Life insurance 101: what do I need to know?

Life insurance is important to your financial security. As a vital part of your financial plan, it needs to be reviewed regularly. As you experience changes in your life and career, your goals and protection needs change.

Click on the question below for more information.
» Why do I need life insurance?
» How do I learn more about a life insurance company?
» How much life insurance do I need?
» How do I choose a beneficiary?
» What is medical underwriting, and why must I answer health questions?
» How do I make changes to existing coverage?
» What do I do if I have a claim?

Why do I need life insurance?
Life insurance is an essential part of any financial program. Most people buy life insurance to replace income that would be lost at the death of a wage earner. The cash provided by life insurance also can help ensure your dependents are not burdened with significant debt when you die. Life insurance proceeds could mean your dependents won't have to sell assets to pay outstanding bills or taxes. An important feature of life insurance is that no income tax is payable on proceeds paid to beneficiaries. If you have questions about tax matters, talk to your tax advisor.

» Return to top

How do I learn more about a life insurance company?
More than 2,000 companies in the United States sell life insurance. Most sell policies through agents or brokers; some companies offer policies by mail and online. Before purchasing a policy, check the insurance company's financial condition. You can do this by asking the agent or requesting information from your state's insurance department. A number of insurance rating services rate the financial strength of companies. These ratings can be found in public libraries. Also check your state insurance department's web site (if available), or call to be sure the company is licensed in your state. Minnesota Life ranks among the most highly rated insurers in the country. Check out Minnesota Life's financial ratings.

» Return to top

How much life insurance do I need?
Before buying life insurance, you should bring together your personal financial information and review your family's needs. There are a number of factors to consider when determining how much protection you should have. These include:

• any immediate needs at the time of death, such as final illness expenses, burial costs and estate taxes;
• funds for a readjustment period, to finance a move or to provide time for family members to find a job; and
• ongoing financial needs, such as monthly bills and expenses, day-care costs, college tuition or retirement.

Our insurance needs calculator will help you determine how much insurance you may need to sufficiently provide for the well-being of your family.

» Return to top

How do I choose a beneficiary?
Designating a beneficiary is an important right of life insurance ownership. It lets you determine who receives your policy benefits. Under current tax law, life insurance benefits paid to a beneficiary are not taxable income.

Common terminology

Primary Beneficiary - The person or persons named will be the first to receive the proceeds.

Contingent (Secondary) Beneficiary - Policy benefits will be paid to the contingent (secondary) beneficiary, if the primary beneficiary is not living.

Irrevocable Beneficiary - Once you designate an irrevocable beneficiary, you may not change it without the beneficiary's written permission.

Default beneficiary: If you do not name a beneficiary, policy benefits will be paid in order of priority as listed in the policy.

How to designate multiple beneficiaries

After determining whom you want to select as your beneficiary, you may then choose what percentage of the benefit each individual should receive.

For example:
Primary Jane Doe, daughter, and John Doe, son

• Jane and John will equally share the proceeds. If any additional children are born, they will not be eligible to receive a portion of the proceeds.

Primary Susan Doe, spouse
Contingent Jane Doe, daughter, 75 percent and John Doe, son, 25 percent

• The proceeds will be paid to Susan Doe. If Susan is not living, then the proceeds will be paid 75 percent to Jane Doe and 25 percent to John Doe.

Primary William Doe - Trustee, his successors or successor in trust under the William Doe Revocable Trust Agreement. Executed by the insured on June 1, 1995.

• The proceeds will be paid to a Formal Trust. If the Trust is an institution, the address of the institution should be included.

» Return to top

What is medical underwriting, and why must I answer health questions?

Most group life policies offer a certain amount of guaranteed coverage. When you apply for more than the guaranteed amount of insurance, you need to provide satisfactory evidence of insurability (EOI).

What is the underwriting process?
When your EOI reaches Minnesota Life's office, we create a record for you. An underwriter then reviews your EOI. Factors such as current physical condition, medical history, height and weight are considered to determine if you meet the company's acceptance standards for this type of insurance.

What information is required?
Most EOI forms are processed using only the information you provide. However, in some cases, a physical examination is needed. The basic physical examination includes height, weight, pulse, blood pressure and a medical history questionnaire. The examination may include special testing such as a blood test, urinalysis and an EKG.

If an examination by a qualified medical professional is required, we will notify the exam center of any required testing, and you will receive notification which will include a brochure to help you prepare for the examination. The exam service will contact you to schedule an appointment. Most exams can be done in the convenience of your own home and take less than 30 minutes. There is no charge for the examination, and a copy of the exam and lab results are available to you at no cost.

Minnesota Life may also call or send a letter to you to clarify information during the evaluation process. A review of your past medical records may be necessary to evaluate your EOI. If so, we will request these from your doctor or other health care provider by mail. We will also send a letter notifying you that your medical records have been requested. Your medical records are considered confidential, and information is not released to anyone else without your consent or a court order.

How long does it take?
When you complete the physical examination, a report of the examination is sent to Minnesota Life. We usually receive the reports in our office within a week of the examination. If blood tests or a urinalysis are needed, they are handled by an independent laboratory. We usually receive the results within a week to 10 days of the examination. If we need to write to your doctor for medical records, there may be some delay in the doctor's office responding to our request. Sometimes it helps if you call the doctor's office and ask for a prompt response.

Once we receive all the information we requested, we will review it promptly. We will notify you of our decision by mail. Infrequently, additional information might be needed. If further information is needed to evaluate your EOI, we will notify you by mail within a few days.

» Return to top

How do I make changes to existing coverage?
If you have a user ID and password for LifeBenefits, you can often manage many aspects of your policy online. Just log in and the options available to you will appear.

If you don't have a user ID and password or your company hasn't opted for LifeBenefits to manage your policy, call us at 1-800-843-8358 and a Customer Service Representative will assist you.

» Return to top

What do I do if I have a claim?

Minnesota Life is committed to providing superior service to you and your family when you have a claim. Our goal is to process all claims promptly, fairly and courteously. Most claims are processed in 5-10 business days of receipt of the necessary claim information.

If you or your family wish to present a claim, please contact your company's benefits department for specific instructions. You may also call Minnesota Life concerning the status of a claim at the number provided on the Contact Us page.

» Return to top