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What questions should I ask my life insurance agent before buying a policy?

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Before you purchase an insurance policy, it is a good idea to make sure that you know exactly what you are getting into, and that you are getting a policy which fits your individual needs. A life insurance policy is a long term financial contract, so make sure that you understand your policy before you sign the contract.

  • What kind of policy do I need?
    The two primary types of life insurance are Term life insurance and whole life insurance, but there are also different types of those policies, such as a mortgage term life policy, or universal whole life. Similarly, both type of life insurance are available as group or individual policies, and that factor will have a large impact on what your premiums will be, among other things.

  • How much insurance do I need?
    The amount of insurance you need depends on many different factors and each policy should be customized to meet your specific needs. A generic whole life policy might be okay, but you will be better served if you are purchasing one written specifically for you.

  • Do I have to have a medical examination?
    Most life insurance policies will require a medical examination, but not all of them. If you are concerned about the details surrounding a medical exam, talk to your agent ahead of time and find out what is involved, or whether you have to undergo the examination at all.

  • What company is underwriting the policy?
    
If you are not buying the policy directly from a dedicated company agent, it is important to find out ahead of time which insurer is underwriting the policy. With that information, you can research the company itself, including their financial rating, to make sure that you are dealing with a reputable company that will be around for the duration of your policy.
 (AM Best Ratings Explained, S&P Ratings Explained)
  • What are the exclusions in the policy?

    If you do not know what the exclusions and other details of the policy are, you could end up losing a great deal later in life. Ask your agent to explain the exclusions of the policy precisely, including such information as the terms under which the policy can be canceled or otherwise changed or voided.

  • If I become terminally ill, are there living benefits? What about Disability?
    Some policies include provisions for disability or terminal illness. For disabilities, you can get the policy written so that premiums continue to be paid or are skipped, during your hardship. For terminal illness, ask about medical payments or living benefits that allow you to collect on the policy while you are still alive
  • Does my Policy expire, and can I renew it?
    
Term policies expire, and it will be important for you to know when that happens. Many term life policies have provisions which allow them to be renewed or converted to whole life. Keep in mind that renewing the policy will mean your premiums increase to match your health and age at the time of renewal.

  • Will my premiums remain the same for the duration of the policy?
    This can be very important. Some policies are designed to have low initial payment and then later the premiums increase. There are also types of life insurance policies with decreasing premiums. Find out which of these you are getting, or whether the premiums will be fixed for the duration.

  • Do the death benefits adjust to meet inflation?

    Even though you may be buying a policy that provides excellent benefits by today's standards, what will happen in 50 years, when inflati
answered Jul 23, 2012 by anonymous
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