5 Simple Questions you should ask your Life Insurance Company about Your Policy

Oftentimes people wonder what kind of coverage they have with their current Life Insurance Policy.

Life Insurance Policies can be confusing at times, but they do not need to be. Many of my clients express frustration when calling insurance companies because at the end of their call they end up more confused than when they called and very often they do not get the information they really need.

Here are 5 Simple Questions you should ask your Life Insurance Company about Your Policy:

1. Is the Policy a Term or a Whole Life (Permanent)?
   Term policies tend to offer higher amounts of coverage at lower premiums but will expire after certain amount of years; typically 10, 20, or 30 years from the approval date. This becomes very important as the insured gets older, specially if the insurance will still be needed after the policy is scheduled to expire. A Permanent policy will last until the day the person dies, unless it is surrendered (canceled) before then.
2. What is the Policy’s Face Value?
   This is the amount of the death benefit your beneficiary will receive when the insured dies, regardless of how the person dies. Make sure this amount does NOT include any riders.
3. Does the Face Value Stay the Same?
   Many policies’ face value will decrease as the insured gets older. Other policies’ face value may stay the same for a certain amount of years and then start decreasing after a certain age. So it is important to know exactly what the beneficiary will receive once the insured passes.
4. What is the policy’s Monthly Premium?
   This is the amount the insured (or the person paying for the policy) is required to pay every month in order to keep the policy active.
5. Does the Monthly Premium Stay the Same?
   Many policies’ premiums will increase as the insured gets older. Other policies’ premiums may stay the same for a certain amount of years and then start increasing after a certain age. So it is important to know exactly what the insured (or the person paying for the policy) will pay for the duration of the policy contract.

In addition to the aforementioned, it is a good idea to also ask if your policy include any riders. An insurance rider, is an optional add-on to an insurance policy that can change or expand coverage.

Riders can often confuse policyholders by misleading them to believe the face value is higher than they think. This could happen due to a vague explanation from the agent, or perhaps because the policy was taken so long ago that the policyholder simply forgot.

Here are some common examples:

A policy with a Face Value of $100,000 may have an Accidental Death Benefit Rider for an additional $100,000 only if the insured dies due to an accidental death. This could lead the policyholder to believe they have a $200,000 policy that would pay out the full amount for any kind of death. In this case, this type of policy would only pay $100,000 if the death is due to natural causes.

A policy for John with a Face Value of $100,000 may have a Spousal Rider for an additional $100,000 coverage on Mary. This could lead the policyholder to believe that, in this case, if John dies, Mary will still be covered; this is not true. In this case when John dies, his beneficiary will receive $100,000 and Mary will no longer be covered. It is important for both John and Mary to each have their own policies.

Once you obtain all of the relevant information, and if you have questions, doubts, or concerns, it is a good idea to have a Policy Review with a trusted Agent to make sure you and your family have adequate coverage.

I offer a  FREE Policy Review for your family’s peace of mind.