The short answer is yes, but it gets a little more complicated than that. Finding the right policy is about more than just finding a company that will insure you, and offers you a good price. You should also consider things like the amount of money you need to save, and the length of time you need coverage, among other things.
Have you ever wondered if you can still get life insurance without a job? This is a common question, and there’s a lot of confusion over the answer. The short answer is: yes, you can. However, there’s a catch: you’ll want to find a life insurance policy with a “market value” that is high enough to cover your needs, whether that’s to replace your income if you’re not working, or to be used in the case of a disability.
Life insurance is a very important financial product for many people and is often overlooked as a necessity by many people. The biggest reason people go without a policy is because they do not think they will need it. While there is truth to this, a lot of people can benefit from the protection it offers.
According to a recent study, just over half of all persons in the United States have life insurance. Many of these policies, referred to as group life insurance, are issued by a company.
You don’t need a job to acquire life insurance, though. Even if you already have a group coverage via your company, there are some advantages to purchasing an individual policy that you own and control.
Coverage for Life Insurance in a Changing Workplace
The latest pandemic may have permanently altered the working environment. Several industries saw mass layoffs. Others switched to working remotely or semi-remotely. Many others also took advantage of the option to leave their 9-to-5 jobs behind and pursue gig work or self-employed freelancing labor.
Many families may be without coverage because most life insurance policies are group policies supplied through an employer. The good news is that life insurance is less expensive than you may believe. This is particularly true for a basic policy that provides coverage similar to that provided by a group policy.
Most group policies cap the death benefit at one year’s earnings, which for the average American worker is less than $50,000.
Years ago, when I worked in the auto repair industry, my firm provided full-time employees with group life insurance. The death benefit was set at one year’s worth of income, which was around $35,000 at the time.
My employer provides free life insurance as part of our benefits package. If you don’t think about it too much, this seems great. If I had died abruptly after a year, my family would have been in financial problems. I was in desperate need of a separate policy with a bigger coverage level.
But I didn’t know any differently at the time, and I went years without insurance.
If you don’t have a job or are self-employed, you can buy a stand-alone life insurance policy. If you’ve been unemployed for a brief period of time, it won’t impair your eligibility. Because your new life insurance coverage isn’t tied to an employer, it will remain intact if you change jobs in the future.
Another advantage of purchasing a solo policy is the ability to choose your coverage amount. For most families, the minimal coverage provided by a group policy is insufficient.
In most circumstances, being unemployed has no bearing on your insurance coverage. Insurers, on the other hand, may take into account other assets, as well as recent employment and income history, when determining eligibility and coverage amounts.
For example, if you’ve been unemployed for two decades and don’t have many assets, you’re unlikely to qualify for a big level of coverage. Nonetheless, nearly everyone can obtain some kind of coverage.
Stay-at-home parents, for example, who have no income but provide enormous value to their families, can commonly obtain life insurance coverage.
If you’re unemployed, insurers may additionally examine the following:
- Before becoming unemployed, how much money did you make?
- Work experience and previous jobs
- How long have you been jobless?
- Are you on the lookout for a job?
Your assets, such as your home and savings, may be taken into account by life insurance carriers.
Consider acquiring a smaller policy and augmenting your coverage with a second policy until you resume generating a stable income if you don’t qualify for as much coverage as you desire due to temporary unemployment.
Choosing the Amount of Life Insurance Coverage
For the majority of families, life insurance acts as a source of replacement income. Multiplying your annual earnings by ten was a standard method of evaluating coverage needs. So, if you earn $40,000 a year (while working), you’ll need $400,000 in life insurance.
However, there are a few critical points that this rule of thumb overlooks. It makes no mention of debt. It also disregards any savings or any life insurance you may have.
Incorporating these elements and determining how long your financial obligations will last is a better method to approach your life insurance needs.
Someone with grown children, for example, has different coverage requirements than someone with a baby. The newborn’s family is financially responsible for the next 20 years or more. A family with grown children, on the other hand, may only need to pay for a spouse.
If they own a property, they may also be further along in paying off their mortgage. Their savings position could also be stronger.
As someone who has a teenage son, I can relate to the fact that having children raises the cost of living. When we pass each other in the corridor, I can see windswept dollar bills sucked into a spinning vortex in the right light.
You can use the following procedure to pick a coverage amount that is appropriate for your needs:
- What level of coverage do you currently have? Perhaps you have an ancient policy that was purchased for you by your grandparents. This existing insurance lowers the amount of new insurance you’ll need to purchase. $25,000 is an example.
- What is the amount of money you have in savings or investments? Savings and investments might also help you cut down on the amount of insurance you need. However, don’t forget to include in your home equity. Your family requires housing. $50,000, for instance.
- How much money do you make on a yearly basis? Consider your earnings after you’ve paid your taxes. When computing the amount of life insurance coverage, the portion that the government receives is ignored. If you’re unemployed for a while, use your previous wages as a guideline. $50,000, for instance.
- What percentage of your income must be replaced? This calculation implies that your insurance company will pay off your debt. However, your family may still require some financial assistance. 50% ($25,000) is an example.
- How long do you think you’ll be able to support yourself? This might take decades for a household with young children. 20 years, for instance.
- How much do you want to set aside for a rainy day fund? Unexpected needs may necessitate the use of credit, which might take years to repay and drain your finances. This is something you might want to factor into your life insurance needs assessment. $5,000, for instance.
- How much do you think you’ll have to pay for funeral costs? The average cost of a funeral and burial is around $15,000. Example: $15,000
- What is the total amount of your household debt, including your mortgage? Car loans, credit card expenses, and mortgage loans all account for a significant portion of the normal household budget. Your family can be debt-free by including these funds. As an example, $100,000
- Do you intend to pay for your children’s college or job training? The cost of education continues to grow. When deciding on a coverage quantity, you may wish to include in the cost of education. You can deduct the amount you have saved if you have previously saved some money. $40,000 is an example.
In this case, life insurance coverage of $585,000 is required. Surprisingly, it calculates life insurance needs similarly to the 10-year earnings technique. Changing any of the numbers above, however, will vary the outcome. It’s preferable to take a more complete strategy that takes into account your financial circumstances.
Here’s how it works:
- $25,000 in current life insurance coverage
- $50,000 in savings and investments
The amount of coverage you require is reduced in these two groups.
The categories below will increase the quantity of coverage you require.
- $500,000 ($25,000 x 20 years) is required to replace lost revenue.
- $160,000 in ongoing financial obligations (Educational expenses)
Policygenius can help you compare insurance quotes. Policygenius provides a free online quote tool that allows you to compare life insurance policies from a variety of different companies.
The Different Types of Life Insurance
Choosing a coverage amount is a crucial step in ensuring your family’s financial security. However, you must choose the appropriate policy type for your situation.
There are two forms of life insurance:
- Term life insurance is a type of life insurance that has fixed premiums for a set period of time. Term lengths typically range from 5 to 30 years. Outside of group life insurance, the most prevalent type of life insurance is a 20-year term policy. Term policies do not always “expire” at the end of the term. Instead, they could become more expensive. After the policy’s guaranteed premium term expires, most customers cancel or replace it.
- Permanent life insurance: As the name implies, a permanent policy can cover you for the rest of your life. Whole life insurance, the most prevalent type of permanent insurance, often provides coverage until the age of 100. When the policy matures, the death benefit is paid to you (rather than your beneficiaries) if you live to be 100 years old.
An annually renewable term life insurance policy is the sort of group life insurance that a business could offer.
Permanent life insurance comes in a variety of forms, including universal life insurance and variable life insurance. Both universal and variable life include an investment component, which may increase risk. An annually renewable term life policy is used by both policy types to offer life insurance protection.
Permanent life insurance has various advantages, including the opportunity to accumulate cash value that can be used to borrow money. These plans also give non-expiring protection.
However, the cost of keeping a policy that uses an annually renewable term life policy for life insurance might rise with time. The policy may become too expensive to continue if your financial status changes or the investment part of the policy underperforms.
Whole life insurance has a cash value that grows over time and has fixed premiums, avoiding some of the dangers associated with other types of permanent life insurance. However, whole life insurance premiums might be several times more than those for a term policy with the same coverage level.
For many families, a well-planned term life insurance policy provides a cost-effective solution that is tailored to the time range in which coverage is required. Paying a mortgage or providing for a family are two of the most common reasons for purchasing insurance for many of us.
Term coverage is a cheap option because they are financial commitments with a set end date.
You may tailor your coverage to your family’s needs because term life insurance comes in a variety of term lengths. You can even combine your coverage options. For example, if you have a young family, you may require a 20-year term coverage.
Then you launch a firm with a $30,000 loan over five years. You can insure the loan with a second-term policy.
I took out a 15-year mortgage when I bought my current home. The savings made the shorter mortgage term (and higher monthly payments) worthwhile at the time because interest rates were higher. Just in case, I also bought a 15-year term life insurance policy.
The policy covers my primary financial responsibilities and is tailored to the length of time I’ll be able to meet them.
If you’re under the age of 40, you can get a 30-year term life insurance policy. Your options may be limited to a 20-year term or less as you get older.
Costs of coverage rise as you get older or develop health problems. Your monthly costs, however, do not alter once you have locked in your rate by purchasing a policy. It’s better (and less expensive) to not wait.
Policygenius can help you compare term life insurance carriers. If you require lifetime coverage, Policygenius also offers full life insurance.
How to Make a Life Insurance Application
It is simple to apply for life insurance. In most circumstances, however, you’ll have to wait 3 to 6 weeks for your coverage to take effect. The insurer reviews your medical exam findings and confirms the information you supplied on your application during this time. This verification process is referred to as underwriting.
Choose your coverage level and examine the coverage types (and terms) that may be ideal for you as a starting step. Term life insurance is the most cost-effective option for many families.
Then, compare quotes from a variety of insurance companies. You may simplify the process by using Policygenius. You can easily compare rates from top insurers with Policygenius.
You can also apply for coverage through Policygenius once you’ve found a policy that meets your needs and budget. Policygenius, as an independent firm, can assist you with the process. Their skilled staff can also assist you with any inquiries you may have.
The basic procedure is as follows:
- Finish your application. Your insurer must be aware of the danger. Questions regarding your health, family history, job, habits, interests, and finances are likely to be asked.
- Complete an interview over the phone. You’ll also meet with an agent to discuss your interests and lifestyle. Now is the moment to ask any queries you may have.
- Make an appointment with your doctor. The majority of policies necessitate a medical evaluation. You can arrange the exam whenever you want. A nurse came to my house to perform the exam when I purchased my coverage. In some situations, your exam may be performed at a local physician practice.
- Relax. The difficult part is over. At this stage, all you have to do is wait for the insurer to complete their underwriting and, based on the results, confirm your premium. This stage of the process usually takes 3 to 6 weeks.
When you go shopping, the quotations you get are a good place to start. However, depending on what your insurer discovers during the underwriting process, your rates may be higher or lower.
If, for example, your medical exam reveals that you are in great condition but you stated that you are in medium health throughout the quote process, your rates may be much lower. Of course, the inverse is also true.
What can make you ineligible for life insurance or affect your rates?
While being self-employed or unemployed is unlikely to prevent you from purchasing insurance, you may find that higher coverage prices are unavailable. The amount of coverage you can purchase is determined by your earnings and job history.
Life insurance isn’t intended to provide a financial bonanza. Insurers, on the other hand, attempt to match maximum coverage limits to potential financial loss.
For example, I won’t be able to afford a $2 million coverage if I’m working minimum pay. To make $2 million, I’d have to work for hundreds of years. Because my earnings are low, my insurable loss would be significantly lower.
A number of reasons can potentially make you ineligible for life insurance. In some situations, you may be able to get coverage, but at a greater cost. These elements may include:
- Cancer, obesity, diabetes, and other chronic diseases can all affect rates and eligibility. Standard policies take into account a variety of medical data, including BMI, cholesterol levels, and other factors. Tobacco, marijuana, and excessive alcohol consumption can all contribute to higher rates.
- Mental health issues: Some insurers will not accept candidates who have had mental health issues in the past.
- Hobbies and way of life: Certain lifestyle choices can put you in danger. Flying planes, racing cars, and rock climbing, for example, can all increase risk, thereby increasing insurance prices or compromising eligibility.
- Your age: If you buy life insurance when you’re younger, your premiums will be lower. As you get older, your eligibility for longer-term insurance policies will likely decrease. Most term insurance companies do not sell coverage to persons beyond the age of 75. You might be able to obtain a last expense policy, though.
- Your line of work: What you do for a living, like your interests, can affect your rates or eligibility. Police officers, truck drivers, roofers, and firefighters, for example, may face higher rates.
- Your credit history includes: Credit-based insurance scores are used by around half of life insurance carriers, a number that is likely to rise. Rates and eligibility may be affected by a recent bankruptcy or other negative credit information.
- Your driving history is as follows: Because car accidents are still a primary cause of death, insurers scrutinize your driving record before offering coverage. Many insurance companies may refuse to insure you if you have recently been convicted of a DUI or DWI.
- Your criminal past: While some insurers may be more lenient, you may find fewer carriers ready to issue coverage if you have a criminal background.
I worked as a truck driver in my twenties. Every day on the roads, I witnessed multiple accidents but was fortunate enough to escape being involved in one myself. My work would have resulted in higher life insurance rates due to higher risk, despite the fact that I was young and in good condition.
My occupational risk is lower now that I’m a freelance writer, thus my rates would be lower as well. My greatest occupational danger right now is that I will fall out of my chair. However, I am becoming older, which will raise my prices.
Life insurance, like other types of insurance, incorporates both positive and negative rating variables when calculating premiums and eligibility.
If you’re unemployed or self-employed, here’s how to shop for life insurance.
Although being temporarily unemployed may limit the amount of coverage you can get in some situations, you should still be able to purchase a life insurance policy.
First, figure out how much coverage you’ll need to keep your family safe. Calculate how much coverage you require using a needs-based approach. This isn’t something you want to leave to chance.
Then, decide on the level of protection you require. Remember that term life insurance assures premiums for a set length of time, such as 10 or 20 years. Whole life insurance, for example, is a sort of permanent life insurance that does not expire.
Permanent life insurance, on the other hand, can be more expensive, and some policy types may expose you to risk due to the investment component of the policy.
It’s time to start looking for the right policy when you’ve decided on a coverage amount and a coverage term or policy type.
Shopping for life insurance isn’t as much fun as going to your favorite store, but internet portals like Policygenius make it simple. You can easily compare rates using Policygenius. You can also work with one of their knowledgeable agents if you have a question or require assistance.
Best of all, Policygenius is an independent insurance agency with the ability to sell coverage anywhere in the United States. Without ever stepping foot in an insurance office, you may expect fair advice and the ability to purchase coverage.
If you’re between employment, you may still be able to find coverage. However, it is preferable to begin sooner rather than later. Insurers take into account how long you’ve been out of work. They also take age into account, so don’t wait another birthday to get the coverage your family requires.
The same purchasing procedure applies to self-employed individuals. When determining your premiums, insurers take into account your wages and assets, as well as other rating considerations.
They also look at your previous earnings. So, even if you’re just starting out in business, you may receive the life insurance coverage you need to safeguard your loved ones.
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Can I Still Get Life Insurance If I Don’t Have a Job? originally appeared on Minority Mindset.
You may have heard that co-workers often have a hard time finding life insurance because they don’t have a job. But is it really true? Yes, but only if you want to get a cheap policy. Life insurance rates are based on a number of factors, including the health of the person buying the policy, their occupation, and their gender.. Read more about prudential life insurance and let us know what you think.
Frequently Asked Questions
Can I get life insurance if Im unemployed?
Yes, you can get life insurance if you are unemployed.
Can you get insurance if you dont work?
If you are not employed, you cannot get insurance.
How long does life insurance last after termination?
Life insurance lasts for a set amount of time after termination, typically 2-5 years.
This article broadly covered the following related topics:
- what is life insurance
- what is life insurance used for
- what is life insurance and how does it work
- life insurance companies
- does life insurance cover unemployment