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Everyone should have adequate life insurance, but when it comes time to buy life insurance, make sure you have enough information to make a wise decision. Here are 12 questions to ask before you commit to your policy.
- What type of coverage is available? – You need to know all the different types of life insurance coverage that you may qualify for – whether term or whole life or some variation of either.
- How much life insurance do I need? – Be prepared with all the answers to questions you’ll be asked about number of persons in your family, whether or not you want to pay for your children’s (or spouse’s) college education, if you own a home, have a lot of outstanding debt. By giving the insurer an accurate picture of what your financial obligations are, they will better be able to answer the question of how much life insurance you need. Generally speaking, it’s a lot more than you think.
- How long does it take for me to qualify? – When you are looking to buy life insurance, you should ask how long it will be before you’re covered. Is it instantaneous when you apply online, answer all the questions and make your payment? Is it within a day or two? If a medical exam is required, how long does the whole process take before you’re eligible?
- Do I need to have a medical exam? – This is an important question if you are trying to buy life insurance on your own, not part of an employer-offered group plan. Younger people who are in good health and have no pre-existing medical conditions may not need to have a medical exam, but for higher coverage and the older you get, many, if not most, insurers will require a medical exam.
- What is the most reasonable type of life insurance? – The least expensive will probably be term life insurance, but this is generally a question you’ll want to ask early on.
- How can I lower my life insurance premium? – Ask what you can do to reduce your premium for life insurance. If you’re a smoker, going on a stop-smoking program, for example, can provide you with a nonsmoker’s rate after one year of quitting. And two years into a smoke-free lifestyle, you may qualify for a preferred nonsmoker’s premium. The same holds true if you’re overweight, a key red flag for insurers who know that statistically, overweight people will be a higher risk due to health factors ranging from high cholesterol and high blood pressure, to diabetes, heart attack and stroke.
- Is there a grace period during which I can change my mind? – You’ll want to know if you have a period of time, say 30 days, during which you can back out of the policy with no problem. Even if you don’t think this is remotely possible, when you buy life insurance, it’s always good to know your options – all of your options.
- Do my benefits ever decrease? – You may think you know what’s included when you are about to buy life insurance, but it all depends on the type of policy – term or whole life. Always ask this question, for clarification if nothing else.
- How much money is typically required in a death benefit? – In order to cover funeral expenses, that average about $6,000 in the U.S., you’ll want to know how much money will be in the policy for a death benefit – before you buy life insurance.
- How do I pay for coverage? – Ask whether you pay online, if there are monthly payments, electronic funds transfer, or automatic payment plans available. You may want to know if you can pay premiums on a semi-annual or annual basis.
- Who receives my life insurance benefits? – It’s always good to ask this question, even though most benefits at death go to your beneficiaries. If you have an employer-paid life insurance plan, some benefits may be payable both to your beneficiary and to the employer.
- Will my beneficiaries have to pay taxes on this coverage when I die? – Death benefits are generally tax-free to beneficiaries. Again, it’s a question that you need to ask and have clarified to your satisfaction before you purchase life insurance.
