6 Areas to Cover About Life Insurance
Not sure if you need life insurance — or have it but not sure it’s enough? Review the questions in these six areas (you can add more to fit your situation) with your agent to help you make a decision.
Something in your policy that puzzles you? Ask about it! You can also request a verbal clause in writing, which can help explain that part of the policy.
Write down whom you spoke with, the date and time of the conversation, the information given and any actions that need to be completed, along with a date for a follow-up meeting
How much insurance do I need?
WHN TIP – Your Current Financial Resources: Compare your current financial resources against the following debts and liabilities.
- Approximately what would be my funeral and burial costs? What are the “average funeral costs”?
- Will my life insurance policy cover these costs? If not, should I buy a separate burial policy?
- What outstanding debts would need to be settled by my estate? (Include credit cards, loans, mortgages and taxes.) What about business debts?
- How much will be needed to provide for my dependents who rely on my income?
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.
What kind of insurance do I need?
- 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 each type of policy?
- What are the “exclusions” and “limitations” of each type of policy?
- Does this policy offer an “accelerated death benefit”?
- Should I buy an insurance policy for my spouse or children?
- Is the policy convertible and for how long?
WHN TIP – Convertible Policies: “Convertible” means you can exchange your renewable term policy for another type of policy without evidence of insurability.
What will the insurance cost?
- How much are premiums for each type of policy?
- What are the 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?
- What factors increase a policy cost or raise my premiums? What can decrease the cost of the policy or premiums?
WHN TIP – National Averages: Have your agent explain where you fall within national averages. Are you paying the average, more or less, and what factors into the answers?
What are the eligibility and terms of the policy?
- Do I need to complete a medical exam in order to be eligible for the policy?
- How soon does policy go into effect?
- How often should I review the policy?
- When does the policy expire?
- Is the policy renewable?
- Can I cancel the policy at any time? Is there a penalty?
- Under what circumstances can the insurance company cancel the policy?
What about my beneficiaries?
- Can I name any beneficiary I 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?
- Are the life insurance benefits or proceeds taxable?
- How do I or my beneficiaries file a life insurance claim? How long does the company have to respond to the claim?
Other Insurance Options
- Employer Group Life Insurance: Your employer might also offer a group life insurance policy. Ask your employer about your benefits and coverage options.
- Credit Life Insurance: A policy that pays off debts after the policyholder’s death. You might be offered this policy option when purchasing an expensive item. It’s usually more expensive than a regular life insurance policy.