Life Insurance Specific:

What is life insurance?

Life insurance is a contract between an insurance company and the insurance policy owner(s). The insurance company pays a cash amount or death benefit to the beneficiary(s) named in the policy upon the death of the insured named in the policy.Purposes of life insurance include providing financial security, funding business continuation and satisfying estate tax requirements among others.The two main types of life insurance policies are term life insurance and permanent life insurance.

The Many Uses of Life Insurance

One of the most common reasons for buying life insurance is to replace the loss of income that would occur in the event of your death. When you die and your paychecks stop, your family may be left with limited resources. Proceeds from a life insurance policy make cash available to support your family almost immediately upon your death. Life insurance is also commonly used to pay any debts that you may leave behind. Life insurance can be used to pay off mortgages, car loans, and credit card debts, leaving other remaining assets intact for your family. Life insurance proceeds can also be used to pay for final expenses and estate taxes. Finally, life insurance can create an estate for your heirs.

What is Term Life Insurance?
Term life insurance is the most basic form of life insurance. It provides coverage for a specified period of time (e.g. 1, 5, 10, 15, 20, 25, or 30 years) in exchange for a specified premium. If the death of the insured individual occurs within this period of time or term period, the insurance company will pay the death benefit. If the term period expires while the insured individual is still living, the policy terminates and no death benefit will be paid.The two main types of term life insurance policies are level premium term life insurance and yearly renewable term life insurance.
What is Permanent Life Insurance?
Permanent life insurance provides coverage for the life of the insured individual(s). These policies are more complex and expensive than term life insurance. They often accumulate tax deferred cash values from which future premiums can be paid or policy loans can be made. These policies typically stay in force as long as the premiums continue to be paid.Some of the main types of permanent life insurance policies are whole life insurance, universal life insurance and variable life insurance.
What is the Return of Premium Life Insurance?
Return of Premium term life insurance is a product that allows you to recover up to 100% of all premiums paid on the policy. If the policy reaches the end of the policy term and there has been no death benefit claim, the insurance company will return all premiums paid on the policy to the policy owner. If the policy is cancelled (lapsed or surrendered) at a point prior to the end of the term, a designated percentage of the premiums paid will be returned to the policy owner.
How do I determine the amount of coverage I need?
Your coverage need will depend on your individual circumstances. Factors you should consider include anticipated final expenses (e.g. medical bills and burial costs), living expenses for your surviving family members, any outstanding loans (e.g. auto and credit cards), the outstanding balance on your mortgage, anticipated education costs for your children, estate taxes, and business continuation expenses.A simple way to achieve a “starting point” is to take a multiple of your annual income and adjust for the factors listed above. MichiganTerm recommends 10 times your annual income to start. Keep in mind that your needs will most likely change over time and what seems like enough today may not be adequate in ten years. It is usually best to purchase an amount you can afford while at the same time considering future needs.Most insurance companies will allow a certain multiple of your annual income based on your age and are usually flexible if you can demonstrate other needs. The amount you choose is up to you for the most part; however, you will need to justify amounts over and above a company’s income multiple guidelines.
How do I choose the length of coverage?
Your coverage length will depend on your individual circumstances. Factors you should consider include your age, your spouse’s age, your children’s ages, the length of your financial obligations (e.g. mortgage and student loans) and the number of years until retirement.You will want to choose a term period that covers all of the above factors. For example, if you have a five-year old child and you wish to support that child through college and perhaps graduate school, you may need a policy term period of 20 years or more.
What happens at the end of the life insurance term period?
The life insurance policy will terminate at the end of the term period. However, you may have the option to renew the policy on an annual basis without providing evidence of insurability. The cost to renew annually will most likely be much higher than the previous guaranteed premium rates were, but it may be a valid option for individuals who find themselves uninsurable due to injury or illness.
Is my life insurance policy convertible?
Most term life insurance policies are convertible to permanent life insurance policies. Convertible policies can generally be converted to permanent policies within a specified period of time from policy issue, without providing new evidence of insurability (unless you increase your benefits). You can check the see the specific requirements of the policy you are interested in by clicking on the “Details” button next to your quote on our Web site. MichiganTerm can assist you with conversion to a permanent policy.
Will my premium rates change each year?
No, your premium rates are guaranteed to remain the same during the entire term period. These are called fully guaranteed or level term policies and they are the only type of term life insurance policies MichiganTerm offers.
Will my final premium rates be the same as the rates your quoted on the website?
It is certainly possible, but not guaranteed. Your final rates will be determined by the insurance company through a process called underwriting. Underwriting includes a review of your current health status, medical history, family history and driving record among other things.Underwriting will determine your final rating class, which will establish your final premium rates. Your rating class may or may not be the same as that quoted on our Web site. With your assistance, we provide the most accurate quote possible up front.
What are the different rating classes and what do they mean?
The policy rating class is the risk category which an applicant qualifies for according to an insurance company’s underwriting guidelines. Common rating classes are Preferred Plus (also called Super Preferred), Preferred, Standard Plus, Standard and Substandard. The policy rating class will determine the premium rate for the policy.
What is the payment mode?
The payment mode is the term of premium payments for a life insurance policy. Available modes are annual, semi-annual, quarterly and monthly.
Why is the annual mode less expensive than the others?

This is because insurance companies build in a charge or ‘factor’ for all modal premiums to cover their cost of billing administration. For example, the quarterly mode requires four billing cycles in a year whereas the annual mode requires only one. The additional charge in the quarterly payment mode helps to cover the extra costs associated with extra billing cycles.

Can I change my coverage amount or length of coverage at any time?

You can change these terms at any time during the application process by sending us your request via email. Once your policy is in force, you can change these terms at specific intervals (usually every two years) by contacting the insurance company’s customer service department directly or by contacting us. The insurance company will require new evidence of insurability for any changes resulting in increased benefits (e.g. a higher coverage amount or longer term period).

What is the Accidental Death Benefit rider?

The accidental death benefit rider is an optional policy provision that pays an additional amount over and above your policy coverage amount in the event the insured’s death is caused by an accident. Even without this rider, your term life insurance policy will pay the stated death benefit in the policy if the insured’s death is the result of an accident.

What is the Children's Term Life Insurance rider?

The children’s term life insurance rider is an optional policy provision that pays a death benefit for each covered child in the event of that child’s death. Life insurance companies will typically provide between $10,000 and $20,000 coverage on the life of each dependent child of the insured, subject to age limitations and other requirements. One rider may cover multiple children.

What is the Waiver of Premium rider?

The waiver of premium rider is an optional policy provision that provides for the payment of a life insurance policy’s premium in the event of the total disability of the insured. Age limitations and coverage maximums usually apply.

What is the Accelerated Death Benefit rider?
The accelerated death benefit is a policy provision that allows for the advance payment of a portion of a life insurance policy’s death benefit in the event the insured is diagnosed as terminally ill. Requirements vary by insurance company. This rider is commonly an included feature of many term life insurance policies requiring no additional cost.

Application Process Specific:

Why wasn't I quoted the same rating class I chose on the Quote Questionnaire?
Our quoting system allows users to choose the rating class they believe they may qualify for based on the chart of underwriting guidelines we provide. However, there are certain controls placed upon this feature to ensure users get an accurate quote.One of the areas our quoting system controls is the user’s build (height/weight) information as provided on the Quote Questionnaire. For example, if a user selects a rating class that she will not qualify for because of her current build, our quoting system will return quotes for the best rating class she can qualify for. This may mean the user asked for Preferred quotes but received Standard quotes, because she does not qualify for Preferred quotes based on her build. Please keep in mind that insurance company build guidelines vary, so it is possible to get a mix of rating classes quoted (e.g. some Preferred and some Standard).The other area our quoting system controls is the tobacco/nicotine information as provided on the Quote Questionnaire. Once again, our system will provide quotes for the best possible rating classes given the selection made by the user. As with build, insurance company tobacco/nicotine usage guidelines vary, so it is possible to get a mix of rating classes quoted (e.g. some Preferred Tobacco and some Standard Non-Tobacco).
How does the application process work?

First you must complete your application forms and submit them to MichiganTerm for review and processing. Our licensed sales representatives are available to assist you with the forms. The next step is to complete your paramed exam with our examination company, Portamedic.Once the exam results are received by the insurance company, they will be matched to your application and submitted for underwriting review. This review can be as short as a few days or as long as several weeks, depending on your individual circumstances. For example, if you have medical history that underwriting wants to review, medical records may be ordered from your physician(s). Depending on how quickly your physician(s) respond to the insurance company’s request will determine how long your application stays in underwriting.Once underwriting is completed, the insurance company will make an offer on your policy and send the application to policy issue. Your policy will then be issued and mailed to MichiganTerm. We will process your policy as soon as it is received and mail it to you. At that point, a licensed representative of MichiganTerm will assist you with any policy questions you have as well as appropriate policy changes.

Am I required to submit a premium payment with my application?

Submitting premium with your application is optional. Doing so may provide temporary or ‘Conditional Coverage’ during the underwriting period.Each company has its own conditions for temporary coverage which are explained in the application. This information can be found in the Limited Temporary Life Insurance Agreement section or Conditional Coverage section. These terms are often used interchangeably between companies. Please read the conditions carefully to determine your eligibility.There are a few important points to remember:

  • There are coverage limits on temporary coverage and they vary by company.
  • Premium is required to be submitted with the application for temporary coverage.
  • Coverage begins and ends at various points in the process, depending on the company.

If you determine you are eligible for temporary coverage and would like to take advantage of this benefit, please follow these guidelines:

  • Make your check payable to the insurance company (not MichiganTerm).
  • Submit the amount quoted for your first modal premium (e.g. quarterly, semi-annual or annual).
  • Date your check and all forms with the same date. This is very important to secure the temporary coverage.
  • If paying monthly, submit the first two months’ premium.
Who do I make my check out to?
Any payments should be made payable to the Insurance Company and not to MichiganTerm.
What happens to my initial premium payment if I am not approved or decide not to accept the insurance company's offer?
Any checks you submit with your application for life insurance will be refunded to you if you are not approved or if you decide not to put your policy in force.
What happens if I am not approved at the rate I applied for?
If underwriting assigns a rating class different from the class you applied for, MichiganTerm will work with you to determine the best course of action. This can include changing the terms of your policy to reduce the premium or challenging the insurance company’s findings.
Who do I call for help with my application forms?
MichiganTerm’s licensed sales representatives are available to assist you with your application forms. You can call us directly at 888-242-9644. Upon submitting your request for an application, you will be assigned to a representative who will contact you within a few days of receiving your request.
What is a paramed exam, why is it required, and how do I schedule one?

All of our partner insurance companies require a basic paramed exam in conjunction with a life insurance application. Our third party medical examination company, Portamedic, will contact you within one business day of MichiganTerm receiving your completed application. They will work with you to arrange your exam at a time and location most convenient to you. The exam takes only about 30 minutes and there is no cost to you for the exam.A basic paramed exam includes the following:

  • Height/weight measurements
  • Blood pressure readings
  • Heart rate readings
  • Urine sample
  • Blood sample
  • Medical history questionnaire

Please remember these suggestions as you prepare for your paramed exam:

Schedule the exam for a time when you will most likely be able to keep the appointment. If the length of your work day varies, try scheduling the exam early in the morning, on a day off, or a weekend.

Fast for a period of at least 8 hours prior to the exam, preferably 12 hours if possible. This will result in more accurate blood test results.

If you are an occasional cigar smoker, refrain for as long as possible prior to the test. Increased nicotine levels in your urine will most likely qualify you for tobacco/smoker rates. Of course, you will need to disclose your smoking habits on your application as well.

Depending on your specific circumstances (e.g. age, amount of insurance, medical history, etc.) the insurance company may require additional testing or information. These requirements do not apply to all applicants. Other requirements that may be included are:

  • Electrocardiogram
  • Chest X-ray
  • Treadmill Test
  • Attending Physician’s Statement
  • Medical Records
  • Motor Vehicle Report
How long does the application process take?
The length of the process depends on many factors, but you can generally expect to receive your new policy 4-6 weeks after submitting your application.
How can I speed up the process of receiving my insurance policy?

There are many ways you can control how fast a policy is completed, however there a other influences that determine the speed of the application process that you nor MichiganTerm can control. The following is a list of the most important and beneficial tips to speeding up the process.

  • Complete the application request form accurately. This will allow you to receive the application quickly.
  • Complete your application packet promptly and accurately. This is the biggest delay in the process. If you can complete your application completely and return it within days you can cut weeks of the overall time.
  • For corrections, cross through the incorrect information, write in the correct information and initial next to the correction. Do not use white out.
  • Respond to us right away with any requests for missing or additional information.
  • Schedule your paramed exam as soon as you are contacted by Portamedic.
Who is my agent/broker?
MichiganTerm is your agent/broker. We are a fully licensed brokerage operating in MI and OH. We do not sell your information to other agents outside of MichiganTerm, nor do we pass “leads” along to other insurance companies. We process your application for you and remain your assigned representative through the life of your policy.
Do I need to be a U.S. resident or U.S. citizen to qualify for life insurance?

All of our partner insurance companies require applicants to be U.S. residents, typically for a period of 3 years prior to the application date. They also require U.S. residency to continue beyond the policy effective date.

Most of our partner insurance companies require applicants to be U.S. citizens or to hold a permanent visa/green card. Coverage may be available for U.S. residents holding a temporary work visa. Please call for details.

Why does the insurance company want to know my financial information for life insurance?

An applicant’s financial information is among several factors used to determine the amount of insurance the company is able to issue to an applicant. This information is required by ALL insurance companies as they must justify the coverage amounts of all policies they issue.

Income multiples are one method of calculating coverage amounts, which is why annual income is required. Net worth helps insurance companies develop a picture of the family’s overall financial position and potential loss in the event of the insured’s death. A common misconception among insurance consumers is they can purchase any amount of life insurance they desire, regardless of financial considerations. This simply is not the case. All insurance companies use financial information to determine allowable coverage amounts. This is done to control fraud and limit excessive insurance situations.

What is a replacement transaction and how do I complete one?

Consumer protection laws exist to prevent the occurrence of unnecessary policy replacements in the insurance industry. Each state has enacted laws to protect its residents and therefore, regulations and required forms vary by state.MichiganTerm is required by law to determine if a replacement transaction exists with every application we process. Please read the following definition of a Replacement Transaction:

A Replacement Transaction occurs when an applicant intends to discontinue an existing individual life insurance contract or annuity contract upon the purchase of a new life insurance contract. This does not apply to group coverage as may be provided by an employer, whether the applicant contributes to the premium payment or not. It also does not apply to a contract that is paid for by an employer.

If your application is determined to be a replacement transaction by the above definition, you will have additional forms to complete. Please provide all requested information on these forms pertaining to your existing coverage. This information is required by law and will help speed the application process.

If your application is not determined to be a replacement transaction by the above definition, you may still have a form(s) to complete, depending on the laws of your state.

What is net worth?
Net worth by definition is as follows: Net Worth = Assets – Liabilities. Simply put, your estimated net worth can be calculated by taking the value of all of you own and subtracting the amount of all you owe. Keep in mind major possessions (homes, autos, etc.), personal possessions (clothing, jewelry, etc.) and financial possessions (savings, retirement accounts, etc.) are considered assets.