Life insurance basics, Part 4
- By Milt x_Zall
- May 04, 2001
What can you expect during a visit with your life insurance agent?
The agent will meet with you to discuss your life insurance needs. He
or she will ask questions about family income and your net worth. With the
information you have already assembled about your personal goals and financial
situation, you'll be able to discuss your insurance options.
The agent should be willing and able to explain various policies and
other insurance-related matters. You should feel satisfied that the agent
is listening to you and looking for ways to find you the right type and
amount of insurance at an affordable price. If you are not comfortable with
the agent, or you aren't convinced he or she is providing the service you
want, find another agent.
Be prepared at the initial meeting to answer questions about your health.
For example, you can expect questions about your age, medical condition,
medical history, family history and personal habits. When you apply for
life insurance, you may also be asked to have a medical exam. Often, a licensed
medical professional will make a personal visit.
Always answer questions about medical history and health carefully and
truthfully. This information helps a company establish a premium for your
coverage based on your risk. For instance, you may pay a lower premium if
you don't smoke. On the other hand, if you have a chronic illness, you may
be charged a higher premium. Also, in the event of a claim, accurate and
truthful answers enable your beneficiary to receive prompt payment. Inaccurate
or untruthful answers, however, may cause delay or even denial of a claim.
The agent will recommend a life insurance policy that he or she thinks
will meet your needs. How do you know if a life insurance policy is right
for you? 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 your agent's recommendation and ask for a point-by-point
explanation. Make sure the agent explains items you don't understand. Because
your policy is a legal document, it is important that you know what it provides.
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 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?
- Keep in mind that 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.
Zall, Bureaucratus columnist and a retired federal employee, is a freelance
writer based in Silver Spring, Md. He specializes in taxes, investing, business
and government workplace issues. He is a certified internal auditor and
a registered investment adviser. He can be reached at [email protected].