Shopping Guide: Life Insurance
Your life insurance plan should be structured to meet your life circumstances (for example, a single person may need less life insurance than a couple or a couple with children).
Utilize the services of trained life insurance professionals. Check if your agent and company are licensed to do business in your state.
An agent is not allowed to be the beneficiary of a life insurance policy the agent has sold you – unless the agent is a family member or a funeral director. Nor is the agent allowed to misrepresent any aspect of the insurance policy being sold or a policy you already own or encourage you to put incorrect information on your application.
Decide what type of insurance policy you want: term, whole life, universal life or a combination of these insurance policies. Make sure you calculate your total premiums for the life of the policy. It is possible to pay more in premiums than the face amount of the policy.
Some insurance policies have an accelerated benefits feature, which is a policy provision that lets the policyholder, under certain conditions, collect part of the death benefit before he or she dies.
Be alert to any promise that you will never have to pay premiums again (the vanishing premium pitch). Also, make sure you are aware of any surrender penalties.
Don’t sign any insurance application that has not been completely and accurately filled in and dated, and make a copy for your files.
Immediately study the insurance policy once you receive it and make sure it’s exactly what you ordered: many life insurance companies will offer a “free-look” (or “right to review”) provision. Take advantage of it.
The policy owner is the only person who can cancel the insurance policy. If premium payments are not being made the insurer will generally send a payment notice before cancellation.
Make your premium payment check to the life insurance company, not the agent.
A failure to pay your premium will cause your life insurance policy to lapse or it could be terminated.
Review your insurance policy periodically. Your insurance needs change during different periods of your life.
Dec 30, 2008
Shopping Guide: Life Insurance
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