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How Life Insurance Works in Virginia
Types of Virginia Life Insurance
Term Life Insurance
Permanent Life Insurance
Virginia Life Insurance Laws
The Cost
Virginia Life Insurance Resources
FAQs
EZ Can Help!
How Life Insurance Works in Virginia
You and your insurance company enter into a legally binding contract when you purchase life insurance. You agree to pay the required premiums to the insurer. If you die while your policy is active, your chosen beneficiary (or beneficiaries) will receive a lump-sum payment from the insurance company, known as a death benefit. They can spend the money on whatever they want. Such as mortgage payments, income replacement, or saving for retirement or college tuition.
Life insurance is a must for people who have dependents, debts, or other financial obligations that must be met even after death. This is especially true if you are the sole provider for your family. Having a policy ensures that your family’s current standard of living can be maintained, even after you are gone.
Types of Life Insurance In Virginia
There are so many different types of life insurance policies available these days that almost anyone can find one that is right for them. But because there are so many options with so many different features, you’ll have to make a lot of decisions before settling on a policy. The first decision you’ll have to make is which of the main types of life insurance you should purchase:
- Term life insurance
- Permanent life insurance
There are multiple differences between these types of policies, as laid out below.
Term Life Insurance
Term life insurance is the more popular type of life insurance because of its low premiums. This type of policy’s premiums are typically lower because they do not cover you indefinitely. Instead, when you purchase term life insurance, you specify how long you want to be covered for. The term of a policy is usually 15 years. But it can be as short as one year or as long as 30 years. Your beneficiaries will receive a tax-free death benefit if you die while the policy is active. Generally, your premium will remain constant throughout the term of your policy.
There are several types of term life policies available, including:
Level Term Life Insurance
The death benefit and premiums for level term life insurance are set at the time of purchase. They will 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. 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 time. For example, your benefit could rise by 5% per year. Unlike other types of term life insurance, the cost of increasing term insurance premiums is likely to fluctuate over time.
Decreasing Term Life Insurance
While the death benefit of decreasing term life insurance decreases in value over time, the premium stays the same. This type of policy is often purchased for coverage while repaying a loan or mortgage, and as the loan is repaid, the death benefit will decrease.
Return-of-Premium Life Insurance
Return-of-premium (ROP) insurance is a type of term life insurance that refunds your premiums if you do not die before the policy’s expiration date. Many people find the return of premiums feature appealing, but be aware that ROP policies are significantly more expensive than other types of term life insurance.
Permanent Life Insurance
Unlike with term life insurance, if you pay your premiums on time, your permanent life insurance policy will remain in effect for the rest of your life. Because of this, and because these policies typically include an interest-bearing savings account (known as cash value), the premiums are typically higher than those of a term policy.
There are numerous types of permanent life insurance policies available, including:
Whole Life Insurance
Whole life insurance provides a guaranteed death benefit as well as fixed premiums. In addition to providing a death benefit, a whole life insurance policy can accumulate cash value that earns interest at a predetermined, tax-free rate.
Universal Life Insurance
Universal life insurance (UL) is a versatile type of permanent life insurance. You will be able to change the death benefit and premium payment amounts with this type of policy. Your UL premiums will be applied to both the cost of insurance (COI) and the savings component (also known as the cash value), and you will eventually be able to use the cash value to pay your premiums. You will also be able to reduce your premium payments by reducing the amount of your death benefit if you so desire.
Indexed Universal Life Insurance
Indexed universal life insurance (IUL) is another type of permanent life insurance with a cash value, which can be invested in a stock index. So, you have the opportunity to make more money than you would with a fixed-rate policy. As the cash value of the policy increases, the premiums for an IUL policy can be adjusted in the same way that they can be for a universal life policy. It may one day 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 universal life insurance policies, can be invested, and the premium can be changed, just like with conventional universal life insurance. But variable universal life insurance policies provide subaccounts, which are similar to mutual funds, in which the cash value can be invested.
Final Expense Life Insurance
Final expense insurance is a type of whole life insurance that pays a small benefit upon your death, typically between $2,000 and $35,000. These policies are a good option for people who are older or in poor health, because they do not require a medical exam, but they tend to be relatively expensive and, again, only pay out a modest amount.
The final expense insurance death benefit is intended to cover final expenses such as a burial, cremation, or funeral service. But your beneficiary will be able to spend the death benefit on whatever they want, such as a vacation or property taxes.
Virginia Life Insurance Laws
The federal government has delegated much of the responsibility for regulating insurance industries and protecting consumers to the states. So Virginia has its own regulations surrounding life insurance. There are a number of consumer protection laws in place in addition to Title 38.2 of the Virginia Code. Which is the primary legal authority governing the insurance industry in the commonwealth of Virginia. The insurance industry in Virginia is regulated by the State Corporation Commission, which includes the Bureau of Insurance.
You should pay close attention to the following guidelines:
Free Look Period
New policyholders are usually given a trial period by life insurance companies during which they can evaluate the policy, cancel it if they change their mind, and receive a full refund. Depending on company policy and/or state regulations, this “free look period” can last anywhere from one to two weeks. In Virginia, insurance companies are required to give you a free look period of at least 10 days.
Grace Period
There is a 31-day grace period in Virginia if you miss a monthly premium payment. If you pay your insurance premium during the grace period, your insurance company will consider the payment on time and your policy will remain in effect.
Benefit Guarantee
The Virginia Life, Accident & Sickness Insurance Guaranty Association guarantees all policies issued in the state of Virginia. If your insurance provider in Virginia goes bankrupt, you won’t lose access to your benefits. State insurers must join this organization and pay dues so they can offer their customers this service.
Death benefits are guaranteed up to $300,000, while cash surrender is guaranteed up to $100,000 by the Virginia Life, Accident & Sickness Insurance Guaranty Association. Even if the deceased person had multiple policies with higher benefit amounts, the total amount distributed cannot exceed these caps.
Settlement Timelines
Insurance claims should be processed and paid out promptly, but the Virginia Code does not mandate a maximum timeframe within which this must occur. See if your insurance policy specifies how and when benefits will be paid out. The “due date” for companies to make payment is typically 30-60 days after your beneficiaries file a claim.
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 learn about potential costs is to get in touch with one of our EZ agents. Simply give them some basic information, and they will find you free quotes that are tailored to you. To give an example, though, a healthy 30-year-old man who does not smoke could pay anywhere from $19 to $56 per month for a 20-year $866,000 policy in Virginia.
Virginia Life Insurance Resources
In Virginia, there are several resources available to help you with any problems with your insurer or policy. These resources include:
- Life, Accident, and Sickness Insurance Guaranty Association – All insurers that sell policies in Virginia have to be members of the Life, Accidents, and Sickness Insurance Guaranty Association. If an insurer declares bankruptcy and is unable to meet its financial obligations to policyholders, Virginia residents are protected by the association.
- Office of the Attorney General – The Attorney General’s Office receives and investigates complaints about life insurance companies, such as unfair claims practices, canceled policies, and billing errors.
FAQs
Does Virginia 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 Virginia?
There are a lot of good ways to get life insurance in Virginia. At the top of the list are Northwestern Mutual, New York Life, MassMutual, Lincoln Financial, and Transamerica.
How much does life insurance cost in Virginia?
There are many things that can change how much life insurance costs, but here’s an example. A healthy 30-year-old woman in Virginia who wants a $866,000 20-year term policy that lasts for 20 years and costs $34.77 per month on average will pay for it. On the other hand, a healthy 30-year-old man will pay about $34.28 for the same policy.
EZ Can Help!
At EZ, we get that everyone has unique requirements, priorities, and financial constraints. We also know that you want to find 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, and we do it all for 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.
