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Frequently Asked Questions
Common Questions Answered for your convenience.
What is the difference between term life insurance and whole life insurance?
Term life insurance provides coverage for a specific period, such as 10, 20, or 30 years, and pays out a death benefit if the insured person dies within that term. Whole life insurance, on the other hand, offers lifelong coverage as long as premiums are paid, and it also includes a cash value component that grows over time.
How do I determine the amount of life insurance coverage I need?
The amount of life insurance you need depends on several factors, including your income, debts, living expenses, and future financial goals. A common guideline is to have coverage that is 10-12 times your annual income. Transamerica offers tools and advisors to help you calculate the appropriate coverage amount based on your specific circumstances.
What factors affect the cost of life insurance premiums?
Several factors influence life insurance premiums, including age, health, lifestyle, occupation, and the amount and type of coverage. Generally, younger and healthier individuals pay lower premiums. Lifestyle choices, such as smoking or participating in high-risk activities, can increase costs.
Can I convert my term life insurance policy to a whole life insurance policy?
Yes, many term life insurance policies can include a conversion option, allowing you to convert your term policy to a whole life policy without undergoing additional medical exams. This option is typically available within a specified period of the term policy.
How does the cash value in a whole life insurance policy work?
The cash value in a whole life insurance policy is a savings component that grows over time with tax-deferred interest. You can borrow against it, use it to pay premiums, or surrender the policy for the cash value. However, borrowing against the cash value or surrendering the policy can reduce the death benefit.
What happens if I miss a premium payment?
If you miss a premium payment, most life insurance policies, have a grace period (typically 30-31 days) during which you can make the payment without losing coverage. If the premium is not paid within the grace period, the policy may lapse. For whole life insurance, you may be able to use the cash value to cover missed payments, depending on the policy terms.