Learn and Plan | Questions to ask before buying life insurance
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Questions to ask before buying life insurance

Jun 21, 2023, 5:22:06 PM | Reading Time: 4 minutes

Life insurance is a vital component of your financial security and helps protect your loved ones from the unexpected. Having coverage can provide an important safety net by helping your family cover final expenses, pay off debt, and meet day-to-day obligations. If you’re considering purchasing life insurance, there are several important questions to ask yourself and your financial professional to ensure you choose the option and coverage that is right for you.

How do I choose the right financial professional?

As you begin to plan for your financial future and work toward your goals, finding a financial professional can be a good first step. An agent can help explain the ins and outs of life insurance, the options available, and assist you in creating a strategy that meets your specific needs and budget. As you look for an agent, you may want to review his or her professional designations and certifications, as this demonstrates a commitment to specialized education. Chartered Life Underwriter (CLU) or Certified Financial Planner designations, for example, indicate this financial professional has extensive knowledge of the life insurance industry, personal finance solutions, and the underwriting process. It’s also a good idea to research the company he or she is affiliated with and review the financial stability and ratings.

During your initial conversation with a financial professional, you can better see if he or she matches your personal preferences and will be someone you can count on for sound advice. This individual can serve as an important confidant on your financial team, so be sure to choose someone you feel will best listen to your concerns and will be available as your life and needs change.

How much life insurance do I need?

To accurately determine the amount of life insurance coverage for your family, it’s helpful to understand your specific needs and how much money your dependents will need in your absence. Helpful questions to ask yourself include

  • Who do I want to protect
  • How long would they need financial support
  • What is my current level of debt
  • How much do I have in savings
  • What are my long-term goals

Your financial professional will likely ask fact-finding questions to better understand your financial and personal situation to help estimate how much coverage would be adequate to ensure your loved ones are protected.

How long should I have insurance coverage?

As you discuss your life insurance needs with your financial professional, he/she can begin to narrow down the coverage amount and type of life insurance that may be suitable for you. Depending on your goals, you can choose between permanent life insurance and term life insurance. Permanent policies provide financial protection throughout your entire life, while term life policies provide coverage for a specified term, usually 10, 20, or 30 years. Term life premiums are generally lower than permanent life policies and can be a beneficial option to work into any budget. If you’re interested in lifelong protection and a cash value option, then permanent coverage may be more aligned with your needs.

What can a life insurance policy do for me?

When exploring life insurance, you may think of a death benefit to protect your loved ones left behind. While this is true and hugely valuable, certain life insurance policies go beyond the death benefit and can offer financial advantages while you’re still alive. For instance, if you’re looking to supplement your retirement income, certain policy types can help by offering a cash value growth potential feature. Some policies offer living benefits which can provide financial support and can help pay for medical care or help your family keep up with daily bills during difficult times It’s important to note that accessing living benefits can reduce the amount of death benefit available to your beneficiaries.

What happens if I don’t die during the policy term?

If you don’t pass away during the term insurance policy, the death benefit will not be paid out. However, some policies come with a “conversion privilege,” which allows you to trade in your old term policy for a new, permanent policy. Meeting with your financial professional at least once a year allows you to revisit your policy regularly to ensure it’s continuing to meet your needs and determine if any changes or updates need to be made.

Deciding to buy life insurance is an important step in protecting the financial future of the people who matter most to you. Getting started may seem overwhelming, but finding a financial professional who you trust can make the process much less stressful and can help you navigate each step together. By asking yourself questions beforehand and seeking guidance from an expert, you can make informed decisions and feel confident that you’ve left your family in a more financially stable and secure place.


REV 2/2023