Although life insurance is an excellent way to financially protect your loved ones, the process of purchasing it can be stressful. You’ll have to research all the various policies on the market, as well as Pennsylvania’s life insurance regulations. It can feel like a daunting task. But before you buy a policy, you should educate yourself on the Pennsylvania life insurance market. You don’t have to do this alone, though: EZ is here to help! After reading the following guide to life insurance in Pennsylvania, contact one of our agents so that they can assist you in finding the best policy possible.
How Life Insurance Works in Pennsylvania
A life insurance policy is a legally binding agreement between you and the insurer of your choice. If you die while your policy is active, your loved ones (“beneficiaries”) will receive the death benefit amount you chose when you purchased the policy. This death benefit is paid as a lump sum that your beneficiary can use for anything they want. Such as debt repayment or college tuition.
Life insurance is essential if you have dependents, debts, or other financial obligations that will continue after your death. It’s even more critical if you are the sole provider for your family. Since life insurance will ensure their financial security in the event of your passing.
Types of Pennsylvania Life Insurance
With so many options on the market today, you are sure to find a suitable life insurance policy. But so many options mean a lot of decisions, the first of which will be between the two main types of life insurance:
- Term life insurance
- Permanent life insurance
The two most important factors to consider when deciding between term and permanent life insurance are your budget and your coverage needs. For example, do you want a policy that will last for the entirety of your life? Or do you only want to pay for coverage while you are repaying a mortgage or putting your kids through school? You’ll also have to think about what extra features you’d like your policy to have, if any.
Term life insurance has become the more popular type of life insurance because of its low premiums. These insurance policies are less expensive because you will not be covered for the rest of your life. Instead, you get to choose the length of the policy. The term of a policy can range from one to thirty years, with fifteen years being the most common. If you die while the policy is active, your beneficiaries will receive a tax-free death benefit. The majority of term life insurance policies have premiums that do not increase over the policy’s term.
There are several types of term policies:
Level Term Life Insurance
The death benefit and premiums for level term life insurance are both set at the time of purchase. So, they are guaranteed to stay the same for the duration of the policy. When it comes to life insurance, the vast majority of people opt for level term policies.
Annual Renewable Term Life Insurance
Annual renewable life insurance is a one-year term life insurance policy. Policies can be renewed on an annual basis, but the premium rises with each passing year.
Increasing Term Life Insurance
If you have an increasing term life insurance policy, the death benefit will grow at regular intervals. For example, your benefit amount could rise by 5% per year. Increasing term insurance premiums, unlike premiums of other types of term life insurance, are likely to rise and fall over time.
Decreasing Term Life Insurance
The premium for decreasing term life insurance never changes, but the amount of the death benefit gradually decreases. The most common reason for purchasing this type of policy is to provide coverage while repaying a loan or mortgage. As the loan is repaid, the death benefit decreases.
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
Permanent life insurance differs from term life insurance in that it will cover you for the entirety of your life, as long as you continue to pay your premiums. Because of this, permanent life insurance premiums are usually higher than term life insurance premiums. They are also more expensive because they typically include a cash value component (that you can borrow against or use to pay your premiums) that accumulates over time, and that accrues interest.
There are numerous types of permanent life insurance policies available, including:
Whole life insurance provides a guaranteed death benefit as well as the ability to accumulate cash value. For the duration of the policy’s life, interest accrues at a predetermined, tax-free rate.
The adaptability of a universal life insurance policy is unparalleled. You can modify both your premium payments and your death benefit with this policy. You can eventually use your cash value to pay your premiums if you want, and/or you can also reduce the amount of your death benefit at any time to lower your premiums.
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
The cash value of a variable universal life (VUL) policy, like the cash value of other permanent life insurance policies, can be invested; however, with VUL, you can invest using subaccounts that are similar to mutual funds. VUL policies, like traditional universal life insurance, have adjustable premiums.
Final expense insurance may be a good option if you are older or have health issues that make it difficult to obtain a standard policy. These policies do not require a medical examination, but they are expensive, and have small payouts ranging from $2,000 to $35,000. The death benefit from final expense insurance is intended to cover the costs of the insured’s funeral, burial, or cremation. But your beneficiaries will be able to spend the death benefit money however they want, such as on a vacation or to pay off debts.
Pennsylvania 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 there are state laws in effect in Pennsylvania to protect you as a life insurance consumer. You will be afforded the following rights when you purchase life insurance in Pennsylvania:
Free Look Period
A new policy owner in Pennsylvania is entitled to a 10-day free look period. The free look period is in place so that you can carefully consider every detail of your policy and decide if it is right for you. Insurance companies must accept policy returns in exchange for a full refund during the free look period; it is illegal to impose any penalties or fees in this 10-day period.
In Pennsylvania, you must be given a 30-day grace period to make up for a missed premium payment before your insurance company can cancel your policy. The grace period begins when a payment is missed. If you die during the grace period, your insurance company must still pay your death benefit to your beneficiaries. Any subsequent late payments will begin a new grace period.
Pennsylvania’s legislators recognize that not all insurance companies are financially responsible. Because policyholders have no control over how financially responsible their company is, the Life & Health Insurance Guaranty Association of Pennsylvania guarantees a certain level of benefits in the event that your life insurance company goes out of business. They will not, though, cover an unlimited amount: the maximum death benefit coverage is $300,000, and the maximum cash value protected is $100,000.
Any insurance claim in Pennsylvania that is not paid in a timely manner may result in the insurance company owing interest payments to the policy beneficiaries on top of the claim amount. The time period during which interest begins to accrue varies depending on the policy, but most claims in Pennsylvania are settled within two months.
Your premium payment will be influenced by factors such as your age, health, and even gender. Contacting one of our EZ agents is the quickest way to find out how much you can expect to pay for a policy. They will be able to find you free quotes based on the information you provide them. To give you an idea of prices, though, in Pennsylvania, a healthy 33-year-old man who does not smoke could pay anywhere from $17 to $56 per month for a 20-year $718,000 policy.
Pennsylvania Life Insurance Resources
In Pennsylvania, there are several resources in place to help you if you have any problems with your insurer or policy. These resources include:
- Pennsylvania Life & Health Insurance Guaranty Association – If an issuing insurance company goes out of business, the Pennsylvania Life & Health Insurance Guaranty Association will pay up to $300,000 in death benefits and $100,000 in cash value.
- Pennsylvania Insurance Department – If you are unable to reach an agreement with your life insurance provider, you may file a complaint with the Pennsylvania Insurance Department. The department is in charge of overseeing the state’s licensed life insurance companies.
- Office of the Attorney General – If you are the victim of an insurance scam perpetrated by a fraudster claiming to sell legitimate policies, the Office of the Attorney General can help. To begin the process, you can file a complaint online.
Does Pennsylvania 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 Pennsylvania?
There are a lot of good ways to get life insurance in Pennsylvania. At the top of the list are State Farm, Guardian, Brighthouse Financial,Transamerica, and MetLife.
How much does life insurance cost in Pennsylvania?
There are many things that can affect how much life insurance costs, but here’s an example. A healthy 33-year-old woman in Pennsylvania will pay an average of $26.81 per month for a 20-year term policy that costs $718,000 and lasts for 20 years. A healthy 33-year-old man, on the other hand, will pay about $33.73 for the same policy.
EZ Can Help!
At EZ, we get that everyone has unique requirements, priorities, and financial constraints. We understand that you want the best for your family without breaking the bank. So, we make every effort to simplify the process of purchasing life insurance. We also 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.