A few questions to ask about life insurance

Any financial decision you make in life should be taken seriously. This means that you will need to ask some questions before you decide on anything. If you are purchasing a car, you will ask the dealer about the vehicle of your choice. And if you are looking to buy a house, you will ask the real estate agent about the area the house is in.

Similarly, if you are planning on taking out life insurance, you will need to ask your provider questions about the product. If you are not sure where to start, below are some questions you should ask about life insurance.

How is my need determined?

The amount of life insurance you will need is determined by two factors. These are: how long it will take to pay off your debts, including mortgage and loans, and how much money your dependents will need to maintain their lifestyle after you have gone.

Although almost all insurance companies use these two factors, many use very different ways of calculating your need. You will need to ask the provider how they came up with the final number. Find out if it was an estimation or if it was based on analysis. Understanding how your need was determined is crucial, especially if you are a family with unusual debts such as high medical bills.

Is a medical exam required?

If you are planning on taking out life insurance, your insurer will require a medical exam. This is not to make you feel bad about your health, but rather to use the results to determine your risk factor.

For example, someone with a congenital heart problem will have a significantly higher risk factor than someone with a healthier heart. The medical exam will also have an effect on your premiums, as the “riskier” you are to insure the more you will have to pay. The medical exam might feel invasive, but it is an important factor in determining your life insurance premiums.

Are there any exclusions?

Every life insurance provider has a list of exclusions. These are instances when the company will not have to pay out in the event of the policy-holder’s death. These exclusions will vary according to the company, but they do include things such as high risk activities (your scuba diving holiday counts here) and even some chronic illnesses.

Extreme activities, such as rock climbing, mountain biking and other “adventure activities” are excluded by some life insurances altogether. This is because of the high risk factor that these sports present. Finding out about the exclusions is important as it will help you to decide on which provider will best suit your needs, especially if you take part in extreme activities.

What happens if I miss a payment?

If you miss a payment on your life insurance the coverage might lapse. This is detrimental as you do not know when you might need the cover. However, there are some options that you can look into if you are unable to pay a premium.

You might be able to use the policy’s cash value towards the premium, which would allow you to remain covered. Some policies might allow you to reduce your repayment for a time so that you will remain covered and be able to save up enough to return to the normal amount. You will need to speak to your provider, however, to be sure that they allow for these options. Before taking out any form of insurance, you will need to be certain that you are financially stable enough to afford the monthly premiums.

What if I become disabled?

If you become disabled and are unable to work, you will need to find out what will happen to your life insurance policy. Some policies will provide some benefits for policyholders who become disabled, while others might have a stricter view of things.

Each insurance company will have a different definition of the term “disabled”. There are some who believe that it is the inability to perform your specific occupation and others who believe that it is the inability to perform any occupation at all. You will need to find out what your provider sees as “disability” and what would happen should you become disabled.

Is this the right choice for you?

One of the most important questions you will need to ask is whether or not the insurance provider you are looking at is the right choice for you. Find out how your need is determined, if a medical exam is required and be sure to ask if there are any exclusions. You will also need to find out what would happen if you were to miss a payment and how your premiums would change if you became disabled. Finding out about these various aspects will help you to decide on what life insurance is best for your needs.