Life insurance is one of the most important purchases you will ever make. Don’t go into the buying process unarmed and unprepared. Before committing to any policy, here are the ten essential questions to ask your life insurance agent:
one. What type of policy makes sense for my lifestyle?
With so many types of life insurance policies available today, staying informed about all of them is nearly impossible without the proper guidance. Term, permanent, comprehensive, universal, variable, single, joint, first to die – how do you know which policy is right for you?
Many things come into play when searching for your ideal policy, including age, marital status, children or dependents, plans for children, health, and travel trends. These lifestyle factors and more must be determined when purchasing a life insurance policy. Find an insurance agent who is willing to spend time learning exactly who you are and what you need from a policy.
two. How does the policy premium work?
The money paid to buy life insurance is called a premium. Not all policies have the same method of paying the premium: some require a lump sum, while others are paid in installments. These installations can be annual, semi-annual, monthly or even weekly. Decide which payment method is best for your current financial situation and ask your agent which method they recommend.
3. Does this policy provide life benefits?
Some policies, such as permanent life, allow you to access the cash value of the policy in times of need. Although the main purpose of life insurance is to provide for your family after you are gone, it can also be a way to meet the needs of your family while you are alive. Living benefits can be used to:
- Pay for college intuition
- Add to retirement or disability income
- Start/help a business
- donate to charity
- cover emergencies
Ask if using your policy’s cash value now would reduce the death benefits your family will receive later.
Four. Are there investment options with this policy?
When a policy has a cash value, portions of that money can be invested to facilitate growth. One of the ways to invest the cash value of your policy is in the market. Think of policies that offer this option as a combination of traditional life insurance and mutual funds as subaccounts.
Another benefit of having a cash value policy is that the interest your policy charges is not taxable. Also, once your policy earns enough interest, this money can be used to pay your premium. Please note that some policies are capable of earning more interest than others. If you’re interested in investing, talk to your agent about the capabilities of the policies they offer.
5. What happens when the policy expires?
If you’re looking for term life insurance, you’re buying insurance for only a certain period of time. Essentially, it means that this particular policy has an expiration date.
It’s important to understand exactly what happens when your policy expires. If you are still living at that time, do you receive any value or benefit? Some policies offer zero payout if the policyholder lives past the expiration date of the policy. Before you buy term life insurance, take some time to understand how the policy works in such a scenario.
6. Is there a grace period for late payments?
If you find yourself in financial difficulty at some point, paying your premium on time may not always be an option. In such a case, it’s reassuring to know that your insurance provider is willing to give you some time to gather the funds instead of penalizing you right away. Most life insurance policies offer a standard grace period of 30 days.
7. Is the policy death benefit adjusted for inflation?
Chances are, just because your policy’s death benefit amount sounds like a lot of money today, it doesn’t mean it will be a lot of money 50 years from now. Some policies are adjustable, meaning benefits increase with the rate of inflation, while others are not. However, there are other ways to offset inflation, so don’t immediately rule out a policy based solely on that factor. To remember; just ask your agent what options are available to you.
8. What is excluded in this policy?
One of the easiest ways to fully understand a policy is to discover what it is not. In fact, ask your insurance agent to explain exactly what the policy is. can not made for you. If the exclusions don’t apply to you, great! However, if what they tell you is something you need from your policy, ask if there is a similar policy that offers what this one doesn’t.
9. Can this policy be converted to another policy?
Maybe term life insurance is all you can afford right now, but you know you want to buy permanent life insurance later. If so, you may want to invest in a smaller life insurance plan that has the ability to transition to a larger plan without losing current benefits in the process. The insurance industry calls these policies “convertible” because they have the ability to “convert” into another policy.
10 What if my health changes or I become disabled?
To set an appropriate premium, insurance providers find out as much as they can about you, including your medical history.
The younger and healthier you are, the less expensive your life insurance should be. While you may be fit right now, there’s no guarantee your health will never change. It’s good to be prepared for any possibility, no matter how uncomfortable it may be to think about.
If something were to affect your health in the future, would your policy be adjusted to meet your situation? Would it be able to provide you with the benefits you need? How much would your premium increase? These questions are absolutely essential before purchasing life insurance.
Educating yourself about life insurance could be the difference between finding the right policy and getting stuck with one that doesn’t fit your needs or life circumstances. Before making important decisions, ask your agent or supplier these ten questions. If they are unwilling or unable to provide satisfactory answers, it may be a signal to look for other options.
A good life insurance agent will give full answers, and maybe even add some extra wisdom of its own! The more you know, the better prepared you will be; Don’t let anything stop you from securing your family’s future.