New Jersey has a population of over 9.2 million people, of which about 17% are seniors (65 years and above). In 2021, over 63 thousand seniors died in the state due to heart diseases, cancers, accidents, stroke, Alzheimer's diseases, diabetes, septicemias, and kidney diseases. Hence, everyone, especially seniors, needs life insurance policies. Life insurance is a way you can provide financial security for your loved ones at your demise.
Besides the obvious death benefit aspect of life insurance, some policies can also serve as an investment tool for retirement planning and improving your financial strength while you are still alive. Life insurance typically comes in two categories:
Here are the most commonly-purchased life insurance companies in New Jersey
|Top Life Insurance Companies in New Jersey
(in alphabetical order)
|Banner Life (Legal General)|
|Direct Auto Insurance|
|Haven Life (Mass Mutual)|
|Mutual of Omaha|
|National Life Group|
|Plymouth Rock Assurance|
|Always consult with a licensed life insurance agent who can recommend best insurers and policy types - based on your needs.|
Term life insurance policies provide coverage for a set period, while permanent life insurance policies provide lifelong coverage. You will be required to pay premiums regardless of the type of life insurance policy you purchase. The monthly cost of a life insurance policy in New Jersey can be as low as $10 - $12 per month for a $250,000 coverage. However, insurers use several factors like age, gender, coverage amount, tobacco use, risk class, occupation, and lifestyle to calculate life insurance premiums. In addition, several benefits come with life insurance. For instance, you can borrow from the cash value of your permanent life insurance policy while alive and still have death benefits that your policy beneficiaries will receive after your death.
The best time to get life insurance is when you are young and healthy. However, your needs change as you get older, which may require more life insurance coverage. In that case, you can purchase riders to customize your policy based on your specific needs or that of your loved ones. It is best to speak with a New Jersey-licensed life insurance agent who can recommend good riders that suit your needs. They can also help you compare life insurance quotes from multiple insurance companies so you can settle for the most affordable and suitable policy.
Use the quote comparison worksheet to help you shop for life insurance coverage.
The average life expectancy among New Jersey residents is around 79.5 years old. In 2020, mostly due to senior deaths from COVID-19, the average age temporarily dipped to 77.7 years.
|NJ County||Avg. Lifespan|
|Cape May County||76.9|
About 40% of all deaths among New Jersey residents were of persons aged 65-84 years. In 2019, about 2,400 per 1,000 seniors died due to heart diseases, Septicemias, cancers, diabetes, strokes, and Alzheimer's diseases in New Jersey. As a result, many residents began to purchase life insurance policies to provide financial security for their loved ones at their demise.
|NJ Counties||Seniors as % of population|
|Cape May County||28.2%|
The major way life insurance works in New Jersey is by purchasing the policy and paying premiums to keep it active. Your life insurer determines your premiums by using several factors like your policy type, coverage amount, age, gender, health status, and lifestyle. Hence, getting life insurance while you are young and healthy is advisable. Your life insurer pays out a death benefit to your policy beneficiaries at your demise. Asides from the death benefit protection, some life insurance options like whole life insurance and universal life insurance offer cash value components that you can borrow against while still alive.
You should consider the following while purchasing life insurance:
The bottom line is: Do you want the cheapest policy for the most amount of death benefits after you die or do you want a financial tool that you can use while alive, in retirement, and after death?
It is best to seek the services of a New Jersey-licensed insurance agent before purchasing a life insurance policy. They can assess your needs and determine the right policy and coverage amount to purchase.
Typically, death benefits are paid after the insured's death. However, note that they are not paid automatically, so the policy beneficiary must file a claim with the life insurance provider. This requires paperwork and supporting evidence to process the claim and payout. For instance, the insurer may require a policy beneficiary to submit the claims form alongside a certified copy of the deceased insured’s death certificate, policy documentation, or any other necessary document or information.
In New Jersey, insurance companies pay death benefits within 60 days from the date of the claim. If the claim requires additional investigation or the insurer denies it, the insurer will notify the policy beneficiary in writing within 45 days. The insurer must state the reason for the investigation or denial.
The two basic kinds of life insurance in New Jersey are term life insurance and permanent life insurance.
|Common Types of Life Insurance Policies in New Jersey|
|Term Life Insurance||Renewable Term|
|Permanent Life Insurance||Whole Life|
These two types of life insurance in New Jersey fall into the two main categories:
Cash value life insurance is a permanent life insurance policy that lasts throughout the insured’s lifetime. It has a cash value savings component from which you can withdraw or borrow. In addition, there is a modest rate of interest you will earn from the cash value of the life insurance policy, which is usually tax-deferred. The most common cash value life insurance policies in New Jersey are:
Term life insurance is a policy designed to cover the insured for a specified period like 10, 15, 20, or 30 years. In New Jersey, the death benefit is paid to the policy beneficiaries only if the insured dies within the specified policy term. However, there is no payout if the policy expires before the insured's death. Generally, term life policies have no value other than the death benefit paid out to the beneficiaries after the insured's death. They do not have cash value components like permanent life insurance. Term life insurance typically comes in two types:
Term life insurance typically offers the lowest premium for the most amount of death benefit.
Most life insurance policies in New Jersey include an underwriting process involving personal and health information and medical exams, including blood work. However, there are certain instances where medical exams are exempt from the underwriting process in New Jersey. This helps many people to streamline the underwriting process. Generally, a life insurance policy that does not require a medical exam would be a good option if:
|Life Insurance Policies in New Jersey that Require No Medical Exams|
|Final Expense life insurance||It does not require a medical exam. At most, you might have to provide answers to a health questionnaire and prescription history.|
|Group Life insurance||It does not include a medical exam, unless you desire more coverage than what the basic group policy provides.|
|Guaranteed Issue life insurance||It does not require a medical exam, but requires a few questions about your health information and medical history.|
|Simplified Issue life insurance||It does not require a medical exam, but you have to provide answers to a health questionnaire, your medical history, and your family medical history. You will also need to provide access to your previous medical records.|
Speak to a New Jersey-licensed life insurance agent who can give you more details on how to get life insurance policies that do not require medical exams.
Several benefits come with life insurance in New Jersey while you are still alive or at your demise. For instance:
You can use your life insurance as a financial tool to cover medical expenses due to any terminal or chronic illnesses while still alive. Living benefits allow you to access money from your death benefits before your demise. Common types of living benefit that can be accessed through policy riders in New Jersey are:
Additionally, one of the key living benefits of life insurance is being able to access the cash values to assist with funding the retirement. Accessed funds are typically tax free and do not affect your eligibility for Medicare and other Social Security benefits.
You can use your death benefits from your policy to achieve the following goals at your demise:
Contact an insurance agent in New Jersey who can help you better understand what you can do with life insurance policies. They can also help you determine what kind of policy fits you and your family's needs.
The best life insurance for you depends on factors like your needs, the type of policy you want, age, goals, and the amount of premiums you can afford. For instance, term life insurance is best for single adults on a budget. In contrast, young families who want to invest in their children’s future can get whole life insurance because of the saving or investment component. Older adults with health conditions can opt for guaranteed issue, simplified issue, or final expense insurance.
Technically, the cheapest life insurance policy in New Jersey is term life insurance, but not everyone qualifies for it. Hence, the cheapest life insurance policy to consider largely depends on your specific situation. For instance:
The best life insurance for seniors in New Jersey varies, depending on needs and eligibility status. This is because some life insurance for seniors involves taking medical exams or just answering health questions. Ideally, the older you get, the higher your premiums, but it is possible to get affordable insurance options at an old age. The best life insurance seniors should get is final expense insurance because they can buy a policy for as little as $15 per month for a $5,000 coverage with no medical exam required. If you are a senior, you can speak with a licensed life insurance agent in New Jersey who can recommend life insurance policies that do not require medical exams.
A premium in life insurance is the amount of money an individual pays for a life insurance policy. The insured can choose to pay premiums monthly, quarterly, or annually. Failure to pay premiums may result in the cancellation of the policy. Life insurers in New Jersey use factors like age, gender, coverage amount, policy type, and occupation to determine the premium amount.
Generally, life insurance premiums are not tax deductible because they are considered personal expenses. However, premiums may be tax deductible if your life insurance is a business expense or your policy beneficiary is a charitable organization. Speak with a licensed life insurance agent in New Jersey to know if your life insurance premiums are tax deductible.
A death benefit in life insurance is the sum of money paid by the insurance company to policy beneficiaries when the insured dies.
In New Jersey, a death benefit is payable after the insured's death. Generally, insurers pay the death benefit as a lump-sum payment, but the policyholder can determine how the insurer pays the death benefits. For instance, upon purchase, a policyholder may specify that the policy beneficiaries receive a portion of the death benefit immediately after death and the remaining few years after the date of death.
It depends on the type of insurance policy you purchase in New Jersey. Generally, you must not have over $2,000 as an individual or $3,000 as a couple to be eligible for Supplemental Security Income (SSI) program. Hence, the cash value component of permanent life insurance can affect SSI because your policy's face value can increase over time, and exceed SSI limits. In contrast, term life insurance policy payout does not affect SSI because the face value remains the same throughout the policy tenure.
A living benefit is a feature in your life insurance policy that allows you access to money from your death benefit while still alive. Typically, the money can be used for expenses associated with terminal or chronic illness like medical care, hospice or nursing home care, and in-home caretakers.
Your insurer can allow you to access 25% of your policy's death benefit as a living benefit. However, proof of life expectancy from a medical provider may be required. Your insurance company can accelerate payout if you have a shorter life expectancy, especially under two years. However, this will affect the death benefit paid to your policy beneficiaries. This is because the amount of living benefit you get will be deducted from the final death benefit your policy beneficiaries will receive at your demise.
Alternatively, some life insurance policies (namely Indexed Universal Life) can offer the insured an option to withdraw cash value using loans, which come tax-free and can be used by the insured as they please. Typically, such loans help the insured during the retirement years, without affecting social security eligibility.
MEC stands for Modified Endowment Contract and was designed to ensure that individuals with life insurance premiums that exceed federal tax law limits pay taxes. Typically, a life insurance policy is considered a MEC by the Internal Revenue Service (IRS) if it meets three criteria:
The seven-pay test determines whether your total premiums within the first seven years of your policy exceed what is required to have the policy considered paid up in seven years. Hence, your life insurance policy becomes MEC when the premiums paid to the policy exceed what could have been paid within that seven-year period.
Yes, you can borrow against permanent life insurance but not term life insurance policies in New Jersey. Some life insurance policies you can borrow against are:
Typically, you can take out loans from your death benefit, and your insurer will use the policy as collateral for the loan. However, you are expected to pay the loan back with interest. If you do not pay the loan back before your death, your insurer will subtract the loan amount plus any interest from the death benefit your policy beneficiaries will receive.
Read more about How to Borrow Money From Life Insurance
A rider in life insurance is an additional option that helps you to maximize your policy benefits or coverage. They can help you customize your policy based on your specific needs or that of your loved ones in New Jersey.
In New Jersey, riders are important in life insurance because:
Read more about the Most Important Riders For Life Insurance.
No. A deductible is an amount you have to pay before your life insurance kicks in. There is no deductible in life insurance because premiums are considered personal expenses.
Life insurance companies operate by pooling together premiums from many people in exchange for covering their risks. These risks are calculated using statistics from which premium amounts will be determined. Hence, individuals considered high risks tend to pay higher premiums than individuals with lower risks.
The life policy remains active as long as premiums are paid, and insurers are expected to pay out death benefits after the insured's death. However, death benefit payments are not automatic. The policy beneficiary is to file a claim with the necessary documentation. For example, life insurance companies in New Jersey pay out claims within 60 days if the insured provides all the required documents.
All life insurance companies in New Jersey perform the same basic function: selling life insurance policies to customers. However, some are organized as stock companies while others operate as mutual companies.
|Differences between Mutual and Stock Life Insurance Companies in New Jersey|
|Mutual Insurance Companies||Stock Insurance Companies|
|Ownership||A mutual insurance company is typically owned by policyholders. Insurers can retain profits in exchange for discounts on future premiums or distribute them to policyholders as dividends.||A stock insurance company is typically owned by its shareholders. Insurers can use profits to pay off outstanding loans or reinvest them in the company. Alternatively, they can distribute it to shareholders in the form of dividends.|
|Source of income||Premiums and investments||Premiums, investments, and stock sales|
|Investments||Mutual companies prefer to invest in conservative, low-yielding assets with long-term results.||Stock companies prefer to invest in high-yielding and risky assets that can yield short results.|
|Management||Policyholders of a mutual company are owners of the company, so they have a say in the company’s management.||Policyholders of a stock company do not interfere in the company's management, unless they are also investors.|
|Financial stability||Mutual companies are not financially stable because they have few options for raising funds. As a result, they might be forced to close down their businesses or declared insolvent if they can not raise funds.||Stock companies are more financially stable than mock companies because they have more options for raising funds.|
Life insurance companies in New Jersey make money through the following ways:
Insurers use all the money derived from the premiums and investments to pay out claims. For instance, over $7.2 billion in revenue was made from life insurance premiums in New Jersey in 2021.
A life insurance company still makes money even if everyone insured under the company dies. This is because they invest the premiums policyholders pay for life insurance in profitable businesses in a bid to make more than they will eventually need to pay out in claims if the insured dies. Furthermore, life insurance companies adopt a business model that ensures constant payment of premiums. These premiums are calculated in such a way that the insurer will be able to cover liabilities and, at the same time, make profits. In some cases, policyholders default on their payments which may lead to lapsed policies. Insurers are not obligated to pay death benefits for lapsed policies, which means more money for them, while the policyholder loses money.
What life insurance covers in New Jersey can be divided into two categories:
Causes of death
Many deaths are covered by life insurance policies with a few exclusions. Insurers pay death benefits for deaths caused by:
What the death benefit can be used for
Policy beneficiaries are at liberty to spend death benefits however they want. Hence, most of them usually use it for:
Additionally, life insurance policies can cover certain medical expenses while the insured is alive. For instance, you can withdraw part of your death benefit if you have riders. However, you need to have a qualifying condition, such as a terminal illness or a disability, to qualify for living benefits. Talk to a New Jersey-licensed life insurance agent who can give you more details on the inclusions and exclusions of life insurance policies. They can also help you compare life insurance quotes from several insurers to get a cost-effective policy that suits your needs.
Everyone should purchase life insurance, especially people who have dependents. The following individuals should prioritize getting life insurance:
The State of New Jersey hosts nearly a million small and large businesses, employing close to 4 million residents. Every business should have a life insurance policy. It can be used in a variety of ways:
The cost of life insurance goes up every year. Every year you wait to get your policy, you are agreeing to pay more and more for your premium. If you purchase a permanent life insurance in your 20s or 30s, your 60-year old self will thank for locking in that low rate for the rest of your life.
SENIORS WITH PRE-EXISTING CONDITIONS
About 40% of all deaths recorded yearly among New Jersey residents are of persons aged 65-84. Most of these seniors died from pre-existing conditions like heart diseases, Septicemia, cancer, diabetes, stroke, and Alzheimer's disease. Seniors with pre-existing conditions should consider getting final expense life insurance policies to pay for their final expenses at their demise.
PARENTS WITH CHILDREN WITH DISABILITIES AND SPECIAL NEEDS
Parents of such children should get life insurance policies to ensure their children’s long-term financial needs continue being met after the parents pass away.
Couples with and without children can benefit from life insurance. You can get term life insurance policies in anticipation of significant changes in their marriages like childbirth or health changes. Alternatively, married couples can get permanent policies like whole life insurance or universal life insurance to build savings over the years.
Life insurance for married couples can be also setup as a joint policy (Joint Life), which can pay out in multiple ways:
Indexed Universal Life (IUL) insurance policies are frequently purchased as an alternative to a 401K. While you are young the cash value of your life insurance policy grows tax-deferred, and after the retirement you can start taking out tax-free loans against this cash value. (Speak with a knowledgeable and licensed life insurance agent for more details)
Yes. Small businesses and large corporations in New Jersey can declare life insurance premiums paid on employees as business expenses. In such a situation, the death benefit becomes taxable to the employees' beneficiaries (family members or loved ones). A deduction on the business tax return slashes the policy’s death benefit by as much as 40%. This, in turn, will create instant tax liabilities for your employees, which may prevent the life policy from serving its intended purpose.
No, you can only buy a life insurance policy on someone that consents and in whom you have an insurable interest. In addition, the person must sign the application and proof that your death will affect them financially.
You cannot buy life insurance for an adult without their knowledge. Hence, it is impossible to purchase life insurance for someone who has not given their consent for you to do so.
Yes, you can. Ideally, your financial needs and goals will change as you get older, and having a single policy might no longer be enough to meet your specific needs. Hence, you might want to opt for a second life insurance policy to cover your current and future needs. Alternatively, instead of getting multiple life insurance options or adding and dropping coverage to meet specific needs, you may want to consider including policy riders in your life insurance policy.
You can have as many life insurance policies as you can afford. For instance, if you had purchased a $300,000 term life policy at age 20 but decided to get more coverage at age 40. You can get an additional $300,000 term life policy to close any gaps in your financial plan or opt for a permanent life insurance policy. However, note that having multiple life insurance policies increases your premiums. Also, the complexities of having multiple insurance policies can increase the odds of overlooking your premium due date, which could make your policy lapse. Speak with a New Jersey-licensed insurance agent who can educate you on the pros and cons of owning multiple life insurance policies and the tax implications of doing such (if any).
The owner of a life insurance policy in New Jersey is the person who buys an insurance policy. That individual may be the insured or a third party. If a third party takes out life insurance policies on others, the policy owner and the insured would be two different people. The policy owner is the person who purchased the policy on behalf of the insured, while the insured is the person covered by the policy. However, if the policy owner buys a life insurance policy for themselves, the policy owner and the insured become the same person.
A beneficiary in life insurance is any person or entity designated legally to receive your death benefit after your demise. For example, you can name one or more loved ones, family members, charity, or the trustee of a trust you have set up. Your insurer will pay your policy death benefit to your estate if you do not choose a beneficiary.
Typically, your life insurance policy should have both primary and contingent beneficiaries. Your insurer will pay your death benefit to your primary beneficiary at your demise if they can be found. However, your death benefit will be paid to contingent beneficiaries if they cannot be found. If both your primary or contingent beneficiaries can not be found, the death benefit will be paid to your estate.
Read more about Life Insurance Beneficiaries
Some life insurance options like whole life and universal life work as investments because they allow you to put a portion of your premium towards a cash value that can grow. You can decide to withdraw from or borrow against your cash value and use the money for whatever purpose. You can even put it into other investment vehicles. By using your life insurance policy as an investment, you will be able to provide financial protection for your loved ones.
Life insurance policies like indexed or variable life insurance allow you to use your cash value directly within investment vehicles like indexed stocks or mutual funds. Speak to a New Jersey-licensed life insurance agent for more details on the investment part of life insurance. They can also help you compare life insurance quotes from several insurers so you can get an affordable policy that will suit your investment goals.
Technically, life insurance is not an investment, but permanent life insurance policies offer an investable cash value. You can use a permanent life insurance policy as an investment in your or your family’s future, and it has policy features that you can use to set aside money that you can access for future needs. In addition, you can use your permanent life insurance policy to build financial stability for savings and retirement income.
|Similarities Between Investments and Life Insurance Policies in New Jersey|
|Interest||Savings accounts, retirement accounts, and permanent life insurance policies all have accumulated interests.|
|Dividends||Some life insurance policies pay dividends over time like some investment options.|
|Tax Benefits||You can make tax-free withdrawals from permanent life insurance policies like some retirement accounts.|
Most permanent life insurance policies in New Jersey pay dividends to insureds. However, these dividends are distributed based on the company's financials, investment returns, interest rates, and new policies sold. The dividends can be shared as cash to purchase additional paid-up insurance or reduce due premiums.
Joint life insurance is usually purchased by the married couples and it comes in two main forms:
While the “First-to-die” policy pays out the death benefits to the spouse who outlives the other one, “Second-to-die” policy pays out the death benefit to the chosen beneficiary only after both of the insured individuals pass away.
Credit life insurance is a type of insurance policy designed to pay off a borrower's debt in case of death, permanent disability, or critical illness before the loan is paid. In New Jersey, a credit life insurance policy can cover car loans, education loans, mortgages, credit card loans, and other loan types. Speak with a financial professional in New Jersey who can advise you on how to take advantage of credit life insurance.
An assignment in life insurance is when the rights of your policy are transferred to someone else. In that context, you are the “assignor” (the person who assigns the insurance policy), while the person to whom you transferred your policy rights is called the “assignee.” Your rights to your policy will be canceled when you transfer your right to the assignee; then, the assignee becomes the policy owner.
The two types of assignment in life insurance are:
Term life insurance in New Jersey does not have maturity dates; instead, they have restricted terms which could be 10, 15, 20, or 30 years. However, all permanent life insurance policies have maturity dates, which are expected to be after the insured person dies. It may also be when the insured person reaches 95 or 121 years of age, depending on which Commissioners Standard Ordinary Mortality (CSO) table was used to measure life expectancy. For instance, a life insurance policy issued using the 2017 CSO tables could mature when the insured person reaches 121 years old. However, a life insurance policy's maturity date using the 1980 CSO tables is 99 years.
When your life insurance policy matures, your insurance company will pay you the maturity value of your life insurance policy, and the coverage will end. Typically, most insurance companies offer maturity date extension riders (MER) that keep the policy from maturing until you decide to terminate the rider or until your death.
Only permanent life insurance policies like universal life and whole life insurance never expire.
Yes. Per N.J. Admin. Code § 11:4-41.3, life insurance will usually cover suicidal death in New Jersey if the policy was purchased at least two years before the insured died. However, insurance companies will not pay death benefits if the insured commits suicide within the first two years of coverage.
Life insurance is a good investment option in New Jersey. This is because aside from providing financial security for the insured’s loved ones after their death, if used well and strategically, some life insurance plans can help build wealth even while you are alive.
In New Jersey, life insurance is an investment because the returns you get from it can help you provide financial security for your loved ones. You can also use it to meet your life goals, such as paying your children’s tuition fees or financial freedom in retirement. If you die, your insurance pays death benefits to your dependents if your policy is still active. You can also borrow from your policy’s cash value if you run into a financial crisis.
There are several ways to get life insurance in New Jersey. You can purchase a life insurance policy online directly from an insurance company or through an insurance agent. Typically, it is always best to use a New Jersey-licensed life insurance agent because they know how insurance works in the state. They can also help you develop a life insurance plan, compare life insurance quotes from multiple insurers, and ensure you settle for an affordable life insurance policy that suits your needs. Additionally, buying life insurance through an agent saves you unnecessary stress.