Advisor’s Tip: Ask These 7 Questions to Your Life Insurance Agent
When you are spending money, you should do it cautiously and ask everything about the product. So, when it comes to life insurance products, it becomes all the more important to ask questions and know the details about the plan.
Purchasing life insurance without asking proper questions to your life insurance agent is not a good idea. A wrong decision would not only affect your current financial planning but also your long-term financial goals. It may also affect your family members financially too if you end up buying a wrong policy. It is wise to ensure that all the crucial questions are answered and known before making a decision.
So, let’s check out the 7 most common questions which you must ask your life insurance agent to make sure you are doing it the right way.
1. What are the major benefits that I will obtain from this policy?
You must ask your insurance agent some questions about the major benefits which you can obtain from the policy you are going to purchase. You should enquire with the insurance provider about which insurance plan would be the best one for you according to your family, lifestyle and income. What life cover amount would be adequate for you? How to carry out the calculation of the returns of your policy if any? What would be the payout in case you can survive the policy term? If you are suffering from any disabilities, what are the benefits that would be paid to you? What would be the benefits that you would be obtaining in the long-term and the short-term?
These are some of the major questions related to the benefits obtained from your life insurance policy which you can ask your insurance provider.
2. Is the insurance provider good?
This question is very important and you must obtain a concrete answer to this. Insurance is all about trust. And, this step would help in building trust. Usually, you would get to hear a lot of things and reviews about the insurance provider you choose or think about choosing. However, you must ask this question to the agent appointed by the insurance company.
Tip: You must get details about the financial health of the company, its claim settlement ratio, its support and commitment towards its customers, the period it has been into the insurance market, etc.
3. What would be the premium to be paid?
You should ask the question about premium payment. For instance, what would be the amount of premium to be paid if you are purchasing this insurance policy? What will be the duration for which you would be paying the premium? Will the premium increase at periodic intervals? You should also ask if there would be any additional charges which the provider might impose on this plan in the future. Will the premium increase with an increase in your age? Are there any tax benefits on the premiums paid for a life insurance policy?
Tip: Life Insurance premium doesn’t increase with age, unlike health insurance. But your advisor should be able to provide you with a policy payment schedule and justify why the premium is constant.
4. Are there medical examinations necessary?
You should ask your insurance agent if any medical examination or check-up would be needed for purchasing the life insurance policy. If yes, then what is the procedure for conducting the medical check-up? Is it mandatory to have a medical examination or it is possible to purchase the life insurance policy without the medical examination? Will you visit the medical practitioner for this or any representative would be sent by the insurance provider for conducting the medical examination? Are there any consequences for buying a life insurance policy without a medical examination?
Tip: Each and every company has a specific medical grid according to which they confirm if there would be medicals for a particular policy or not which depends on age and sum assured of the plan.
For example, if you are less than 45 years of age and opting for a life insurance policy with a sum assured of INR 10 lakhs only, chances of falling in the medical grid is minimal. However, if either the age or the sum assured is high, i.e. the risk of the insurance company is high, then chances of conducting a medical test is high.
However, even if you do not fall in the medical grid, the underwriter might request for a medical check-up if they find it necessary for any reason. Also, the cost for a medical test would usually be covered by the life insurance company.
5. What would happen if I am unable to pay the premium?
When you are going to purchase a life insurance policy, you must know about the consequences in case of failure in premium payment. If you are facing any financial issues and are unable to make the premium payment, then what would happen? Is there any grace period for your policy? Will your policy lapse or will you be able to revive the policy? Will you have to be penalized for this? What is the process to be followed for the policy revival? Are there any additional charges or increment in the premium to be paid on reviving the policy?
Tip: Ask for surrender benefits, loan options and paid up benefits of the plan, in case you wish to discontinue your plan at a later point of time. Although insurance is a long-term product, knowing all details ahead of time is prudent.
Also, check if discontinuation of the plan would disrupt the guaranteed benefits and the life coverage of the policy.
6. What are the guarantees available in the policy?
You should know about the guarantees that your life insurance policy gives. Make sure that you do not forget to ask your life insurance agent. You can ask your life insurance agent to explain in detail the benefits and guarantees that the insurance policy would be providing. Will the guarantees to be provided be mentioned in the policy document? What would happen if the life insurance company discontinues the plan?
Tip: You should ensure that the guarantees must be provided by the insurance provider and not by the agent as it can create complications in case the agent changes his job.
7. What are the exclusions of the insurance policy?
You must ask about the exclusions of the insurance policy which you are purchasing to your life insurance agent. It is of utmost importance to have a clear understanding of all those situations under which you would not be able to claim the death benefit.
Tip: Lack of knowledge about the exclusions can lead to claim rejection thus, turning the entire purpose of purchasing the life insurance policy pointless.
Hence, these are some of the essential questions which you must ask your life insurance agent. You would be purchasing the life insurance policy for family and would pay the premium to keep the policy active by making certain financial sacrifices. So, you must ensure that the purchase of the policy and the sacrifices are completely worthwhile.