Who would be short of money if you died this year?
A spouse, a child, a parent — anyone relying on your income or your work. Sometimes the honest answer is nobody, and that is a real answer.
Moon Insurance Managers, Inc. · TDI license #5595
Individual Life Insurance in Houston, TX
Life insurance is the one policy the buyer never sees work. Somebody else reads it, usually on the worst day of their life, and what it does for them was settled years earlier by somebody reading a page like this one.
So this starts with what the money has to do — for whom, and for how long — and only then asks which contract does that job.
Tex. Ins. Code chs. 1101, 1114 Contest and replacement
Two clocks the contract runs on
- Incontestable after
- Two years from issue
- Except for
- Nonpayment, and wartime service
- Understated age
- Benefit adjusts to the premium
- Reinstatement
- Can start a new contest period
- Replacing a policy
- 30 days to return it
Agent of record
- 41years in Houston
- 20+markets compared
- Same dayDPS filing
- #5595TDI license
Before the products
Start with what the money has to do
There is a number that circulates on this subject — some multiple of your income — and it is repeated because it is easy to say, not because anyone sourced it. It knows nothing about your mortgage, your children’s ages, your spouse’s earnings, or the coverage you already hold. These five questions do.
What income or work would have to be replaced?
Not only the paycheck. Unpaid work with a real replacement cost counts: childcare, caregiving, running a household.
For how many years?
Until the children finish school, until a mortgage ends, until a spouse reaches retirement income. Some needs last for life.
What one-time needs belong in the plan?
Debts the household intends to clear, education funding, end-of-life costs, and a reserve for the months when nobody is thinking clearly.
What resources already exist?
Savings genuinely available for this, survivor income, coverage in force, employer coverage. Check whether the work coverage ends with the job, and whether conversion has a deadline.
This is a worksheet, not a formula — inflation, taxes and assumptions about spending down assets all move the result. And its most useful output is not the amount but the duration: a need with an end date and a need without one are financed differently, and that one distinction decides most of what follows.
The actual choice
Term, whole, universal
Three shapes, and the honest comparison is not which is better but which matches the duration you just worked out.
Term
Covers a stated period and pays the death benefit if the insured dies while the policy is in force and the claim is covered. For a given premium it commonly provides a larger initial death benefit than permanent coverage, because it builds no cash value and may expire before any claim. What to understand before buying is what happens when the level-premium period ends: the policy might end, renew at a higher premium, or offer a conversion right. Ask for the renewal schedule, the conversion deadline, and which permanent products conversion reaches.
Whole life
Designed as permanent coverage, commonly with a scheduled premium and a guaranteed cash-value schedule while required premiums are paid. The guarantees, payment period, dividends, loans and lapse terms live in the policy and the illustration — and nonguaranteed values are projections, not promises. For the same initial death benefit the premium is commonly higher than comparable term coverage.
Universal life
Flexible-premium permanent coverage: premiums and benefits may be adjustable within limits, while crediting and some charges can be nonguaranteed. The flexibility is also the caution — paying less than illustrated, lower crediting, higher charges, withdrawals or loans can all shorten how long the coverage lasts, unless a valid no-lapse guarantee applies and its conditions are met. Ask for an in-force illustration.
The two can also be combined when a household has both a temporary need and a lifetime one.
Source: TDI — Life Insurance Guide. Verified .
What they ask, and why
Underwriting, and what happens if the answer is no
Depending on the product and amount, an application may ask about health, prescriptions, family history, work, travel, hobbies, finances and driving, and the insurer may use records, third-party data, an interview or a paramedical exam. Some products need no exam — but no exam does not mean no underwriting.
Three clocks, and people run them together. How long it takes to apply is not how long underwriting takes, and neither is how long a policy takes to be issued and delivered. Ask which stage the application has reached, what is outstanding, and whether the estimate came from the insurer or from somebody’s general expectation.
An offer may differ from the application. An insurer may issue as applied for, offer a different risk class or price, postpone, or decline — and that result belongs to one insurer, one product, one amount and one date. Disclose prior applications and decisions exactly as the next one asks.
Ask whether anything is temporarily in force. A temporary-insurance agreement or conditional receipt can provide limited coverage during underwriting when its conditions are met; another application provides none. Get the amount, conditions, expiry and effective date in writing — paying money with an application does not by itself prove coverage exists.
One rule worth knowing while you answer. Generally, once a Texas policy has been in force two years from issue during the insured’s lifetime, it becomes incontestable — except for nonpayment and a permitted wartime military-service condition. The rest of the contract still applies: an understated age adjusts the benefit to what the premium would have bought at the correct age, and reinstating a lapsed policy can start a new contestable period for the statements made to reinstate it.
Sources: Tex. Ins. Code ch. 1101 — incontestability, understated age; TDI — individual life policy checklist. Verified .
The paperwork that decides
Beneficiaries
A primary beneficiary is first in line under the designation; a contingent beneficiary is considered when the contract’s conditions for the primary are not met. When no eligible named beneficiary remains, the policy’s default rules apply — which can mean payment to the estate, with everything that implies about timing and creditors.
- Percentages should total correctly, with a plan for a beneficiary who dies first.
- A minor generally cannot receive and control a large benefit directly — ask an estate lawyer about a trust or custodian.
- Ownership, beneficiary and insured are three roles, and one person need not fill all three.
- Marriage, divorce, a birth, a death, a court order or an employer-plan rule can all change what should happen.
A designation generally controls the proceeds rather than a will — but state law, court orders, benefit-plan rules, ownership arrangements and the contract itself can all create exceptions. Keep the carrier’s record current, and use an estate lawyer where a minor, a trust, a business, a divorce or special-needs planning is involved.
General rules, not advice
What your beneficiary will owe, and what they will not
Money paid to a beneficiary because the insured person died is generally not included in the beneficiary’s gross income under federal law. That is the rule. What it is not is the blanket phrase this industry reaches for, and three exceptions are why:
- A policy transferred to somebody for value can limit the exclusion to what they paid plus the premiums they paid afterwards.
- Interest on a delayed payment is taxable income, even when the benefit itself is excluded.
- Inclusion in the insured’s gross estate is a separate question, turning on whether proceeds are payable to the estate or the insured kept rights over the policy.
Ask an accountant or an attorney whenever a transfer, business arrangement, estate or trust is involved. That is a general statement of federal rules, not advice about your policy.
Sources: IRS — life insurance proceeds guidance; IRS — Form 706 instructions. Verified .
Permanent policies only
Cash value, loans, and what “borrowing from yourself” leaves out
Only permanent policies build cash value. Term does not, which is a large part of why it costs what it costs.
You may be able to withdraw value or borrow against it. A loan accrues interest, can reduce both the death benefit and the cash value, and can contribute to a lapse. If a policy carrying gain ends while a loan is outstanding, taxable income can result even though the owner receives little or no cash — the part nobody expects. Ask for an in-force illustration and tax advice first.
Surrendering the policy for its cash value ends the coverage. Sometimes that is exactly right. It should be a decision, not a surprise.
Contract-specific
Riders worth asking about
A rider adds a benefit, and every one lives or dies on its own definitions. Compare those, the evidence required, the charges and the exclusions.
Waiver of premium
May waive premiums after a disability meeting the policy’s definition. The definition is the whole rider.
Accelerated death benefit
May prepay some or all of the death benefit after a qualifying condition. The advance, and any charges or lien attached to it, reduce what remains for beneficiaries.
Child term
Has its own eligibility, amount and conversion rules — read all three.
Guaranteed insurability
May permit additional coverage at stated dates or life events without new evidence.
If you already have a policy
Replacing one is sometimes right and often is not
Three rules make the difference, and the second is where people get hurt.
1. A replacement can begin new contestability and suicide periods. Texas credits elapsed periods for certain same-insurer or affiliated-insurer replacements, up to the existing face amount — so read the notice and the contract rather than assuming it either way.
2. An in-force policy beats a proposal. Approval is not issue, issue is not delivery, and none of them alone proves coverage exists. Ask the new insurer to confirm the effective date and in-force status in writing.
3. Keep the old policy in force while you compare. Review surrender charges, guarantees you would lose, acquisition costs, the health evidence required, and the new policy’s contestability and suicide provisions before cancelling anything.
When Chapter 1114 applies, Texas requires replacement notices and gives you 30 days after delivery to return the replacement for an unconditional refund. Hold both only as long as the comparison takes — two premiums running for months is its own problem. The life insurance FAQs walk through the paperwork.
Source: Tex. Ins. Code ch. 1114 — replacement. Verified .
Right question, wrong page
When the answer is somewhere else
- Funeral costs — final expense insurance, which routes the product questions to our senior-life desk.
- A new house — mortgage protection insurance.
- A business owning the policy and being paid by it — key person insurance.
- What existing savings should do in retirement — the fixed annuity guide. Income for life is not automatic; it takes an applicable payout election or feature.
- Wills, trusts or probate — a lawyer’s work, not an agency’s.
- A change to a policy you already hold — policy service.
Before you sign
The free look, and what to compare in it
Texas life policies carry a free-look period — TDI describes it as at least 10 to 20 days depending on the policy, and a qualifying replacement carries 30 days. Read the cover page the day it arrives, keep proof of the delivery date, and use the window on the issued contract rather than the illustration you were shown. They are two documents and they do not always agree. What to check, in order:
- Level-premium period, renewal schedule, and the maximum or guaranteed premium.
- Guaranteed death benefit, and the conditions for keeping it.
- Conversion deadline, and which permanent products are eligible.
- Guaranteed versus nonguaranteed values in the illustration.
- Any temporary-insurance receipt, and the exact effective date.
Sources: TDI — Life Insurance Guide; Tex. Ins. Code ch. 1114 — 30-day replacement return. Verified .
No obligation
Talk it through
Describe the household rather than the product. Ask who would handle the inquiry, which insurers and products are available, how that producer is paid, and which parts of the application this office handles — the right questions for any agency, this one included.
Nothing here is a quote or proof of coverage. Ask the insurer or producer to confirm in writing whether temporary coverage exists and when an issued policy is effective and in force.
Monday to Thursday, 9:00 to 5:00; Friday, 9:00 to 4:00. 360 FM 1959, Houston, TX 77034.
Questions we get asked first
How much life insurance do I actually need?
List the income and unpaid work to replace, how long each need lasts, the one-time obligations, and a transition reserve. Subtract the resources genuinely available. Treat the result as a range, and test the premium against the budget — a policy that lapses in year three protects nobody.
Is term or whole life better?
Neither, universally — and anyone answering before asking about your household is selling. Term is built around a stated period; permanent insurance is designed for a need that may last for life. Compare the duration, the guarantees, the premium, and how much coverage each lets you afford.
Will my family owe tax on the payout?
Generally the death benefit is not included in the beneficiary’s gross income under federal law. Three things change that: a policy transferred for value, interest on a delayed payment, and estate inclusion. Ask a tax adviser about any transfer, business arrangement or trust.
Do I have to take a medical exam?
Not always — the insurer, product, amount, age and application all affect what evidence is required. But "no exam" is not "no underwriting", and it can change the price, the amount available or the benefit schedule.
I was declined before. Is that it?
Not necessarily. A decision belongs to one insurer, one product, one amount and one date. Gather the letter and disclose the prior application exactly as asked. Another insurer may decide differently; nobody should promise you it will.
Can one person have more than one policy?
Yes. The insurer considers coverage in force or pending elsewhere, the financial purpose, the ownership and beneficiary arrangement, and insurable interest. Disclose other coverage accurately — the answers get checked.
Related
- All life insurance The rest of the silo, and where each question belongs
- Life insurance FAQs Applications, replacements, claims and lost policies
- Mortgage protection insurance The offer that arrives after a closing
- Key person insurance When the business owns the policy and the business is paid
- Long-term care insurance Where a chronic-illness or long-term care rider is judged against the standalone contract