Life insurance in Phoenix, explained plainly

With term life you pay for the years of the term you choose. Indexed universal life is permanent coverage with flexible premiums: within the policy’s limits you can pay more or less, but the cash value has to keep covering the policy’s charges, or the coverage can end.

Most claims are paid when the policy was in force and the application was accurate. A claim can be delayed or denied if premiums lapsed, if the death falls under an exclusion, or if the insurer finds a misstatement during the contestability period, usually the first two years.

Term life insurance covers you for a set number of years. If you die within the term, it pays the amount on the policy to the people you name. When the term ends, the coverage ends unless you renew or convert it.

Coverage usually costs less the younger and healthier you are. The time to look at it is when someone would be hurt financially if you died: a partner, children, a mortgage or a business.

Supplemental life insurance is extra life coverage, often offered through an employer on top of a basic group policy. It usually ends when you leave the job.

An individual life policy issued in Arizona may exclude only a short list of causes of death set in state law: war or military service, aviation, a named hazardous occupation, death outside the continental United States and Canada, and suicide within a limited period after the policy is issued or reinstated. Your policy lists the exclusions it carries. When an exclusion applies, the policy must still pay at least an amount based on its reserve. Separately, for the first two years a policy is in force the insurer can contest it over a material or fraudulent misstatement on the application. A term policy that lapsed for unpaid premiums pays nothing, and an indexed universal life policy stays in force only while its cash value covers the policy’s charges.

Arizona law gives an individual life policy a grace period after the due date, and the coverage stays in full force during it; if you die before the overdue premium is paid, the insurer can deduct it from the benefit. If the grace period ends unpaid, the policy lapses. Unless you cashed it in, you can usually apply in writing to reinstate it within the period the law allows, by showing evidence the insurer accepts that you still qualify and paying the missed premiums with interest. The answers on a reinstatement application can be contested for the same period as the original application.

Each insurer sets its own limits. Most offer term coverage only up to a certain age, and most will not sell a term that would end past a set birthday, so the older you are when you apply, the shorter the terms on offer.

The beneficiary tells the insurer, or the agent who handles the policy, and sends proof of death, usually a certified copy of the death certificate, with the insurer’s claim form and the policy if it can be found. If a policy sets a deadline for paying the claim, Arizona law caps it at a limit counted from when the insurer receives the proof. The benefit is usually paid as a single lump sum, though policies often offer other options, such as payments over a set period or an income for life.