Permanent Life Insurance Policy FAQs

Frequently Asked Questions

When does my coverage begin?: Coverage begins after your policy application is approved without any changes by the insurance company that issued your policy, and you’ve paid your first premium.
Can I increase the death benefit on my policy?: Yes, but you will have to submit a new application and may be required to take a new medical exam. If the application is approved, your premium for the higher death benefit will likely be more than your current premium.
Can I adjust my monthly payment amount?: Some permanent policies do allow for this flexibility. Contact your Allstate agency or Allstate customer service for more information about flexible premiums.
Will my beneficiary have to pay taxes on the death benefit?: Life insurance death benefits are generally free from federal income taxes. Consult with your tax advisor about your specific situation.¹
Would my death benefit be lower if I were to die soon after I bought the policy, such as less than a year?: No. If you’ve paid your premiums on schedule, your beneficiary will receive the full death benefit amount you chose. (Subject to the terms and conditions of your policy.)
I’ve heard life insurance can be used for business purposes. How?: Life insurance can help business owners preserve their estate for the next generation or ensure a smoother succession of the business. It’s also often used to financially reward a business owner, partner or key executive. Or, businesses will sometimes insure an employee with specialized skills so that if he or she dies, the business will have cash flow until they find a replacement.²

Questions?

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^1. The death benefit of life insurance policies that were transferred for value may be subject to ordinary income taxes. Estate taxes may apply. Consult your tax advisor for additional information.

^2. The Pension Protection Act of 2006 limits the death proceeds an employer can exclude from income when the insured does not meet the definition of a highly compensated employee or of a highly compensated individual, or the death benefit is not used to purchase the insured’s ownership interest in the business. The Act also imposes specific requirements that the employer notify the individual about the insurance, secure his written consent and submit annual reports to the IRS. Please consult your tax advisor.