10 Questions about Life Insurance You Cannot Afford to Ignore
There are so many options available while shopping for life insurance, that choosing the right one becomes a confusing task. Here are 10 questions to ask your life insurance agent, to be sure you’re getting the right fit:
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Who are you buying life insurance from?
A more important question than the type of insurance policy, is who is behind it or backing it, and acting as the guarantor. It’s exceedingly important to know about the company you’re dealing with when purchasing a policy, right from when they started out and how big they are now in the market to what fiscal ratings they hold.
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What is the basis on which there is a need for the policy?
Deciding how much life insurance coverage you need stems from understanding the real current and expected expenses for which you’re purchasing the policy. Consider the factors in life that have pushed you to buy insurance, whether it is the debt amount that you want to pay off, or the funds you intend to secure for dependents.
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Will there be any living benefits provided by the policy?
To be sure of which type of policy works for you, understand how long each policy will last and how they differ in terms of premiums that need to be paid. Also, look at the kind of rate of return to expect while you’re alive, and the terms of the death benefit. Based upon your needs, determining how a policy can provide liquidity, control, use and equity will reflect which one suits you best.
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Are there any guarantees available on the purchase of the policy?
Life insurance illustrations can help to put a lot into perspective when you’re comparing policies. Get the life insurance agent to break down the illustrations and give you detailed facts and figures that display the policy’s working, in order to get a clearer picture of the minimum guaranteed returns, regardless of how the market functions.
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When can you expect returns from the policy?
While considering a permanent life insurance policy, ask your insurance agent about the possible returns associated with it. Most permanent policies are known to only provide returns after several years post purchase, for they are designed in a manner that makes them long-term saving instruments, and can take a decade to show positive returns.
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Will deterioration in health affect the policy negatively?
Insurance policies require painstaking efforts on the part of the purchaser, mainly in the form of medical evaluations. If you are prone to health problems due to bad habits like drinking and use of other intoxicants, or heart disorders and other ailments, ask your agent how the insurance policy may be affected by changes in your health.
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How is the policy affected if you are disabled?
It’s always a good idea to do the homework and be prepared for the worst case scenario, which includes knowing how the policy can be affected by any concern, e.g. disability. Certain life insurance policies have the option for providing benefits even if you become disabled after purchasing them.
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Will death benefit inflation adjustable?
You must consider the option of increasing your death benefit increase over time, so it covers the rising costs of inflation. Ask your agent about the possibilities available to incorporate an increase in death benefits, considering the uncertainty of financial markets and the repercussions on the policy that may unfold with time.
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What is likely to happen in case premium payments are not made on time?
Life has its ups and downs, making it extremely likely that you undergo financial insecurity bad enough to forgo timely premium payments. Hence it’s important to understand how the policy will be affected in case a premium payment is either missed or delayed.
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What happens as you age?
Lots of people invest in life insurance policies as a part of their retirement plan, and as you start to age, your financial needs will also change. Ask the agent if the policies have amendment options in the terms and conditions, and how they can be used for the best possible outcome.