If you’re looking for life insurance in the state of Vermont, there’s a lot you’ll need to learn about before you purchase your policy. There is a wide variety of policies to choose from in Vermont. As well as a lot of regulations that it will be in your best interest to be aware of. All of this means that searching for a policy can be time-consuming and frustrating – but it doesn’t have to be! EZ is here to help. First, read our comprehensive guide below, then speak to an agent about finding the best policy for you.
How Life Insurance Works in Vermont
When you purchase life insurance, you are entering into a legally binding contract with your chosen insurance company. You commit to paying the required premiums. In exchange if you pass away while your life insurance policy is still active, your insurer will give your designated beneficiaries a one-time cash payment known as a “lump sum death benefit”. They will be able to use this payout however they choose. For things like repaying a mortgage, saving for the future, or replacing your income.
If you are responsible for the financial well-being of others, if you have debts, or other financial obligations that will still need to be met after your death, you should seriously consider purchasing life insurance. And, if you are the primary or sole provider for your family, you should absolutely have a policy. Having a policy will mean that your loved ones will be in a position to continue living the way they do now, even after you are gone.
Types of Vermont Life Insurance
Because there are so many different types of life insurance policies on the market today, almost anyone can find one that is right for them. All of these options, though, mean that you’ll have to make a lot of decisions about your policy. The first decision you’ll have to make will be between the two main types of life insurance: term life insurance and permanent life insurance.
When deciding whether to buy term or permanent life insurance, you should think about how long you would like the coverage to last. As well as how much you’re willing to spend on your premiums.
Term life insurance has become the more popular choice because of its lower premiums. These policies tend to be cheaper than permanent life policies because they do not provide indefinite coverage. Instead, when you purchase term life insurance, you specify how long you want to be covered for. The term of a policy is typically 15 years. But you can find policies that will cover you for as little as one year or as many as 30 years. Your beneficiaries will receive a tax-free death benefit if you die while the policy is still in effect. You can also rest easy knowing that your premium payments, in most cases, will never change if you choose some types of term life.
There are several types of term life policies available, including:
Level Term Life Insurance
The value of the death benefit and your premium price are both fixed at the time of purchase with this type of policy. So, they will not change as long as the policy is active. The majority of people who purchase term life choose level term life insurance policies.
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 each year. But your premiums will most likely rise each time that you do.
Increasing Term Life Insurance
The death benefit of an increasing term life insurance policy gradually increases over the policy’s term. For example, the value of the policy’s death benefit might increase by 5% each year. Unlike with other types of term life, the cost of increasing term insurance premiums may fluctuate over the policy’s term.
Decreasing Term Life Insurance
The death benefit of decreasing term life insurance gradually decreases over the course of the policy, while the premium stays the same. These policies are often purchased for coverage while repaying a loan or mortgage. The death benefit will lose value as the loan is repaid.
Return-of-Premium Life Insurance
With return-of-premium (ROP) insurance, the premium payments you make are reimbursed if you don’t pass away prior to the expiration date of the policy. While many individuals find the return of premiums to be appealing, it’s important to note that the cost of ROP policies is significantly higher than those of other term life policies.
Permanent Life Insurance
Permanent life insurance policies differ from term life policies in a few significant ways. First, as long as you continue to pay your premiums, a permanent life policy will remain in effect for the rest of your life. Next, permanent life policies usually include a type of savings account, known as cash value. Which accrues interest and can be borrowed against or used to pay your premiums. Finally, because of these features, premiums for permanent life policies are usually higher than for term life policies.
But, as with term life policies, there are numerous permanent life insurance policies to choose from, including:
A guaranteed death benefit and fixed premiums are included in whole life insurance. A whole life insurance policy, in addition to providing a death benefit, can accumulate cash value that earns interest at a predetermined, tax-free rate.
If you choose universal life insurance, you will have a broader range of options. You will have the option of changing the amount of the death benefit as well as the amount of your premium payments. You can use the cash value that you build up with this policy to help pay your premiums, thus lowering them. Or you can also choose to lower the amount of your death benefit to lower your premiums.
Indexed Universal Life Insurance
The cash value of an indexed universal life (IUL) policy can be invested in a stock index. Giving you an opportunity to make more money than you would with a set interest rate. IUL premiums can be adjusted in the same way that other universal life policy premiums can: they can increase and decrease in tandem 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 universal life insurance policies, can be invested. But these policies allow you to invest using subaccounts, which are similar to mutual funds. Premiums for VUL policies, like those of traditional universal life insurance, can be changed.
A final expense policy is a type of whole life insurance policy that pays a small death benefit, usually $2,000 to $35,000. This death benefit 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 funds as they see fit. Such as on a vacation or to pay their taxes.
These policies do not require a medical exam and offer easy and immediate coverage. But it’s important to note that they can be expensive when compared to other similar policies.
Vermont 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. So, in Vermont, the primary regulating force behind Vermont’s insurance and banking industries is Title 8 of the Vermont Statutes. Chapter 103 is specific to life insurance, but other legal provisions have also been adopted as consumer protection laws. The insurance industry is regulated by the state’s Department of Banking, Insurance, Securities, and Health Care Administration.
The following are the most important rules that may apply in your situation:
Free Look Period
If you purchase life insurance in Vermont, you will be given a state-mandated 10-day “free look” period beginning on the date of policy delivery. During this time, you will be able to review your policy contract. If you decide that it does not meet your needs, you will be able to cancel your policy and get a full refund of your premiums. It is illegal for an insurance company to charge any fees or penalties if you exercise your free look period rights.
The grace period in Vermont is 30 days, which is fairly standard across the country. This grace period means that, as long as you make up a missed premium payment within 30 days, your policy cannot be canceled. And if you die during a grace period, your insurance company cannot deny coverage to your beneficiaries. There are no restrictions on how many grace periods a policy can have.
You and your beneficiaries would lose out on a large amount of money if your insurance company goes bankrupt and is unable to pay claims. You could also lose cash value, if you have a permanent life policy. Vermont believes that its consumers deserve to be protected from this unlikely event, and that a backup guarantee should be provided as a safety net. If an insurance company is unable to pay claims or make cash value payments, the Vermont Life and Health Insurance Guaranty Association will make up to $300,000 in death claim payments and $100,000 in cash value returns.
Vermont wants all claims to be settled as soon as possible, and they have set a hard deadline. All claims must be paid within 45 days by an insurance company. If this is not done, the insurance company will then have to pay the claim amount plus interest to beneficiaries. Because of this, most claims in Vermont are paid in full within the 45-day window.
A variety of factors, including your age, current health, and even gender, can affect the cost of your premiums. For the most accurate information on potential costs, contact an EZ agent. Simply give them some basic information, and they will be able to find you free quotes that are tailored to you. But to give you an example of prices, a 34-year-old man in good health who does not smoke could pay anywhere from $18 to $55 per month for a $697,000 policy with a 20-year term in Vermont.
Vermont Life Insurance Resources
In Vermont, there are several resources in place to help you if you have any problems with your insurer or policy. These resources include:
- The Vermont Department of Financial Regulation – Vermont residents can contact the DFR for information and assistance. Its website includes an online complaint form, as well as an insurer license verification tool.
- The Vermont Office of the State Treasurer – Unclaimed policy funds may be turned over to the state. Consumers who believe they may be the beneficiaries of unclaimed policies can search for unclaimed property on the state treasurer’s website. There are also links to several lost policy locator services on the website.
- The Vermont Life & Health Insurance Guaranty Association – Consumers who have been impacted by an insurance company’s insolvency can directly contact the state’s guaranty association for information and next steps.
Does Vermont 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 Vermont?
There are a lot of good ways to get life insurance in Vermont. At the top of the list are National Life Group, Lincoln Financial, New York Life, MassMutual, and Northwestern Mutual.
How much does life insurance cost in Vermont?
There are many things that can affect how much life insurance costs, but here’s an example. A healthy 34-year-old woman in Vermont who wants a 20-year term policy that costs $697,000 and lasts for 20 years will pay an average of $27.12 per month for it. A healthy 34-year-old man, on the other hand, will pay about $28.69 for the same policy.
EZ Can Help!
We at EZ understand that you want the best for your family without spending an arm and a leg. We also know how tough it can be to look for a life insurance policy while juggling everything else in your life. So, we make every effort to simplify the process of purchasing life insurance for you. Not only that, but every one of our services is 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.