Life Insurance Checklist

Following are some key questions to ask your insurance provider before you purchase your life insurance.

• What is guaranteed in the policy and what isn't? (This should include all aspects of the policy: the premiums you pay, benefits you receive, how and when "riders" apply, and so on).
• How long has your prospective insurance representative been in business? What education and professional accreditation does this individual have? How long has the company been in business?
• Comparing term insurance policies is much easier than comparing permanent policies. But even with term policies, remember to ask what your renewal rates will be 10, 20, and 30 years down the line. What is the difference between the various policies you're considering?
• Comparing permanent insurance policies is much more challenging than comparing term policies, since there are so many variations. Get a good explanation of such concepts as "interest-adjusted net cost index," and "interest-adjusted net payment index." You will need both sets of indices from your insurance provider in order to compare similar policies from different life companies.
• “Policy illustrations” can be a minefield. Ask specific questions about the assumptions in the illustrations you're shown, such as:
  • If there is an investment segment to the policy, what rate of return is assumed? What if the rate is lower? Higher?
  • Is the death benefit guaranteed?
  • Will premiums fluctuate? If so, under what circumstances?

Please note, these questions are intended as a helpful guideline only, and are not meant to be exhaustive.