly leaves life insurance regulation and consumer protection to the states. Title 26.1 of the North Dakota Century Code regulates the insurance industry, but other consumer protection laws have been passed. The North Dakota Insurance Department regulates insurance.
All of this means that you will have the following rights and protections when you purchase life insurance in North Dakota:
Free Look Period
If you purchase a life insurance policy in the state, you have 20 days to cancel the policy and request a refund. This is known as the “free look period,” and it allows you to review and test your life insurance policy for a set period of time before you are locked into it. If you do choose to cancel your policy within these 20 days, perhaps because you have found a better deal or have realized it is not the right policy for you, you can get a full refund with no questions asked.
Grace Period
According to North Dakota law, insurers must give you a 31-day grace period, meaning that if you miss a payment, you will have 31 days to make up this payment before the insurance company can cancel your policy. This time frame is intended to prevent an insurance company from withholding a claim due to a minor payment delay. If you die during the grace period, your life insurance company is still obligated to pay the claim.
Benefit Guarantee
The North Dakota Life and Health Insurance Guaranty Association backs all life insurance policies in the state. If your life insurance company goes out of business during the term of your policy, this organization will take over and pay out claims to beneficiaries.
You must be current on your premium payments and the company must be legally licensed in the state of North Dakota to qualify. Your policy will be guaranteed by the North Dakota Life and Health Insurance Guaranty Association for up to $300,000 in death benefits and $100,000 in cash value.
Settlement Timelines
In North Dakota, life insurance companies are required to pay any death benefit claim within 60 days of receiving it. And, while the law requires payments to be made within 60 days, most insurers will pay within a month. It’s important to note, though, that every life insurance company has different claim payment policies, so check with your insurer to review their specific policy.
The Cost
The amount you pay for your premiums will be affected by factors such as your age, health, and even your gender. The quickest way to find out what you can expect to pay for a policy is to get in touch with one of our EZ agents. They will be able to use the information you give them to find you free quotes that are tailored to you. But to give you an example of prices, a healthy 25-year-old man who does not smoke could pay anywhere from $14 to $25 per month for a 20-year $300,000 policy in North Dakota.
North Dakota Life Insurance Resources
In North Dakota, there are several resources in place to help you if you have any problems with your insurer or policy. These resources include:
- North Dakota Life & Health Insurance Guaranty Association – In order to operate legally in North Dakota, insurance companies are mandated by law to become members of the North Dakota Guaranty Association. Its purpose is to settle claims in the event of a business liquidation.
- North Dakota Insurance Department – This department can assist with any problems you have with your insurance company, as well as provide helpful information.
FAQs
Does North Dakota 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 North Dakota?
In North Dakota, there are many good ways to get life insurance. Northwestern Mutual, Lincoln Financial, Great-West, New York Life, and Nationwide are at the top of the list.
How much does life insurance cost in North Dakota?
There are many things that can affect how much life insurance costs, but here’s an example. A healthy 28-year-old woman in North Dakota will pay an average of $29.20 per month for a 20-year term policy that costs $727,000 and lasts for 20 years. A healthy 28-year-old man, on the other hand, will pay about $34.41 for the same policy.
EZ Can Help!
Everyone has unique requirements, priorities, and financial constraints. At EZ we understand that you want the best for your family without breaking the bank. We also know how frustrating looking for a policy can be. So, we make every effort to simplify the process of purchasing life insurance. Not only that, but we offer all of our services for free. You won’t have to pay a dime 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.
