6 Questions to Ask Before Committing to Life Insurance

insuranceInsurance, just like any priorities in life, is also important part of our future. We may not be totally open about it, but considering getting one will take us further into the future. One of the popular insurance policies is the life insurance. It provides coverage on personal assistance when you get old or when you disabled at a young age. Before making the commitment, make sure you know what you want the life insurance to do for you and your loved ones.

Life insurance can be a complicated and intimidating topic, but by asking a few simple questions, you can better understand what you are getting, how you may benefit from the protection, and what you can expect from your life insurance policy.

How much coverage do I need?

There are two factors that will determine the need of life insurance. One is how much money your surviving loved ones will need to live after you are gone, and two is how much money will be needed to pay off your current debts like mortgage, car loans, and student loans. However, the amount of life insurance you need is a very individualized number that can only be determined by carefully examining your current and future financial situation.

Does my policy provide living benefits?

Usually, permanent life insurance policies offer some cash-value benefits, but that’s not the case with term life. If the whole or universal life insurance policy provides living benefits, make sure that you understand the rules for borrowing money against your policy.

How are policy loans being calculated?

Most life insurance policies hold two "cash value" numbers, which are accumulation value and the cash surrender value. The cash surrender value subtracts any charges or penalties for withdrawals. Generally, you can withdraw about 90 percent of the surrender value, but if the loan interest ever exceeds this amount you can be asked to pay down the loan.

What are my current other financial priorities?

The decision to buy life insurance should never be made in isolation. You need to consider how much money your loved ones would need if you were suddenly gone and could no longer provide for them, and determine how much you can spend on life insurance relative to other financial commitments.

What happens if I can't pay premiums?

The answer to this question simple: if you have stop paying, then you'll no longer have life insurance coverage. But if you're leaning toward permanent life insurance, you may have payment options in the future, after the policy has built up cash value. It's up to policyholders to understand how the process works and how much cash value they can use for premiums.

Am I covered if I become disabled?

Many life insurance policies provide some benefits for policyholders who become disabled. Even if your life insurance policy provides some disability benefits, you may also want to ask your agent about Accidental Death & Dismemberment coverage.

To make an informed decision about the purchase of life insurance, start asking yourself with these question along with the help of your insurance agent.

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