Questions to Ask

Once you have discussed your financial needs and objectives with your agent, he or she will recommend the type of life insurance policy that will best suit your purposes. Often, the agent will provide a "policy illustration" that will show how your policy will work.

Carefully study your agent's recommendation and ask for a point-by-point explanation if there are items you don't understand. Because your policy is a legal document, it's important that you know what it provides.

Questions You Should Ask

If your agent recommends a term policy, consider the following:

• Does this policy truly meet my needs?
• How long can I keep this policy?
• If you want the option to renew the policy for a specific number of years or until a certain age, ask your agent about the terms of renewal of the contract.
• 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? Some policies allow you to convert the policy to permanent insurance without a medical exam, regardless of your physical condition at the time of the conversion. These policies are known as "convertible term."

If your agent recommends a permanent policy, consider the following:

• Are the premiums within my budget? Be sure you want to spend the money for this type of long-term coverage.
• Can I commit to these premiums over the long term?
• Make sure you know the amount you would receive if you surrender your policy. Keep in mind that permanent insurance is designed to provide protection for your entire life. If you don't plan to keep the product for many years, consider another type of policy. Cashing in a permanent policy after only a couple of years can be a costly way to get insurance protection for a short term.