After reviewing the various life insurance policies available, a potential customer might still be unsure about which best meet their needs. “A conservative, but reliable, method of choosing life insurance includes locking in a long term guaranteed rate of the policy regardless of your health” says Dobronos “To help you, I often recommend to my clients that they seek a trusted insurance agent to guide them through the multiple different insurance options. Often an insurance agent can provide you examples of how your policy will work. Carefully evaluate your agent’s recommendations. Make sure you get a detailed explanation for all of his recommendations. Also, once you have finalized your insurance options, call your family lawyer for an objective opinion as to the insurance you are about to commit to.” An agent can recommend policies that he or she thinks will meet your needs. Look at the recommended policy with care to be sure it fits your personal goals, often, an agent will provide a ‘policy illustration’ that shows how the policy will work.”
Carefully study an agent’s recommendations and ask for a point-by-point explanation. Make sure the agent explains items you don’t understand. Your policy is a legal document and it is important that you know what it provides. Use the following recommendations, when deciding which type of life insurance to purchase:
If your agent recommends a term policy, ask:
- How long can I keep this policy? If I want the option to renew the policy for a specific number of years or until a certain age, what are the terms of renewal?
- When will my premiums increase? Annually? Or after a longer period of time, such as five or 10 years? Can I convert to a permanent policy? Will I need a medical exam when I convert?
If your agent recommends a permanent policy, ask:
- Are the premiums within my budget?
- Can I commit to these premiums over the long term?
- How much will I receive if I surrender the policy?
Permanent insurance provides protection for your entire life. If you don’t plan to keep the policy for many years, consider another type. Cashing in a permanent policy after only a few years can be a costly way to get short-term insurance protection.
Other tools to help you choose the right insurance policy
For more information about life insurance, consider the following services:
- The National Insurance Consumer Helpline (NICH) at 1-800-942-4242. NICH is a consumer information service sponsored by insurance trade associations.
- Visit your local library, where you can find magazines or books on insurance or personal finance.
- Contact the consumer affairs division of your state insurance department.
The above article is meant to give a general overview of insurance policies; exact coverage and terminology could vary by insurance company. Please refer to your policy for exact coverage details and terminology.