Am I Covered?: Life Insurance Questions
Here is a 'starter' list of things to consider and questions to ask your agent. You'll probably come up with questions or ideas that best fit your needs.
Calculate Your Insurance Needs
- Amount of coverage per policy
- Type of coverage:
term life (no investment component and is only for short-term coverage)
cash-value (permanent policies that also build up cash like a savings account)
WHN Tip: Employer Group Life Insurance
Your employer might also offer a group life insurance policy. Ask your employer about your benefits and coverage options.
WHN Tip: Credit Life Insurance
A credit life insurance policy is used to pay off debts after the policyholder's death. You might be offered this policy option when purchasing an expensive item but keep in mind that it's usually more expensive than a regular life insurance policy.
Amount available in savings and/or investments
Total current financial resources
After-Death Debts and Liabilities
Approximate funeral and burial costs
WHN Tip: Read our article Average Funeral Costs
Outstanding debts to be settled by my estate (credit cards, loans, mortgages, taxes, business debts)
Amount needed to provide for dependents
WHN Tip: Assessing Dependents' Needs
Calculate their income needs: food, clothing, home, property taxes and other costs you pay (in full or in part) along with an emergency fund amount and projected or actual cost of your child's college tuition.
Total debts and liabilities
Meet With Your Insurance Agent
Discuss the following questions with your agent. Be sure to note the date you talked as well as full contact information for the agent.
If you request policy changes or additions, follow up to ensure they are made and make sure you get a copy of the change or addendum.
If you don't understand something, ask. Have the agent put the explanation in writing, sign and date it.
- Do I have enough life insurance policy to cover my costs?
- If not, do you offer a separate burial policy?
- Will my estate be responsible for my business debts?
- Which type of life insurance would be best for me:
term life (no investment component and is only for short-term coverage)
or cash-value (permanent policies that also build up cash like a savings account)?
- What are the choices within each category?
- What is included in the policy?
- What are the "exclusions" and "limitations" of the policy?
- How much are premiums?
- What factors increase or decrease my policy cost or premiums?
- Where do I fall within national averages: am I paying average, more, or less? What factors affect this rating?
- Do I need to complete a medical exam in order to be eligible for the policy?
- Can I name any beneficiary you choose? If he/she is a minor, do I need to appoint a trustee or name a guardian?
- How do I make a change in beneficiary?
- How soon does policy go into effect?
- How often should I review the policy?
- Is the policy convertible and for how long?
WHN Tip: "Convertible" means you can exchange your renewable term policy for another type of policy without evidence of insurability.
- When does the policy expire?
- Is the policy renewable?
- What are payment options for premiums (annual payments, bi-annual, monthly, etc.)?
- What happens if I can't pay a premium for a month?
- What happens if the policy lapses?
- Can I cancel the policy at any time? Is there a penalty?
- Under what circumstances can the insurance company cancel the policy?
- Are the life insurance benefits or proceeds taxable?
- How do I file a life insurance claim? How long does the company have to respond to the claim?
- Should I buy an insurance policy for my spouse or children?
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