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Wednesday, December 11, 2013

Questions to ask your agent before taking life insurance

Household financial planning often includes a life insurance policy
Cash value life insurance is creditor protected in some states
By Kunal Mehta

Life insurance is something that you cannot live your life without! This valuable coverage provides superior financial protection to your family to help cover costs when you pass.

The insurance covers not only your burial and final expenses, it can also help provide your family with a nest egg. Families with just one breadwinner can find this comforting at an otherwise difficult time.

Life insurance isn’t easy

However, buying life insurance isn’t a cut and dry situation. You cannot simply make a purchase and hope you are buying the right policy and the right amounts. By asking your life insurance agent a few questions before signing on the dotted line you will be more than confident that you are making a purchase worthy of your time and money.

How much insurance is needed?

All too often individuals who purchase life insurance fall into one of to categories –they have too little or they have too much. Neither situation is something that you will want to face. An experienced insurance agent will be more than capable of helping you to determine the actual amount of life insurance coverage that you will need. Heed this advice and you can be sure that you get what you need, nothing more and nothing less.

What rate are you paying?

Asking the insurance agent directly how much you will be paying for the selected policy is always a good idea. You hear it with your own two ears and can easily remember the information so there is no confusion later down the line.

Do you know the company you are dealing with?

In the insurance world there are agents and then there are brokers. A broker is an agent authorized to do business using the name of the company. However, they have their own set of rules, regulations and customer service which may or may not be identical to the ‘real’ company. Ask the company you are working with if they are the actual company or a broker and avoid hassle.

Is a credit report necessary?

Oftentimes in life a credit report is necessary to obtain the things that you want. The credit report helps a company determine how credit worthy you are. This also helps them determine the amount of risk they are willing to take with you, and the amount of money it will take for them to take that risk. Luckily a credit report is not a part of the life insurance application process. Even those with the worst of credit will be able to obtain a life insurance policy at a reasonable price, without worry their credit will stand in the way.

What determines the cost of my life insurance policy?

The life insurance company will use numerous factors to determine how much money you will spend to purchase life insurance. While this will vary from company to company, most use the following to base your policy amount on:
  • Age
  • Amount of coverage desired
  • Current and prior health conditions
  • Family health
  • City/State you reside
  • Company that you choose to insure with
Ensure that you are fully aware of the factors that determine the cost of your insurance coverage.

What exclusions are limited in my policy?

Exclusions are found in each and every life insurance policy that is purchased. You should take special care to learn these exclusions so there are no worries when the policy is executed. Read the fine print and do not hesitate to go to your insurance agent with specific requests of information regarding the exclusions. Without knowing this information you could be needlessly spending your hard-earned money.

When does my policy expire?

Knowing the date of the policy expiration is important. You should ask your agent of this date while also reading over the contract to ensure that it is stated in this information. The last thing that you want to do is allow your policy to expire, mark it on your calendar and do not forget!

What does that mean?

After you’ve selected a company and a policy, be sure that you read over everything before you sign. If there is something that you do not understand, ask questions so that you know. Oftentimes insurance policies use wording that is difficult for the average consumer to understand. When you do not understand, knowledge is power and asking will enable you to walk with pride and this knowledge.

Can your policy be converted?

If there is a conversion clause in your life insurance policy this is something that you should be aware of. However, only when you ask may these details be revealed. Ensure that you understand the policy conversion policies before you start any life insurance plan.

Do not be afraid to ask your insurance agent plenty of questions so that you have the answers before you spend any money. It is easy to find out answers if you are willing to speak up!

About the author: This article is contributed by Kunal Mehta who is a blogger & internet marketer. He is blogging at TopCompaniesIndia where he writes about business & other important details of top Indian companies.

Image license: Valerie Everett, CC BY-SA 2.0