Questions to Ask Your Life Insurance Agent
Finding the right life insurance policy can be much easier with the help of a licensed agent. But before you get on the phone, you should prepare a list of questions you want answered. Here’s a few questions to help you get started.
Do I need term or permanent life insurance?
If you are looking for a lower cost life insurance policy that would help replace your income after you die, term life insurance may be the way to go. If you are looking for more complex retirement planning, a cash value policy and lifetime coverage, permanent insurance might be the better option.
Your unique needs will impact which policy is right for you. An agent can help you understand the pros and cons of each option and recommend the right policy for your needs.
What riders are available on this policy?
Insurance companies usually offer “riders” to add to your policy for an additional cost. Common life insurance riders include:
- Waiver of Premium Riders – These riders allow you to stop paying your monthly premium without losing your policy if you become disabled and unable to work. These waivers typically expire around age 60, but they will ensure the additional protection up until that point.
- Critical Illness Rider – With this rider, the insurance company will pay you a lump sum if you are diagnosed with a critical illness, such as cancer, heart attack, kidney failure or stroke. You can use this money to pay for any expenses you choose throughout the course of your treatment.
- Long-Term Care Rider – This rider will allow you to take out money from your death benefit early to help you pay for long-term care if the need arises. Long-term care may include care in a nursing home or help from a private in-home nurse.
Check with your agent for a list of riders available from the life insurance company you choose.
How is the policy priced? Will the premiums increase with age?
Premium structures for life insurance policies can be structured in a number of ways.
With term life insurance, level-premium policies keep the premium the same for the entire length of the policy, as opposed to rising-premium policies, which will increase the premium as you get older. Certain types of permanent insurance have different premium structures that incorporate different types of investment decisions.
An agent can explain how the policy is priced and if it will increase as you age.
When will my coverage begin?
Some life insurance policies have specific waiting periods — called a graded death benefit — before the full coverage begins. Typically, these periods last one or two years, during which the insurance company will return the premiums paid up to that point if the insured person dies, instead of the full death benefit.
Waiting periods only apply to certain policies, but you should always ask your agent to tell you explicitly when your full benefits will begin after buying.
What types of discounts are available?
It is not uncommon for life insurance companies to offer discounts to certain groups of people, such as a spouse, government employees, teachers or active military. Talk to your agent about what types of discounts are available from companies that interest you and check to see if you qualify.
Will this plan require a medical exam?
Some life insurance policies require some type of medical exam, but there are other types of policies that don’t. Simplified-issue policies don’t require a medical exam but do include certain health questions. Issuance of the policy may depend on answers to those health questions.
Guaranteed-issue policies can be sold without a medical exam or without answering health questions. These policies are usually more expensive than other policies, but they can be a last resort for people who can’t get approved for life insurance anywhere else. These policies may have a graded death benefit for an initial period of time.
Does this policy have any exclusions?
Insurance companies can outline circumstances in which they would not be obligated to pay a death benefit if the insured were to die. For example, a lot of companies will not pay a death benefit if the policyholder commits suicide in the first year or two of policy. Other companies may have inclusions for dangerous activities, such as scuba diving or mountain climbing.
Your insurance agent will be able to tell you what exclusions are included in your policy.
Does this policy have any living benefits?
Death benefits are not the only life insurance benefit that may be available to you. Aside from riders, some permanent policies also offer benefits related to the cash value the policy accumulates, such as the ability to borrow against it or use it as collateral. Ask your agent what benefits your policy offers while you are still living.
Is this policy renewable?
Some life insurance policies will allow you to renew your coverage at the end of your term. If you are concerned about being able to get approved for a new policy at the end of your term, you should look into policies that are “guaranteed-renewable.” Ask your agent what options you have with the companies that interest you.