Life Insurance 101
Frequently Asked Questions
What is the definition of life insurance?
Life insurance is a unilateral contract between the life insurance
company and the insured person. A unilateral contract is a one sided
contract. One of its many benefits is that it protects the insured
from health or lifestyle rate increases. Increases, if any, are
spelled out in the contract and cannot be changed by the company.
The insurance policy cannot be canceled by the insurance company for
any reason except for nonpayment of premium.
How much life insurance should I purchase?
The National Association of Life Insurance Underwriters suggests
between eight and ten times a person's annual income not inclusive
of accidental life insurance policies.
Are the proceeds of life insurance taxable?
The proceeds of life insurance are paid directly to the beneficiary
and are tax-free.
Are Life insurance proceeds subject to probate?
No. However, the amount of life insurance owned does increase the
estate of the insured person for estate tax purposes. |
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