Being a grown-up means you have to think about things like life insurance. No one wants to think about the fact that someday they will die, but it’s a fact of life so to speak. And you want to leave as little burden on your family as you possibly can in the event of your unexpected death.
It can be difficult to choose the right life insurance policy for you and your family’s needs. You are definitely going to want to shop around to find what’s best for you and your needs, for a price that you can afford. What should you be asking, though?
Here are the questions you should ask an agent about your potential life insurance purchase.
1. What are my needs?
If you just bought a house and have small children, then you want a policy which can help pay the mortgage and your children’s needs until they are 18. However, the older you get, the older your family gets, and the closer you get to paying off your mortgage - in which case you might have different things you’ll be focused on. You’ll have less financial burden at this point in your life, so you won’t have the need for such a large policy.
2. What are the different types of policies available?
One possibility is to get a group policy which is offered by your employer as part of your employee benefits. These policies tend to be term life insurance policies, which means it’s only good during a specified time (in this case probably the time in which you’re employed). Because this is part of a group, the cost can be less and will be deducted directly from your wages. If your employer offers this, then this could be a less expensive way to be covered.
Then there is an individual policy. In this case you or a family member will be the owner of the policy. This gives you more flexibility in changing the policy, or taking it with you should you change employers. You can also change a term policy into a permanent one with an individual policy.
3. What will happen at the end of a term life insurance policy?
You need to find out what happens if you outlive the terms of your term life insurance policy. In many cases, if you want to keep your term life insurance policy as you come to the end of your term, then the premiums will go up. You might also be able to get a new policy. If you’re healthy at the end of the term, then this could be the way to go.
You need to know if you can change the coverages. Say you purchase your term life policy when you’re young and just starting out with your family. Your term ends and your children are all grown and out of the house, and now you no longer have to pay a mortgage on your home. You’re probably going to want to change your coverages if this is the case. Try to find a policy that will allow you to upgrade to a permanent policy at the end of the term.
4. What am I going to pay?
Just like you shop around for the best price on a TV, you should shop around for life insurance. You will want to know things like what could cause the premiums to change (either up or down). What is the national average for life insurance premiums? You need to know how you can pay for your premiums - monthly, quarterly, bi-annually, or yearly. You should also find out what happens if you miss paying a premium - when will the insurance lapse?
5. What do I get?
You will need to make sure you not only are clear on all of the inclusions, but also exclusions. You’ll want to know what might cause the policy to not pay out.
6. What things will affect my insurance premiums?
You should find out if you need to have a physical and how the results of that physical can affect your premium cost. Also, you’ll want to know how soon the coverages will go into effect after you apply.
Being sure you have the proper coverages to protect your family in case something should happen to you will give you peace of mind, knowing that your family will not be struggling to handle expenses. So it’s important that you do plenty of research on the policy, including how it gets paid out and for what.