Life insurance has many benefits because it replaces income lost for your dependents, pays final expenses like medical cost, and leaves an inheritance for your loved ones. However, life insurance companies are regulated by state laws, and understanding those laws is challenging. It’s also important to note that employer sponsored policies are regulated by federal laws and preempt individual plans.

In some states, your marital status affects your life insurance policy because of property laws. Community property state laws say that if a couple purchases life insurance policy during a marriage, each spouse receives an equal share. If you’re concerned about your income determining your monthly premium, there is no need to worry because income does not determine premium rates. In most states, age and gender are the main factors that will determine your premium.

If you participate in the Medicaid program, you’ll need to be cautious when purchasing a life insurance policy. Medicaid caps a number of assets you can have at $2,000, and this unfortunately includes life insurance. The limit may be more or less than $2,000, depending on the state, which is why it’s so important to know your state’s limit before you purchase life insurance. Also, keep in mind that missing a payment won’t cause you to lose your policy. There are consumer protection laws that prevent insurance companies from canceling your policy due to missed payments.

Now that you’ve learned the basics of state laws and life insurance policies, take this Health IQ life insurance quiz to check your knowledge.

ALSO READ  Top 5 tips to selling an inherited property