Frequently Asked Questions
Life Insurance FAQ: Answers From Licensed Agents
This life insurance FAQ answers the questions our licensed agents hear most, from how much coverage you need to final expense, health conditions, taxes, and claims. Each answer links to a deeper guide when you want more detail.
- Most families need 10 to 15 times income in coverage.
- Death benefits are generally income-tax free.
- Health conditions rarely rule you out completely.
- Working with Octans costs nothing extra.
Table of Contents
Life Insurance Basics FAQ
What is life insurance?
Life insurance is a contract: you pay premiums, and the insurer pays a tax-free death benefit to your beneficiaries if you die while the policy is in force. Many policies also offer living benefits for terminal, chronic, or critical illness. Read our full guide.
Why do I need life insurance?
It replaces income, pays off a mortgage or debts, covers funeral costs, and gives your family time to adjust after a loss.
What types of life insurance are there?
The main types are term, whole life, universal and indexed universal life, final expense, and guaranteed issue. Compare them on our types of insurance coverage page.
How much life insurance do I need?
A common starting point is 10 to 15 times your annual income, adjusted for your mortgage, debts, education goals, savings, and existing coverage.
Is life insurance taxable?
Death benefits paid to a named beneficiary are generally free of federal income tax, but interest, some cash value withdrawals, and large estates can create taxes. Learn more.
Term, Whole, and Permanent Coverage FAQ
What is term life insurance and return of premium (ROP)?
Term life covers a set period, usually 10 to 30 years. A return of premium rider refunds the premiums you paid if you outlive the term, in exchange for a higher price. See term life options.
What is whole life insurance?
Whole life lasts for your lifetime with level premiums and guaranteed cash value. Compare whole life rates.
What is indexed universal life (IUL)?
IUL is permanent coverage whose cash value earns interest tied to a market index, limited by caps and floors. It needs consistent funding and annual reviews. Read the IUL pros and cons.
What are living benefits?
Living benefits let you access part of your death benefit early after a qualifying terminal, chronic, or critical illness diagnosis. Learn how they work.
What are riders?
Riders are optional add-ons, such as guaranteed insurability, waiver of premium, accidental death, child, and accelerated death benefit riders, that customize a policy.
Final Expense, Seniors, and Health Conditions FAQ
What is final expense insurance?
A small whole life policy, usually $5,000 to $40,000, that pays funeral and end-of-life costs. See final expense costs by age.
Can I get life insurance with health problems?
Often yes. Simplified issue policies ask a few health questions, and guaranteed issue policies ask none but have a two-year graded benefit. Compare guaranteed issue.
Can seniors over 70 or 80 buy life insurance?
Yes. Final expense and guaranteed issue coverage are commonly available to age 85. Explore senior options.
What is accidental death and dismemberment (AD&D)?
AD&D pays if you die or suffer a covered serious injury in an accident. It does not cover illness, so it supplements rather than replaces life insurance.
Working With Octans FAQ
How do I choose the right policy?
Tell us your goals, health, and budget. A licensed agent compares carriers and explains the trade-offs before you apply.
Can I change my policy after buying it?
Depending on the policy, you can often change beneficiaries, adjust coverage, add riders, or convert term to permanent coverage. Every new policy also has a state free-look period.
How do I file a life insurance claim?
Contact the insurer with the policy number and a certified death certificate, and complete the claim form. Octans helps beneficiaries through the process at no cost.
Does it cost anything to work with Octans?
No. Carriers pay our commission, and premiums are generally the same whether you buy direct or through us. How we get paid.
Which states does Octans serve?
Octans serves 19 states. See every state guide.
Policy Rules, Beneficiaries, and Claims FAQ
These life insurance questions cover the rules inside a policy: deadlines, beneficiaries, underwriting checks, and what happens when something goes wrong. State law and your contract control the exact answer, so treat these as a starting point.
Life insurance FAQ: what is the contestability period?
The contestability period is the window when an insurer can review your application after the policy starts. The Texas Department of Insurance says life policies have a two-year contestable period. After two years, “the company must pay the death benefit regardless of the cause of death.” The North Carolina Department of Insurance also says policies may be voided within the first two years.
If you die in that window, the insurer may check your answers against medical records. Honest, complete answers protect your family’s claim. Rules vary by state and contract. See deaths not covered by life insurance.
What is a grace period on life insurance?
A grace period is extra time to pay a missed premium before your policy lapses. The Texas Department of Insurance says “most policies have a 31-day grace period after your premium’s due date.” North Carolina’s insurance department says life policies there provide a minimum 31-day grace period. The point is to keep a late payment from ending your coverage.
Your contract spells out the exact terms, including what happens if a claim arises during the grace period. If you miss the deadline, call the insurer right away and ask whether the policy can be reinstated. Setting up automatic payments is the easiest way to avoid a lapse. Learn more on our term life insurance page.
What is the free look period?
The free look period lets you cancel a new policy and get a full refund for any reason. The length is set by state law. North Carolina requires at least 10 days on new policies and at least 20 days on replacement policies, according to the NC Department of Insurance.
The Texas Department of Insurance says Texas policies have a free-look period of at least 10 to 20 days. Check your policy for the exact start date, and read the whole contract in that window. Check the rules for where you live on our states page.
Can I have more than one life insurance policy?
Yes, in many cases. Carrier Western & Southern says there is “generally no law prohibiting someone from owning multiple life insurance policies.” You can hold policies with the same company or different ones. The limit is on total coverage. Insurers apply financial underwriting limits based on your income, age, existing coverage and the reason for the coverage.
Applications usually ask you to list policies you already have, and insurers may check this through MIB. Always disclose existing coverage. Many families pair term life for income with a small permanent policy for final costs. Compare options on our types of insurance coverage page.
What happens to my life insurance if I move to another state?
Your policy generally stays in force. Carrier ManhattanLife says most policies “stay active if the policyholder moves, as long as premiums continue to be paid.” Update your address with the insurer. The North Carolina Department of Insurance says “the laws and regulations of the state of issue apply” to a policy.
One thing does follow your new address. According to NOLHGA, guaranty association protection generally comes from your state of residence when a failed insurer is ordered into liquidation. Read more in does where you live affect life insurance.
What happens if my beneficiary dies before me?
If no living beneficiary is named when you die, the money usually goes to your estate. The Texas Department of Insurance says: “If you don’t name a beneficiary, or your beneficiary is dead, the company will pay the death benefit to your estate.” That may not be what you intended for the people you wanted to help.
To keep control, name more than one beneficiary, including a backup. The Texas guide confirms you can name more than one. Update the policy as soon as a beneficiary dies. Your contract and state law control the exact result, so read the beneficiary section. See how life insurance works.
Can I change or add beneficiaries?
Usually, yes. The North Carolina Department of Insurance says the policy owner “has full legal right to all policy values and to make policy changes during the lifetime of the insured.” Ask your insurer for its beneficiary change form, and check whether any past designation limits changes.
The NAIC says beneficiaries can be one or more people or even an organization, and you should note what percentage each one gets. The NAIC also advises updating policies after events like a birth or divorce and checking them once a year. To leave money to a cause, see donating life insurance to charity.
What is an MIB report?
MIB is a database that life insurers share for underwriting. MIB says you will only have a file if you applied with a member company in the last seven years. A file is created only when underwriting found relevant information. You can get one free copy a year, by phone or online.
You can get an extra free copy if an insurer’s adverse decision letter says an MIB record played a part. If anything is wrong or incomplete, you can dispute it. Checking your file before you apply is a smart step. Our no-exam life insurance guide explains other data insurers check.
Life insurance FAQ: can I be denied coverage?
Yes. Fully underwritten policies are not guaranteed. The Texas Department of Insurance says underwriting often includes a medical exam and questions about “your health, job, and habits.” Policygenius names health, habits, hobbies and occupation as the main reasons an applicant is classed as high-risk.
That can mean a higher rate, a flat extra charge or a decline. A decline from one company does not mean all will say no, because underwriting rules differ. If health is the barrier, coverage with no health questions is another route. See guaranteed issue life insurance.
What does guaranteed issue pay if I die in the first two years?
Usually not the full face amount, unless the death is accidental. Guaranteed issue policies skip health questions, so they start with a graded benefit. For Mutual of Omaha’s guaranteed whole life, partner Navy Mutual says benefits in the first two years pay 110% of premiums paid for death from natural causes.
Broker Choice Mutual says all guaranteed issue policies have a waiting period of two to three years, and accidental death is generally paid in full from day one. Hypothetical example: premiums of $60 a month for 12 months total $720. A natural death in that time would pay $720 × 1.10 = $792. Options with full coverage sooner are in life insurance with no waiting period.
Does my driving record affect life insurance?
It can. Insurers often pull your motor vehicle report (MVR), the driving history kept by your state. Policygenius says most insurers consider the past five years, and some look back up to 10.
To get the lowest rates with most insurers, you need no DUIs or DWIs in the last five years, no more than two to three moving violations in the last three years, and no recent license suspensions or reckless driving charges. A single minor ticket may have little effect. Multiple DUIs make a decline or postponement more likely. Read more in our guide to what affects life insurance rates.
Does life insurance pay if I die while traveling abroad?
Generally yes, if you were honest about your travel when you applied. Policygenius says that if you disclosed known travel, your insurer “cannot deny your beneficiaries the death benefit if you die while you’re traveling abroad.” Applications often ask about trips outside the U.S. or Canada, usually within two years.
They may ask about the purpose and length of future trips. Policygenius also notes that insurers have not historically underwritten domestic travel. Travel to higher-risk countries can lead to tighter limits or a decline with some insurers. Check your policy’s exclusions. See deaths not covered by life insurance.
What if my life insurance company goes out of business?
State guaranty associations step in. NOLHGA says they keep coverage going by moving policies to a stable insurer or by paying claims directly. In most states, they cover up to $300,000 in death benefits and $100,000 in cash surrender values (as of June 1, 2025). Some states set higher limits.
NOLHGA says the associations have never failed to pay a covered claim in more than 40 years. Coverage above the limit is not protected by the association, so check your insurer’s strength before buying a large policy. Your state’s limits are linked from our states page.
How do I find a lost life insurance policy?
Start with the NAIC Life Insurance Policy Locator. It is a free tool launched in November 2016. You submit a request about a person who has died, and participating insurers search their records. If there is a match and you are the beneficiary, the insurer contacts you directly.
Searches can take 90 business days or more. You will not hear back if there is no match or you are not the beneficiary. Through July 31, 2026, the tool found more than 780,000 matches worth $16,991,229,586, according to the NAIC. Step-by-step help is in find a lost life insurance policy.
Is group life insurance from work taxable?
Partly, if your employer pays for more than $50,000 of coverage. Under IRS Publication 15-B, the cost of coverage over $50,000 is added to your wages and is subject to Social Security and Medicare taxes. The IRS sets that cost by age. Hypothetical example: a 45-year-old has $150,000 of employer-paid coverage.
The taxable part is $100,000, or 100 units of $1,000. The IRS rate for ages 45 to 49 is $0.15 per $1,000 per month. Imputed income: 100 × $0.15 × 12 = $180 a year. The death benefit itself is a separate question. See group life and health insurance.
Can I increase my coverage later without a new exam?
Sometimes, if you add the right rider when you buy. The NAIC describes a guaranteed insurability rider that “lets you increase your death benefit at certain times in the future without a medical exam.” The price of each increase depends on your age and the amount of the increase, “not your health or lifestyle.” That can matter if your health changes after you buy.
The NAIC also notes that adding any rider increases your premium, so ask for the rider’s cost on its own line. Without this rider, more coverage usually means a new application and underwriting. Buying early is covered in life insurance when you are young. Bring any other life insurance questions to a licensed agent.
Related Coverage and Guides
Life Insurance FAQ: Quick Answers at a Glance
These life insurance FAQ answers come from the questions our licensed agents hear most. For details, follow the links to our full guides.
| Question | Short answer |
|---|---|
| Does it cost anything to work with Octans? | No. Carriers pay our commission. |
| Do I need a medical exam? | Not always. No-exam options are available. |
| Which states do you serve? | 19 states; see our states page. |
| How fast can I get covered? | Some policies issue in days; fully underwritten policies can take weeks. |
| Can I get coverage with health issues? | Often yes, through simplified or guaranteed issue policies. |
Important: Octans Insurance agents are licensed in the states in which they operate. Coverage availability and rates may vary by state. Premium examples, when provided, are illustrative samples from published sources, not quotes. Final rates are determined by the insurance carrier based on underwriting and applicable policy criteria. Policy terms, exclusions, limitations, riders, and availability vary by carrier and state.
About examples and tools: Hypothetical examples, sample rates, calculators and quizzes on this site are for general educational and illustrative purposes only. They are not quotes, offers of coverage, or guarantees of eligibility, approval, price or benefits, and they are not legal, tax, financial or medical advice. The insurance company decides eligibility and price; Medicare rules are set by CMS and the Social Security Administration.
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(617) 935-9220 | life@octansinsurance.com