Is it legal to purchase life insurance across state lines?
UPDATED: Nov 14, 2011
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Asked November 14, 2011
For the policy buyer, the location of the company selling the life insurance policy is less important than the licensing of the company. Insurance is regulated on a state by state basis, so companies have to be licensed in each state they sell policies in. It is not unusual for a company to be based in, say, Ohio, but to be licensed to sell insurance in several other states as well.
Life insurance is not as location-specific as some types of insurance, such as home or car coverage. Where car insurance has to meet state guidelines for the amount and type of coverage required, life insurance is much more versatile. Before you purchase a policy across state lines, make certain that the company you are buying from is licensed in your state and there will not be any problem. You can contact the company to find out if they are licensed, or check with your state's Department of Insurance.
One reason that life insurance can be purchased across state lines is because it is a type of long-term coverage. It is not at all unusual for a policyholder to move one or more times during the course of a life insurance policy, so it is vital that the life insurance is able to follow them as they move. When you are buying an insurance policy that you will be paying premiums on for many years, you need to have assurance that the contract will not be negated simply because your job moves you to another state.
So the question is not whether you can buy life insurance across state lines so much as whether the company you are buying your life insurance from is licensed to sell insurance in your state. As long as the company is licensed, and your research has determined that the company is stable enough to buy a life-long policy from, go ahead and make the purchase.
Answered November 14, 2011 by Anonymous