If you’re in the process of purchasing a life insurance policy or are considering doing so, you likely have questions. We recommend that you print this article and keep it handy, to help you remember the questions to ask your life insurance agent.
How much life insurance do I need? How much life insurance you might need is directly related to how much insurance payout money you want your family to receive in the event of your death, and how much protection you can afford to buy. Also consider, for example, how many dependents you have, your assets such as a retirement fund, and your liabilities such as a mortgage.
Will my monthly premium ever go up? If you want to be able to plan for your monthly bills to include steady insurance premiums that won’t go up, tell your insurance agent. If your life insurance agent assures you that your premiums won’t go up for the life of the policy, make sure you understand the term “life of the policy.” The Gerber Life Term Life Plan1, for example, allows you to choose a policy term of 10, 15, 20 or 30 years. Your guaranteed premium rate is locked-in for the entire term, as long as premiums are paid.
What happens if I can’t pay my premiums? Everyone may encounter financial ups and downs. Before buying a life insurance policy, ask your life insurance agent what alternatives are available for keeping or not keeping your insurance if you no longer are able to pay your insurance premiums.
What does a life insurance policy cover? Different kinds of life insurance policies offer different kinds of coverage and different amounts of financial protection. Before you sign on the dotted line, make sure you understand what’s covered and not covered.
What are “riders” for insurance policies? Insurance policy “riders” are additional layers of protection that a basic policy may not cover but that may be available. Insurance riders, which are optional, can provide certain kinds of additional coverage for an additional cost.
Do I need to buy separate accident protection? You may wish to provide your family with insurance payout money for medical bills and other expenses should you have a disabling covered injury or die in a specifically covered accident. The Gerber Life Accident Protection Policy2, for example, offers guaranteed approval with no health questions or medical exam and immediate 24/7 coverage, for as little as $1.92 a month3.
Do life insurance policies build cash value? Some kinds of life insurance policies, such as whole life insurance, build “cash value” over time. The longer that you hold the policy, the larger the cash value.
How can I access the cash value? The policyholder can access the available cash value in various ways, such as cashing in the policy for its available cash value, or borrowing against the available cash value, or toward paying for policy premiums in the event that the policyholder is no longer able to do so. Loans against the policy are charged interest. To borrow against the policy, all premiums need to be paid. “Available cash value” is the built-up cash value less any unpaid premiums and any outstanding loans against the policy.
If I have to borrow against the cash value of a whole life insurance policy, what is the interest rate? It’s important to know the interest rate charged if you ever needed to borrow against your policy’s cash value. The Gerber Life insurance policy loan interest rate is 8%.
Do life insurance policies have a probationary period? Many policies do, usually a brief period of time when the policy is new. For example, the “probationary period” for a whole life insurance policy is the period of time during which the policy does not accrue cash value and benefits will not be paid out. Before buying a life insurance policy, make sure you know the length of the probationary period, so that there will be no surprises in the event that your beneficiary needs to make a claim.
1 Policy Form Series SLT-05
2 Policy Form Series ACC-911
3 Payment shown is for $20,000 in coverage