Life Insurance: Fidelity Bank's Offerings And Your Options

Life insurance is a crucial aspect of financial planning, providing peace of mind and a safety net for loved ones in the event of unforeseen circumstances. Fidelity, a trusted name in financial services, offers a range of life insurance options to meet diverse needs. With policies available for US citizens and permanent residents aged 18 and above, Fidelity's life insurance plans include term life insurance, whole life insurance, and hybrid life insurance with long-term care. Term life insurance provides coverage for a specific period, while whole life insurance offers permanent coverage with fixed premiums and cash value accumulation. Additionally, Fidelity's hybrid life insurance combines life insurance protection with long-term care coverage, addressing potential health risks during retirement.

Term life insurance vs. whole life insurance

Fidelity Life Insurance offers a variety of term and whole life policies. Term life policies are available for 10 to 30 years, while whole life insurance is available for those aged 50 and above.

The main difference between term life insurance and whole life insurance is that term life insurance covers you for a specific amount of time, whereas whole life insurance covers you for your entire life. Term life insurance is also generally cheaper than whole life insurance. Here is a more detailed breakdown of the differences:

Term Life Insurance:

• Policy Length: You can choose a policy length, typically ranging from 10 to 30 years.
• Cash Value: Term life insurance does not accumulate cash value. You cannot borrow against or cash out a term life insurance policy.
• Cost: Term life insurance is generally the cheapest type of life insurance.
• Death Benefit: The death benefit is typically level, but decreasing term life policies are also available, where the benefit gets smaller over the length of the term.
• Pros: Term life insurance is customizable, specific to your timeline, and usually costs less than whole life insurance.
• Cons: If you outlive the term length, your coverage will end, and you won't receive any benefits. It does not cover your entire lifetime, and the policy will not accumulate cash value.

Whole Life Insurance:

• Policy Length: Whole life insurance provides coverage for your entire life, typically expiring at a specific age like 95 or 100.
• Cash Value: Whole life insurance has a cash value component that accumulates at a guaranteed rate set by the insurer.
• Cost: Whole life insurance is significantly more expensive than term life insurance.
• Premiums: Premiums typically stay level throughout the length of the policy.
• Death Benefit: The death benefit is typically level, but graded death benefit policies are available. These policies have a waiting period where the full benefit won't be paid out if the policyholder dies within the first few years.
• Pros: The premiums remain the same, the payout is guaranteed, and the value of the plan grows at a constant rate.
• Cons: You cannot choose the length of the policy, and it is typically more expensive than term life insurance.

There is no definitive answer to which type of insurance is better, as it depends on your unique needs and financial circumstances. Term life insurance is usually sufficient for most people, but whole life insurance may be preferable if you have lifelong dependents or want to build cash value.

How much coverage do you need?

The amount of life insurance coverage you need depends on your financial goals and needs. If you have loved ones who depend on your income, it's important to have the right financial resources in place, including life insurance. Here are some factors to consider when determining how much coverage you need:

• Debts and expenses: Your policy should include enough coverage to pay off any outstanding debts, such as mortgages, loans, and credit card payments. It should also cover funeral and burial expenses, as well as day-to-day living expenses for your dependents.
• Income replacement: One of the main purposes of life insurance is to replace lost income. Consider how much income your dependents rely on and choose a policy that can provide a similar level of financial support. It's recommended to have enough coverage to replace at least 10 years of your salary.
• Inflation: To maintain the purchasing power of your policy's payout, it's a good idea to include a buffer for inflation. This will ensure that the benefits provided are sufficient to meet your dependents' needs over time.
• Family situation: Your family situation plays a crucial role in determining your coverage needs. If you have a spouse or partner, it's important for both of you to have coverage, regardless of individual earnings. If you have children, consider the costs of raising them, including education expenses.
• Age and health: The younger and healthier you are, generally, the lower your premiums will be. However, older individuals can still obtain life insurance coverage.
• Financial goals: If you have specific financial goals, such as saving for your child's education or retirement, ensure your coverage is sufficient to achieve these goals in your absence.

When deciding on the amount of coverage, it's recommended to use one of the common methods for calculating your ideal coverage amount. These methods include:

• Salary multiplier: Most insurance companies recommend a coverage amount of at least 10 times your annual salary. For example, if you earn $50,000 per year, you would opt for $500,000 in coverage.
• Years-until-retirement method: This method involves multiplying your annual salary by the number of years left until your retirement. For instance, if you're 40 years old and earn $20,000 per year, you would need $500,000 in coverage to reach age 65.
• Standard-of-living method: This approach is based on the amount of money your survivors would need to maintain their standard of living if you were to pass away. For individuals between the ages of 41 and 50, multiply your annual salary by 20, and for those between 51 and 60, multiply it by 15.
• DIME (debt, income, mortgage, education) method: This method is designed to provide a minimal amount of coverage to cover essential family expenses in the event of an untimely death. It takes into account your outstanding debts, income replacement, mortgage, and education costs for your children.

Remember, you can use online tools and quote calculators to get an estimate of the coverage amount and premium that best suit your needs.

How long should your coverage last?

When deciding how long your life insurance coverage should last, it's important to consider your financial situation and obligations. Here are some factors to help you determine the appropriate duration for your coverage:

Financial Responsibilities and Obligations:

The duration of your coverage should align with the length of your financial commitments. For example, if you have a mortgage, consider how many years are left until it is fully paid off. Similarly, if you have children, you may want coverage until they reach financial independence, which could be beyond the age of 18 if you plan to support them through college.

Term Length Options:

Life insurance policies typically offer coverage for set periods, such as 5, 10, 15, 20, 25, or 30 years. You can choose a term length that best suits your needs. For instance, a 10-year term may be suitable for older adults without young children, while a 30-year term could be ideal for covering long-term financial obligations like a mortgage.

Annual Renewable Term Life Insurance:

This option allows you to renew your coverage annually for a set period without reapplying. However, the premiums usually increase with each renewal, making it a more expensive choice in the long term. This might be a good choice if you're looking to cover a short-term gap or improve your health to qualify for a better policy in the future.

Age and Health:

Your age and health can impact the term lengths available to you. Older adults may not be eligible for longer terms, but they can still opt for shorter durations. Additionally, consider that health problems tend to become more prevalent as we age, which can affect the likelihood of renewal or purchasing a new policy.

Cost Considerations:

The longer the term length, the higher the premiums will likely be. This is because you're locking in your rate for an extended period, and the risk of paying out a claim increases with time. However, buying a longer-term policy when you're younger and healthier can result in lower overall costs compared to purchasing multiple shorter-term policies over time.

In conclusion, when deciding on the duration of your life insurance coverage, carefully assess your financial situation, including any mortgages, loans, and dependents. Choose a term length that covers your obligations, keeping in mind that you can always adjust the duration later if needed.

What is the application process?

Fidelity offers a simple application process that can be completed online on a desktop, tablet, or mobile phone in as little as 15-20 minutes. The application will require you to answer questions about your identity, contact information, employment, prescriptions, medical conditions, smoking status, and the activities you enjoy. Having your medical details handy before starting the application is recommended, as it cannot be saved and resumed later. Additionally, all required fields, including medical history, must be completed.

After submitting the application, you may receive approval right away, or you may be asked to provide additional information, including a medical exam. The medical exam is typically conducted by a paramedic professional and includes checking blood pressure, weight, height, and collecting blood and urine samples. The exam is safe, secure, and can be scheduled at a convenient location and time for you at no cost.

Once you have submitted all the required information, the application will undergo a review process, which generally takes 4-6 weeks. If approved, you will receive your policy offer by email. You are not required to make any payments until you decide to proceed with the policy. If your application is declined, you will receive a letter explaining the reason for the denial.

What happens if you have a history of medical issues?

If you have a history of medical issues, you may still be eligible for a term life insurance policy with Fidelity. Medical history is just one factor in determining eligibility for coverage and premium amounts. Your eligibility will be determined through the application and underwriting process.

Fidelity's underwriting process evaluates your application using medical information and third-party data to determine your "risk class" and provide you with a personalized premium for the selected coverage. The underwriting team looks at all relevant information from the submitted term life application, medical records obtained from your doctor, and results from any additional medical exams requested after the application is completed.

Fidelity Life Insurance offers several policy options for seniors, including term life, whole life, final expense, and guaranteed issue coverage. The company also has a RAPIDecision Guaranteed Issue policy for those who think they would otherwise have difficulty qualifying for a life insurance policy due to pre-existing health conditions. This policy does not require a medical exam, answering medical questions, or a public database health search.

Fidelity's term life insurance for older Americans, ages 50 to 70, does not require a medical exam. Your quote and approval hinge on two things: health questions answered in the application and public data sources such as a Motor Vehicle Report (MVR).

Frequently asked questions