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Life insurance answers
Talk to one of our life insurance specialists for help finding a life insurance policy that meets your needs.
Let’s face it, there are a lot of life insurance misconceptions out there, and it’s easy to understand why. When it comes to getting answers to questions about life insurance, not all sources produce accurate answers. For example, a neighbor or co-worker may have good intentions but still gives bad advice, they might not know enough about your situation, they may have different opinions on what approach makes the most sense for you, or they might simply offer incorrect information.
Don’t let life insurance myths prevent you from helping to secure your family’s financial protection. Here, we debunk five common misconceptions about life insurance.
FACT: Sure, being young and in good health makes it less likely that you’ll need to rely on life insurance benefits in the immediate future, but there are good reasons to consider getting a policy now.
FACT: Your employer may provide basic group life insurance as a free or low-cost workplace benefit. According to a 2024 survey done by the life insurance industry research group LIMRA, 25% of respondents indicated that their only coverage was what they obtained as a benefit of employment. Life insurance through work can supplement your individual coverage (yes, you can have more than one life insurance policy), or it could be beneficial to someone who might not qualify for tailored protection, but it has a few drawbacks compared to individual policies.
Make the most of your coverage by understanding all your options. Learn the intricacies of choosing a life insurance beneficiary—the person or entity that gets your death benefits.
Read moreFACT: Some types of life insurance allow you to build cash value over time, which can be accessed as living benefits, letting you borrow from the value or claim it by cancelling the policy. A terminal illness rider is another way a policyholder can have cash available to spend before they pass away. It’s called an accelerated death benefit because it allows a person who’s been diagnosed with a terminal illness to access a portion of their payout while they’re still alive, helping them with things like medical or other care expenses at a difficult time. Term life insurance policies can have living benefits, too, such as a return of premium, where you receive a refund on your paid premiums if you outlive the policy.
FACT: This myth—the number one reason people give for not purchasing life insurance—has a real foothold with consumers, and it’s based on a mistaken understanding of just how much life insurance costs. LIMRA has conducted annual studies since 2011 that all show the same thing: Most consumers imagine the cost of life insurance to be higher than it really is. When asked how much they thought the true cost of a basic term life insurance policy is, 72% of Americans overestimated the amount.
What life insurance is best for you? This guide explains your choices.
Read moreFACT: This final myth has a twist—it could be true, but it doesn’t have to be. While there are many different types of life insurance to choose from, there’s an easy alternative to getting overwhelmed while trying to figure it all out by yourself. A life insurance specialist is the answer, and there’s one ready to help you navigate the choices and make recommendations based on your specific needs. In fact, when you work with a life insurance specialist, you’ll quickly learn that many of those “overwhelming” options are really good things to help you get the coverage that makes the most sense for your current situation.
Yes! Getting life insurance while you’re young and healthy has several benefits:
Workplace life insurance is a great benefit, but it’s typically limited and has drawbacks:
No. Some life insurance policies offer “living benefits,” such as:
Not at all. Many people overestimate the cost of life insurance. According to studies by LIMRA, 72% of Americans think life insurance is more expensive than it actually is. Basic term policies are often surprisingly affordable.
You don’t have to figure it out alone. A life insurance specialist can help you:
Reach out to a life insurance specialist to ensure you make informed choices and apply for coverage that fits your situation!
Life insurance answers
Talk to one of our life insurance specialists for help finding a life insurance policy that meets your needs.
ALAN-30033-725-XX
This information is being provided for general informational purposes only. The Auto Club Group does not assume any liability in connection with providing this information.
Life insurance underwritten and annuities offered by AAA Life Insurance Company, Livonia, Michigan. AAA Life Insurance Company is licensed in all states except NY. CA Certificate of Authority #07861. Products and their features may not be available in all states.
AAA Life and its agents do not provide legal, tax or financial advice. Please consult your professional advisor prior to the purchase of any policy or contract.
This is a summary of product provisions and does not contain all of the benefits and exclusions. For complete terms of the insurance coverage or annuity, please contact your agent or refer to the policy/contract.
Annuities - LA
Annuities are not short-term products. During the surrender charge period, withdrawals exceeding 10% will be subject to a surrender charge that may be higher than fees associated with other types of financial products and may reduce principal. Withdrawals prior to 59½ may be subject to IRS penalties, separate from the annuity’s schedule of surrender charges.
EliteGuarantee Deferred Annuity - LAEG Contract Form Series: ICC11-4101/DA-4101 (In OR: ICC11-4101)
Platinum Bonus Annuity - LAPB Contract Form Series: ICC11-4111/DA-4111 (In OR: ICC11-4111)
Guaranteed Income Annuity - LAGI Contract Form Series: ICC14-4120/SPIA-4120 (In OR: ICC14-4120)
The payout amount you will receive is based on your individual circumstances, the options you select at the time of application and your initial premium payment.
Term Life Insurance - LT
Premiums are guaranteed. They are level for the term period and increase annually thereafter. Any sample premiums are examples only and may vary based on your personal health history and underwriting guidelines. The answers provided to the health questions are used to determine eligibility for coverage. Not all applicants will qualify. Product and its features may not be available in all states. Coverage ends at age 95.
If insured is diagnosed with a terminal illness that will cause death in 12 mos. or less, up to 50% of the total benefit can be applied for, and used as insured chooses. The remaining benefit payable at death will be reduced by the Accelerated Death Benefit paid and any accrued and unpaid interest (8% annual interest rate applies). Receipt of Accelerated Death Benefits may affect eligibility for public assistance programs and may be taxable. Please consult the appropriate social service agency and seek the advice of tax counsel before applying for these funds. The Accelerated Death Benefit is not available if the terminal illness results from an intentionally self-inflicted injury. This benefit may not be available in all states.
ExpressTerm - LTE Policy Form Series: ICC19-1601/1601 (In OR: 1CC19-1601)
Traditional Term - LTT Policy Form Series: ICC19-1801/1801 (In OR: ICC19-1801)
Group Direct Term Policy Form Series: GT8200
Individual Direct Term Policy Form Series: ICC16-1501
Universal Life Insurance – LULG
Health history, underwriting guidelines and the answers provided to health questions are used to determine approval for coverage. Not all applicants will qualify. Rates may vary.
Lifetime Universal Life Insurance - LUL Health history, underwriting guidelines and the answers provided to health questions are used to determine approval for coverage. Not all applicants will qualify. Rates may vary.
Policy Form Series: ICC19-4701/4701 (In OR: ICC19-4701)
If insured is diagnosed with a terminal illness that will cause death in 12 mos. or less, up to 50% of the total benefit can be applied for, and used as insured chooses. The remaining benefit payable at death will be reduced by the Accelerated Death Benefit paid and any accrued and unpaid interest (7% annual interest rate applies). Receipt of Accelerated Death Benefits may affect eligibility for public assistance programs and may be taxable. Please consult the appropriate social service agency and seek the advice of tax counsel before applying for these funds. The Accelerated Death Benefit is not available if the terminal illness results from an intentionally self-inflicted injury. This benefit may not be available in all states.
Accumulator Universal Life Insurance - LULA Health history, underwriting guidelines and the answers provided to health questions are used to determine approval for coverage. Not all applicants will qualify. Rates may vary.
Policy Form Series: ICC19-3701/3701 (In OR: ICC19-3701)
If insured is diagnosed with a terminal illness that will cause death in 12 mos. or less, up to 50% of the total benefit can be applied for, and used as insured chooses. The remaining benefit payable at death will be reduced by the Accelerated Death Benefit paid and any accrued and unpaid interest (5% annual interest rate applies). Receipt of Accelerated Death Benefits may affect eligibility for public assistance programs and may be taxable. Please consult the appropriate social service agency and seek the advice of tax counsel before applying for these funds. The Accelerated Death Benefit is not available if the terminal illness results from an intentionally self-inflicted injury. This benefit may not be available in all states.
Whole Life Insurance
Whole Life Insurance (for coverage amounts of $30,000 or more) - LWL Policy Form Series: ICC18-5601/5601 (In OR: ICC18-5601)
Health history, underwriting guidelines and the answers provided to health questions are used to determine approval for coverage. Not all applicants will qualify. Rates may vary.
If insured is diagnosed with a terminal illness that will cause death in 12 mos. or less, up to 50% of the total benefit can be applied for, and used as insured chooses. The remaining benefit payable at death will be reduced by the Accelerated Death Benefit paid and any accrued and unpaid interest (8% annual interest rate applies). Receipt of Accelerated Death Benefits may affect eligibility for public assistance programs and may be taxable. Please consult the appropriate social service agency and seek the advice of tax counsel before applying for these funds. The Accelerated Death Benefit is not available if the terminal illness results from an intentionally self-inflicted injury. This benefit may not be available in all states.
Rapid Issue Whole Life Insurance (for coverage amounts of $25,000 or less) - LRIWL Policy Form Series ICC20-7001/7001 (In OR: ICC20-7001)
Responses to the application will be used to determine approval for coverage. Not all applicants will qualify.
This Whole Life policy is referred to as graded benefit whole life insurance. If you suffer a non-accidental death within the first two years of coverage, your beneficiaries will get 100% of the base premiums you paid, plus 35%. After two years, the total amount of your coverage is paid for death due to any cause.
After the first two years of coverage, if insured is diagnosed with a terminal illness that will cause death in 12 mos. or less, up to 50% of the total benefit can be applied for, and used as insured chooses. The remaining benefit payable at death will be reduced by the Accelerated Death Benefit paid and any accrued and unpaid interest (8% annual interest rate applies). Receipt of Accelerated Death Benefits may affect eligibility for public assistance programs and may be taxable. Please consult the appropriate social service agency and seek the advice of tax counsel before applying for these funds. The Accelerated Death Benefit is not available if the terminal illness results from an intentionally self-inflicted injury. This benefit may not be available in all states.
Guaranteed Issue Whole Life Insurance - LGIWL Policy Form Series: ICC16-6301/GWL6301 (In OR: ICC16-6301)
The maximum amount of Guaranteed Issue Whole Life insurance coverage per insured is $25,000.00. Subject to age requirements and policy limit restrictions.
This Guaranteed Issue Whole Life policy is referred to as graded benefit whole life insurance. If you suffer a non-accidental death within the first two years of coverage, your beneficiaries will get 100% of the level monthly premiums you paid, plus 30%. After two years, the total amount of your coverage is paid for death due to any cause.
If you are a California resident 65 years of age or older, we are required to advise you of the following. The sale or liquidation of any stock, bond, IRA, certificate of deposit, mutual fund, annuity, or other asset to fund the purchase of this product may have tax consequences, early withdrawal penalties, or other costs or penalties as a result of the sale or liquidation. You may wish to consult independent legal or financial advice before selling or liquidating any assets and prior to the purchase of any life or annuity products being solicited, offered for sale, or sold.
