Types of Pennsylvania Life Insurance Policies – Term, Whole Life, and more…

If you’re thinking of buying life insurance in Pennsylvania and not sure what you need or what to do, you’ve come to the right place.

I’ll give you some vital tips on what you need to know about buying life insurance.

Let’s start with life insurance basics.

How to Find the Best Pennsylvania Life Insurance

Buying life insurance is a 3 step process which breaks down into the following:

Step 1Decide How Much Life Insurance you Need

Consider first any existing policies you might have such as a company plan, what you might receive with social security, or possibly a veteran’s pension, and take inventory of the other assets your family could live on in the event of your passing (investments, home equity, etc.)

Then, decide on how you family would need to keep them financially viable and to keep their standard of living if you were to die now.  Also, include future financial considerations which your family might need such as tuition costs and other possible financial needs such as funeral expenses, existing debts and your mortgage or rent.

If you’re working, many people simply chose a multiple of their income, such as 10 or 20x annual income.  Here’s a helpful calculator for more on how much you need.

This will give you a ballpark figure.

Step 2Decide on a Life Insurance Policy

Take a look at the different types of life insurance policies available and decide on which one suits your needs best. Your choices include Term life insurance, and Permanent Insurance which includes Whole Life, Universal Life and Variable Life. I’ll explain their differences later on in the article.

Step 3Compare the Costs for the Policy

To find the most affordable insurance policy, your best bet is to consult an independent agent like myself.  An independent agent has access to a vast range of insurance companies so I am able to research them and find one that suits you best and at the best price.

Types of Pennsylvania Life Insurance Policies

As I said earlier, there are 2 types of life insurance which you buy being Term or Permanent Life Insurance.  Let’s look at the differences.

Term Life Insurance

Term life insurance covers you for death benefits only.  It is the most economical type of life insurance available.  Although term life covers you for life, you buy term life insurance for a periods of time in increments such as 10, 20 or 30 years.

It’s best to buy term insurance for as long a term as you can.  The reason is that the premiums become significantly higher if you re-new a policy when you become older.  The premiums are fixed for the period of the term.  The death benefits which are payable are also not taxable.

You also have the option of converting a term life policy into a permanent policy if you would like to factor in a permanent policy into a retirement vehicle as your income increases.

Permanent Life Insurance

Permanent life insurance has 3 basic types of policies which include whole, universal or variable life insurance. Let’s look at them in brief detail.

Whole Life Insurance

A whole life policy lasts you for your entire life, or until you decide to cancel the policy.  Or, you also have the option of buying a whole life policy which only lasts until you reach age 65 or some other time period.

A whole life policy is more expensive than a term policy. The reason is that this type of policy not only covers you for death benefits but it also has a cash accumulation feature as well.

The cash accumulation feature will be paid to you if you cancel the policy.  Otherwise, it will go to your beneficiary.  You can borrow against the cash accumulation if have the need to do so, or use it pay for your premium for a certain period of time.

Universal Life Insurance

Universal life insurance is very similar to whole insurance except the cash accumulation earns interest that is based on the market rate of interest.  Also, you can vary your premiums with this type of policy, and vary the death benefits which you can increase or decrease.  You can also skip premium payments as well.

Variable Life Insurance

In this type of policy both the death benefits and the cash value accumulation will be based on the performance of the investments.  These policies can only be sold by an agent who is a registered securities dealer.

Pennsylvania Insurance Tips

  • Always make sure the agent you select is licensed to sell policies in Pennsylvania.  The reason is that policies sold by licensed agents are covered against insurer’s default and are covered under the PLHIGA (Pennsylvania Life and Health Insurance Guarantee Association) which will cover up to $100,000 in death benefits and up to $300,000 for death and annuity benefits.
  • I also suggest that you discuss your insurance needs with your financial advisor, lawyer and members of your own family.
  • Always carefully read all the information contained in your insurance application to ensure its accuracy.  A simple typo could end up causing you an endless amount of unwanted headaches.  Also, never lie on your application form.  Insurance companies have the right to fully investigate your application should you die within the first two years of signing a policy, and could void or cancel any policy which is inaccurate.
  • Also, remember that you have a ‘free look’ or ‘right to examine period of 10 days or more to determine if you want to change your mind and cancel the policy.  Pennsylvania law warrants you must be given a full refund if you cancel within this period.
  • Always take the time shop around and compare premium prices.  I also highly suggest that you use the services of an independent agent to get the best quotes and the most suitable policies.

Special Considerations for PA

One of the whacky things about Pennsylvania is that their department of insurance makes consumers and life insurance agents jump through hoops sometimes to get a policy.

Here’s an example.  Our main office is in California, but we are licensed in over 35 states.  We’re also contracted with a couple dozen life insurance carriers.  Let’s use Banner Life Insurance, for example.

If a client calls me up from out-of-state like Texas, I can go ahead and sell him a Texas policy.   Contracting with insurance companies is a bit weird as you can’t just be contracted with the insurance company in general, but you have to be contracted with them in every state where you want to do business.

This is usually no problem in most states. Usually, you can take the application, and then get contracted with the carrier in that state.  But in Pennsylvania, I can’t just sell a PA policy, even if I’m contracted with the carrier already in other states.  I have to be contracted with that carrier IN PA in order to be able to take the application.

Sometimes this causes delays, and there are a few other examples like this that PA is a bit of a pain to do business in, but it’s nothing compared to New York, and we love all our PA clients.

Get a Term Life Quote

We are an independent agency, licensed with over 30 life insurance companies, so when you come to us for help, you’ll know the quotes we provide you are the absolute lowest prices available.  For more information or to get started with an application for Pennsylvania life insurance, sign up for some quotes using our instant quote form on the right or call us at 877-996-9383.