Frequently Asked Questions
Filling out the form on our home page gives our powerful life insurance quote engine enough information to give virtually all parties interested in buying life insurance a range of quotes from the top insurance companies in the term life insurance market.
Spectrum Direct constantly monitors the life insurance market for the highest quality companies offering the most competitive prices. The results you see on your quote output are the best rates available. Basically, there are no other products or insurers to research. You have found the best deal.
2. Click "Request Application". Apply online.
When you get your complete list of quotes, beside each insurance company's quote for you is a button that says "Apply Online Now". Click it for the online application.
The online application asks for basic information so that we can begin the process of getting your coverage in place (pending underwriting approval by the insurance company). The form asks for things like your beneficiary's name, your address, some basic medical questions and so on and so forth.
When you are finished with the online application form, simply click submit and within 24 to 48 hours your forms will be mailed to you for signature and Spectrum Direct Customer Service will contact you by email or phone.
3. Your policy is underwritten and issued after you qualify.
When Spectrum Direct Customer Service contacts you, an appointment will be set up for a routine physical similar to an employment physical, although in many cases, not as detailed.
The physical exam is paid for by Spectrum and is done at your convenience in the privacy of your home or office by a medical professional who performs life insurance physical exams as a profession. It takes about 15 minutes.
We submit your physical exam results with the signed application form to the insurance company you have chosen. Then the insurance company home office reviews it along with your medical history. A decision is made to offer coverage or not. At that point, if you are approved and have paid your initial premium, your coverage is in effect.
How does a life insurance company evaluate my health when underwriting my life insurance application?
There are three elements to the evaluation of your health when underwriting a life insurance application.
1. The health questions you answer on the application form itself. It is very important that you answer these questions fully and accurately in order for the life insurance company to have complete information. Our experience tells us that clients receive the best offer when the insurance company receives complete information. If information is withheld or inaccurate information is given, the offer the insurance company can give you will tend to be less favorable.
2. A routine physical. If the amount of insurance coverage you are applying for requires a physical exam performed by a medical professional at your convenience in the privacy of your home or office, this is another way the insurance company receives information about your health. Items such as pulse, blood pressure, height and weight and information received through urinalysis, etc. are covered. The physical exam is simple and takes about 15 minutes.
3. Medical records. When you complete an application for life insurance, you are asked to sign a medical release form. This form permits the insurance company to receive a copy of your file from your doctor or doctors. In this way, your medical history can be reviewed.
We pay all the expenses for things such as the routine physical as well as fees paid to doctors for copies of medical history files.
The process of evaluating your health is quick and easy for you but is quite thorough.
Spectrum Direct puts forth its best effort to get you the best offer possible based on each individual's health status.
This answer can vary significantly from one individual to the next. Applicants often must complete a physical exam and so that is another variable in the completion of the underwriting process. Also, copies of medical files must often be ordered from your doctor or doctors. This is known as the Attending Physician's Statement or "APS". The time it takes to complete the underwriting process also depends on how long it takes the doctor's office to supply the needed information. Finally, for very large amounts of insurance, sometimes the insurance company will request financial information to make sure the applicant's financial situation justifies the amount of insurance for which they have applied. After all requirements have been submitted, the insurance company usually makes an underwriting decision within a few weeks.
Personal reasons are those which insure against the burdens usually experienced when an income earner dies. So when you are thinking about a personal life insurance need, you might think about income replacement, paying off a mortgage and other loans and setting up a fund to make sure children have enough money to attend college. The other major area in personal life insurance is charitable giving.
INCOME REPLACEMENT: In a typical family situation, if a key source of income dies their income disappears and the remaining spouse and children may face some financial challenges. Life insurance is used to create a conservatively invested foundation that will produce enough annual income to help the family meet its income needs. Typically, the funds should not be consumed but rather should be the principal which remains intact so that interest and dividends provide income to the family year in and year out.
MORTGAGE PAYOFF: Usually the biggest monthly expense a family faces is the mortgage payment on a home. So when a major wage earner dies, it is desirable to have life insurance in force that can be used to either substantially or totally pay off the mortgage balance. This type of approach almost never should involve the mortgage lender; it is better to simply have enough life insurance in place to meet this need and then the family can decide to pay off the mortgage with the life insurance proceeds. Other loans can be insured in this manner as well.
COLLEGE FUNDING: Many families plan ahead and start saving for their children's education well in advance. This is another financial obligation that is placed in jeopardy at the time of death of a major wage earner. So, it is wise to think of this need when deciding how much life insurance you should own.
CHARITABLE GIVING: You may want to consider setting up a policy to pay a benefit to the charity of your choice. Properly set up, this type of program can produce current tax deductions for premium payments.
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Buy/Sell Agreements: Life Insurance used to provide money to buy out the heirs of a deceased business partner. |
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Executive Benefits: Life Insurance used to provide an attractive benefit to valued executives by using Executive Bonus, Split Dollar or Deferred Compensation life insurance plans. |
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Key Person Protection: Life Insurance on the life of a CEO or top salesperson to compensate the company in case of the untimely demise of such a valued employee. |
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Securing Business Loans: Life Insurance used in real estate partnerships, mortgage transactions and other business deals where those paying back the loans are insured so lenders are repaid even in the event of death. |
BUY/SELL AGREEMENTS: The simplest example of a Buy/Sell life insurance arrangement is in the case where two business partners own life insurance policies on each other with death benefits sufficient to buy a deceased partner's share of the business from the heir of the deceased. Under such an arrangement, the family or heirs are compensated in cash and the remaining partner owns the business completely and is free to operate it accordingly. More complex arrangements are possible where several partners are involved or where the business is a corporation rather than a partnership. Spectrum Direct can provide you with details: call 800-438-7343. Want to see what term life insurance would cost for your Buy/Sell agreement?
EXECUTIVE BENEFITS: Suppose you have a valuable executive and you want to give that person something in addition to the company retirement plan, health insurance and vacation time. Life insurance is often used to provide a substantial death benefit for the family of the executive as well as to accumulate cash for future retirement benefits in addition to the company retirement plan. Because cash values accumulate on a tax-favored basis inside permanent life insurance policies, they are ideal, cost-effective vehicles for such programs. Spectrum Direct can help you to determine if an Executive Bonus, Split Dollar or Deferred Compensation life insurance plan is right for your business.
KEY PERSON PROTECTION: What if your company lost its best salesperson or some other executive in the company and such a loss actually threatened the financial viability of the business? In closely held companies, this is often possible and sadly enough, it sometimes is the cause of companies going out of business. Key Person life insurance is purchased on the life of those individuals a company simply cannot survive without. Often the life insurance benefit provided by such a policy is the very thing that gets a company through the process of finding, hiring and training a replacement. Low cost term life insurance can often be used for this purpose. Want to know how much a term life policy on a key employee would cost?
SECURING BUSINESS LOANS: Many banks and other lending institutions require life insurance on the lives of principals for certain types of transactions. Suppose you are borrowing a substantial amount of money to develop a parcel of real estate or construct a building. The bank or lender may require that life insurance proceeds must be payable to the lender as a named beneficiary in order to make the lender whole if an important person to the project dies. Not only banks and financial institutions require this type of coverage, but private investors and financial partners sometimes do as well. Term life insurance is often used for this purpose.
Are all premiums on policies purchased through Spectrum Direct guaranteed level for the duration of the term period?
YES! Whether you purchase a 5, 10, 15, 20, 25 or 30 Year term life policy from Spectrum, the rates are guaranteed level. Beware of companies that offer a "rate guarantee period" that is different from the "term length" (see next question).
Any time during the period which your term life insurance policy is in force, and you are within the conversion period, you may convert it to a permanent type of life insurance without providing evidence of insurability at the time you exercise your conversion rights. The conversion period varies from policy to policy. Some policies allow you to convert for the first five years, some through age 75, etc.
This is a very important provision of a term life insurance policy and it is also a feature that is very important for the policy holder to understand. Virtually every term life insurance policy we know of contains a standard conversion provision that permits the policyholder to convert to any permanent life insurance product available from the issuing insurance company.
It is important to be able to convert to a permanent policy at some point in the future because permanent life insurance policies, although they have higher premiums, build internal cash value and therefore, generally have a lower total net cost of coverage than pure term life over a period of years. Also, permanent life insurance policies have level premiums that never increase. Term life insurance will eventually go up in price (once you have reached the end of your rate guarantee period). At older ages, term life insurance premiums can become very expensive because there is no internal cash value to help offset the cost of coverage.
ASK IF GOOD PERMANENT POLICIES ARE TYPICALLY AVAILABLEFROM YOUR TERM LIFE INSURANCE ISSUER
When you are considering buying a term life insurance policy, it is very important to determine if the insurance company has a good history of offering a range of competitive permanent products for you to convert to. If you think you might be interested in converting in the future, we can discuss the permanent product track records of various companies offering term life at the Spectrum Direct web site.
Generally, you would want to know that a company offers universal life, whole life or variable life and has a history of offering competitive products in these varieties. The three types of permanent products are briefly discussed in the next section.
WHEN DON'T YOU NEED A CONVERSION PRIVILEGE?
Some policy holders won't ever need to convert their term life policy to permanent life insurance. Who might these people be? A good example would be a partner in a business partnership where a 5 year loan has been extended by a lender. The lender and the partnership require that the loan be secured by a life insurance policy in case the principal dies before the project can be completed and made profitable. That person can buy a 5 year term life policy, be guaranteed of level premiums for all 5years and factor the annual premium into the cost of doing business. They know in advance that the conversion privilege will not be needed.
There are 3 types of permanent life insurance.
WHOLE LIFE - the original permanent insurance product. Features fixed, level premiums, a fixed face amount and internal cash value accumulation crediting interest and/or dividends based on the insurance company's general account investment performance.
UNIVERSAL LIFE - an offshoot of Whole Life, Universal Life builds internal cash value and has been around for about 20 years. Also known as Flexible Premium Adjustable Life, the face amount and premium payments are often very flexible helping policy holders to adjust their coverage and premiums based on the stage of life they are in. Interest credited to the cash value account is based on the general account investment earnings of the life insurance company. This is generally an interest rate declared each year.
VARIABLE LIFE - a permanent insurance product that builds internal cash value which is invested in a separate account managed by well known mutual fund families. In fact, many of the investment options available in a Variable Life policy are "clones" of some of the most famous mutual funds operated in identical fashion by the exact same fund manager.
Free quotes on any of the above three types of permanent life insurance policies can be obtained by calling (800) 438-7343.
DO YOU HAVE A TERM LIFE POLICY THAT YOU WOULD LIKE TOCONVERT TO PERMANENT LIFE INSURANCE?
Spectrum Direct would be pleased to be of service if you have a term life policy and you are considering converting to permanent life insurance. You may have purchased your term life policy from a company other than Spectrum. That's OK. We are able to offer guidance and product information to help you make an informed decision.
No, there is no cash value accumulation in term life policies. The premium rates for term policies are lower than permanent types of life insurance but the policy does not develop cash surrender or loan values. Think of term life insurance as pure protection.
No, you are not obligated to continue a life insurance policy for any period of time. The owner of a policy may terminate it at any time. Typically, the insurance company will pro rate a refund if you have paid, for example, an annual premium, and then cancel before the passage of that year.
Yes, you can generally get the results of your life insurance medical exam sent to you after your policy is issued. A few companies provide you with a copy of the medical exam results along with your policy. Others require a letter from the insured and then will forward your results.
Yes, you can make minor children the beneficiary but a life insurance company will only make the proceeds available to the legal guardian or other such legally empowered entity of such a minor.
No, you need not name a contingent beneficiary. If the primary beneficiary is deceased at the time of the insured's death, the life insurance benefit will be paid to the estate of the insured.
When a family welcomes a new baby, it is usually an opportune time to evaluate life insurance needs. Often, families acquire additional life insurance coverage on the parents so that, in the event of death, financial resources will be provided to care for the dependents. See the Spectrum Direct Coverage Analyzer
Yes, it is usually prudent to evaluate one's life insurance needs when you are taking out a mortgage loan or other significant loan. The cash needed to pay off outstanding loans at the insured's death can be provided by the life insurance benefit thereby alleviating what may otherwise be substantial financial strain on survivors. See the Spectrum Direct Coverage Analyzer
If the insured dies after paying an annual premium but before the passage of one year, will the insurance company refund the unused premium?
Yes, the insurance company will pro rate a refund based on the time that has passed since the payment of the annual premium.
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