25 Questions to Ask When Buying a Life Insurance Policy
Once you make the decision to buy life insurance, selecting the right life insurance company and plan is extremely important. The following are 25 questions you should ask, as you consider what company to do business with and what plan to buy.
1. What is the insurance plan monthly and annual premium?
Premiums can vary greatly depending on the plan and benefits. Some plans may offer discounts if you pay the premium on an annual basis.
2. Is there a waiting period before coverage goes into effect?
Some plans may have a waiting period between the time you start paying the premium and when benefits go into effect.
3. Are there circumstances where benefits are not paid?
Most plans have benefit exceptions where they may deny benefits.
4. Does the plan require a physical exam?
Most plans require a physical exam to be done prior to the plan going into effect. In many cases, it will have to be done at your expense by an approved doctor.
5. What lifestyle factors can impact your life insurance policy before and after the plan goes into effect?
Insurance plans will usually have lifestyle factors they evaluate before issuing a life insurance policy and these factors which may impact the premium you pay after plan goes into effect.
6. What happens if you miss a monthly premium or are late on a payment?
Non payment of the life insurance premium or a late payment may impact your benefits and if the policy remains in force.
7. Does the life insurance plan have a cash value if you decide to cancel the policy?
Some plans will have a cash value if you terminate the policy before benefits are paid out, you should understand this of any policy you may buy.
8. What is the process to change life insurance beneficiaries?
Over the course of the policy term, you many need to make policy changes, such as who you have identified as a beneficiary, you should understand this process before you buy.
9. What happens with the plan if you decide to move out of state or to another country?
While most life insurance companies operate nationwide, each state has different insurance laws, you should understand how moving to another state or country may impact your policy and plan benefits.
10. Under what circumstances can an insurance policy be cancelled?
Most life insurance policies have certain conditions which allows the insurance company to cancel a plan, you should be aware of these circumstances.
11. Are there situations where the premium may change?
There are a wide variety of life insurance plans with just as many options for premiums. You should be fully aware of how your premiums many change over the course of the policy.
12. How are benefits paid out?
You should determine how policy benefits will be paid out to your beneficiaries before selecting any plan.
13. How long does it take for benefits to be paid out?
Many life insurance policyholders purchase life insurance to pay for their burial expenses, if this is the case for you, knowing how long it takes for benefits to be paid out will be especially important.
14. Can I increase or decrease the benefit amount after plan goes into effect?
Your life insurance needs may change over the course of the policy and you should understand if you can change the benefits after it goes into effect.
15. How long has the insurance company been in business?
When selecting an insurance company you should know how long they have been in business, who owns the company and who runs it.
16. How many policyholders does the insurance company have?
The size of an insurance company and number of policyholders may impact their ability to pay out benefits and should be a factor you consider in selecting an insurance company.
17. Who do I contact with insurance plan questions, after it goes into effect?
Some insurance plans have the insurance agent who sold the policy provide customer service, others have a separate customer service group, knowing this may impact your selection of an insurance company.
18. Are there reviews online about the insurance company?
Knowing about the reputation of a life insurance agent and company should be a factor you consider in deciding who you want to buy a life insurance policy from.
19. Can I pay premiums online or make electronic payments?
If you like to pay all your bills by check or online, knowing how you can pay your premium may impact what company you want to do business with.
20. Can a family member make premium payments if I am no longer able?
Your life circumstances may change and you should fully understand how to keep it in good standing should you no longer be able to make premium payments.
21. Is there a application fee to apply for the plan?
Some insurance companies require an application fee prior to making a final decision to provide you life insurance.
22. Does the insurance company offer a final expense life insurance plan?
A final expense life insurance plan is designed to literally pay for a person’s burial and outstanding debts. Depending on the benefits you are looking for, this may be the plan that is right for you.
23. What is the appeals process if benefits are denied?
In some cases, an insurance company may deny benefits, you should fully understand the insurance company appeals process if this occurs.
24. Can the insurance company change benefit terms after the policy goes into effect?
There are situations where an insurance company many change benefit terms after your insurance plan goes into effect, you should know what these are.
25. What happens to my policy if the insurance company is sold or changes ownership?
While there may not be a clear cut answer to this question, since situations may vary greatly, you should ask this question and make sure you are comfortable with the answer you receive.
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Insurers will commonly deny claims if they can argue that the accidental injury was not the cause of death of the insured because the death occurred too long after the injury was sustained.
When you are younger It might make sense for you to buy a policy that is less expensive, that has many exclusions and a more expensive but expansive policy, and have the two policies differ in years of coverage.
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There may be a handful of people who will be directly affected by your passing so it’s good to know that you don’t have to pick one over all the others. You can choose a few people easily. You don’t have to pick only your spouse.
Never turn down a matching 401K plan unless you will starve to death because of the deduction from your paychecks. How often do you have people paying you to put money away for the future while getting a tax break on that amount? Any match is free money so don’t pass it up!