In this comprehensive guide, we will be exploring 10 questions you must ask before buying life insurance. Yes, just because you come across a life insurance quote does not mean that you just sign up and make payment instantly.
On the contrary, there are several factors that you will need to consider before buying a policy. I know that navigating the realm of life insurance can feel like walking through a maze, especially since there are many options to choose from.
Well, you do not have to feel that way. To make sure that your beneficiaries or dependents will be getting enough coverage after you pass away, you need to ask the questions below.
What is Life Insurance?
Life insurance is a financial product that offers to give a lump sum amount to the beneficiaries upon the death of the policyholder. This payment is also known as death benefits and it is meant to give financial security to the beneficiaries or dependents of the policyholder if they pass away.
What Does Life Insurance Cover?
Here is what a standard life insurance policy generally covers:
- Income replacement.
- Death benefit.
- Education expenses.
- Estate planning.
- Debt repayment.
What Are Its Exclusions:
Here are conditions or situations that are not covered by a life insurance policy or the issuing insurance company:
- Terrorism or war.
- Suicide clause.
- False information.
- Criminal activities.
- Risky activities.
10 Questions You Must Ask Before Buying Life Insurance
If you are considering getting one, here are the 10 simple questions you must ask before buying a life insurance policy:
What Type of Life Insurance Is This?
It is important that you know what type of life insurance it is because there are different forms of which they exist. There is term life insurance which offers coverage for a specific period while permanent term life insurance offers coverage for a lifetime.
What Are the Premiums?
Confirm how much you will need to pay and how frequently will you be making this payment. More importantly, make sure that the premium amount is affordable for you and it is something you can easily pay for now and in the future.
What Is the Death Benefit?
If you come across a life insurance policy while shopping, ask for the amount your dependents or beneficiaries will get upon your death. Make sure that it will be enough to cover your family’s needs, outstanding debts, and financial responsibilities.
What Happens If I Miss a Payment?
There is no doubt that there won’t be repercussions for defaulting your premium payment. So, understand the consequences and the grace period to prevent coverage loss and policy lapse.
Are There Any Riders Available?
Riders are extra or additional benefits that policyholders can add to their quotes at an extra cost. One of them includes accelerated death benefit riders. This enables policyholders to get some death benefits if they are terminally sick.
What Is the Claims Process Like?
This is a very important question that every individual looking to consider life insurance should ask. Find out what the necessary steps that your dependents will take when they wish to file a claim and ask about the payout and claim processing speed.
Can the Policy Be Converted or Renewed?
For policyholders who are considering purchasing a term life insurance policy, ask if your existing policy can be converted to permanent insurance without a medical exam in the future. You can also find out if your policy can be renewed again.
Are There Exclusions or Limitations?
Find out if there are any circumstances or situations that may prevent the insurance company from paying out death benefits to the family of the policyholder. For example, risky hobbies or suicide.
Is There a Cash Value Component?
For individuals interested in getting permanent life insurance, ask about the cash value growth of the policy with time and find out if there are any tax implications and how these funds can be accessed.
How Strong Is the Insurance company’s Financial Stability?
The financial stability of the insurer is very important. Hence, research the insurance provider strength rates from agencies to find out if they can meet their financial responsibilities.
How To Buy Life Insurance
If you have considered all of these questions and would still like to proceed with purchasing a life insurance policy, do not get worked up. Here is a step-by-step guide you can follow to successfully find a policy that meets your financial goals and needs. So, what are you waiting for? Let us begin:
- Assess your coverage needs.
- Review your financial situation.
- Consider your financial goals.
- Explore and understand the various forms of life insurance.
- Shop around.
- Compare insurance policies.
- Research life insurance companies.
- Gather multiple quotes.
- Evaluate the policy features.
- Find out the coverage amount.
- Choose a policy that meets your needs.
- Begin the policy application process.
- Fill out the application form.
- Proceed with the underwriting process.
- Carefully, review the terms and conditions of the policy.
- Sign the agreement.
- Feel free to ask questions.
- Pay the insurance premium.
- Monitor your policy and make adjustments when necessary.
- Inform your beneficiaries.
- Ask a professional for advice.
Carefully understand the options you get and follow these steps carefully to buy a good life insurance policy.
In Conclusion
Investing in life insurance is very essential as it gives you peace of mind and financial security for your family. Carefully ask and consider these questions to understand your coverage options and needs. You also get to find a policy to meet your needs and budget as well.