10 Important Questions to Ask Your Life Insurance Advisor

When it comes to securing your family's future, life insurance is a crucial investment that demands careful consideration and thorough research. As you embark on the journey of purchasing a life insurance policy, numerous questions will likely arise in your mind. It is essential not to hold back these queries and seek clarity before committing to paying insurance premiums.

To assist you in making an informed decision, we have compiled a list of 10 vital questions that you can ask your life insurance agent. By posing these questions, you can gain a deeper understanding of your policy and gain reassurance about the protection it offers. So, without further ado, let's explore the 10 important questions to ask your life insurance advisor for your own satisfaction and peace of mind:

1. How Reliable Is the Insurance Company?

The response to this query holds immense significance for you as an individual investing in a life insurance policy. In fact, the reputation and credibility of the insurance company play a pivotal role in establishing trust. It is crucial to inquire about the company's background, its longevity in the industry, financial stability, claim settlement ratio, and overall presence and reach.

The claim settlement ratio denotes the percentage of claims approved and paid by an insurance company within a specific timeframe. It serves as a key indicator of the insurer's reliability. Hence, it is always advisable to assess the claim settlement ratio of a company before buying a life insurance policy or any other type of insurance plan, be it a term plan, health insurance plan, or travel insurance plan.

2. Why Are You Suggesting This Particular Policy?

Many individuals tend to rely on the recommendations of their life insurance agent when purchasing a policy. However, blindly following another person's suggestion without assessing the policy's suitability for your specific needs can lead to a significant mistake. Hence, it is advisable to ask your life insurance agent why they are recommending a particular policy.

Agents may recommend a specific policy for various reasons, including the potential for higher commission earnings. While their intentions may not always be malicious, it is crucial to consider whether the recommended policy truly aligns with your requirements and financial goals.

By asking the question to your life insurance advisor, you can gain a deeper understanding of their rationale behind the recommendation and evaluate whether it is indeed the most suitable option for you. This inquiry allows you to make an informed decision, ensuring that the policy you choose adequately addresses your unique circumstances and provides the necessary coverage and benefits. Remember, your life insurance should be tailored to your needs and not solely driven by the interests of the agent.

Join Now: PersonalFN is now on Telegram. Join FREE Today to get 'Daily Wealth Letter' and Exclusive Updates on Mutual Funds

3. Are There Any Alternatives to this Policy?

While a life insurance agent's suggestion may seem appealing, exploring other options can provide you with a broader perspective and ensure that you make the best decision for your needs. Different insurance policies offer varying levels of coverage, benefits, and terms. By asking about alternatives, you can compare the features and determine which policy aligns more closely with your requirements. Comparing different options will empower you to make a well-informed decision and provide you with greater confidence in your life insurance purchase.

4. How Much Is the Policy Premium?

The insurance premium is money the insured person pays to buy/renew their insurance policy. Policyholders need to be aware of the premium amount and any potential additional charges that may apply. Furthermore, it is essential to consider the premium payment term, which denotes the duration for which you are obligated to pay the premiums.

Certain insurance plans may result in fluctuations in premiums over time, either increasing or decreasing. Therefore, you should be prepared and well-informed about any potential changes in the premium amount. The premium plays a significant role in the insurance policy as it directly affects the benefits you receive. Hence, it is important to carefully note down all the premium-related options and features associated with your chosen plan.

5. What If I Can't Pay the Premium?

Life insurance entails a long-term commitment that necessitates regular premium payments to maintain an active policy and access its benefits. Hence, you should inquire about your premium due date from your agent and ensure timely payment. Additionally, you should also ask the agent about the premium payment options. So, in case of financial crises, if the insurer offers flexible premium payment options, you can choose to pay the premium on a monthly or quarterly basis instead of the popular annual payment option. Furthermore, do not overlook the importance of asking your agent about the consequences of failing to pay the premiums on time.

6. How Much Coverage Should I Get?

Determining the appropriate coverage is a vital step in safeguarding the financial well-being of your loved ones in the event of your untimely demise. After understanding your family's lifestyle and unique needs, your agent can help you evaluate your financial responsibilities, such as outstanding debts, mortgage payments, future educational expenses for your children, required replacement income for your family, etc. Understanding these obligations will guide you in determining the appropriate coverage to ensure your loved ones are protected. By asking your life insurance agent about the ideal amount of coverage you need, you can make a well-informed decision and select a policy that provides adequate protection for your loved ones. Remember, the right amount of life insurance will offer you peace of mind, knowing that your family's financial future is secure, even in your absence.

7. What Is the Guarantee under the Policy?

When communicating with your insurance agent, it is best to inquire about the policy details and the benefit guarantees provided by the company. Ensure that these benefits are documented either in writing or as part of the policy document that will be provided to you.

For life insurance policies, the primary guarantee is typically the death benefit, which ensures that your family will receive a specific amount in the event of an unfortunate circumstance. You should confirm and have a clear understanding of the exact amount your family will be entitled to receive, and the conditions associated with it. Apart from the death benefit, certain life insurance plans may offer a maturity benefit, which guarantees a predetermined sum to you upon completion of the policy's tenure. However, it is important to note that claiming the maturity amount typically requires timely payment of all premiums and fulfilment of the terms outlined in the policy contract.

8. What Is the Claim Process?

An efficient and smooth claim settlement process is one of the critical factors when assessing the reliability of an insurance company. The main objective of purchasing an insurance policy is to ensure that your loved ones receive the promised sum without unnecessary complications. Hence, it is advisable to inquire about the turnaround time taken by the company to process and disburse death claims to the beneficiaries. Moreover, you should clarify if there are any additional benefits or provisions apart from the death benefit that your family will receive and how they will access these benefits.

You should also ask what happens if your nominated beneficiary is unavailable or absent at the time of claim settlement and whether the benefit amount be redirected to your remaining family members. Seeking clarity on this matter ensures that you have a comprehensive understanding of the claim dispersal process and the contingencies in case the nominated beneficiary is unavailable.

9. What Are the Suitable Riders And Add-ons I Should Consider Buying?

A standard insurance policy may not always be enough to fulfil your family's unique needs. Fortunately, you can enhance your insurance coverage by purchasing additional riders and/or add-ons. Insurance companies offer various riders and add-ons that can supplement your policy, such as critical illness rider, waiver of premiums, income benefit rider, accidental death benefit, a disability rider, and more. By adding these riders and/or add-ons to your term insurance plan, you can establish a robust safety net for the future.

These riders provide specific benefits and coverage beyond the basic policy. The added coverage addresses potential contingencies and offers additional financial support in times of need. By carefully selecting and incorporating the relevant riders into your insurance plan, you can customise your coverage and ensure that your insurance policy provides a comprehensive safety net for you and your loved ones.

10. What If My Requirements Change?

As you age, your life insurance requirements may undergo changes. Consequently, the terms and conditions of your life insurance policy may need to be adjusted accordingly. If you are young, your insurance coverage requirement may increase as you extend your family. In such a case, you may consider buying an Incremental Term Insurance Plan that allows you to increase your coverage with the lifestyle change.

Furthermore, the underlying concept in term insurance is that your need for insurance should diminish or cease by the end of the policy term. However, if you anticipate the need to extend your life insurance coverage beyond the term's expiration, it makes sense to include a conversion or convertibility rider when initially purchasing your policy.

To conclude:

Buying a life insurance policy, specifically a term plan, is a crucial investment for the financial security of your family. It is advisable to seek guidance from a reliable life insurance agent or financial advisor and clear all your doubts. Asking the necessary questions will ensure you buy a life insurance policy that aligns with your family's special needs.

KETKI JADHAV is a Content Writer at PersonalFN since August 2021. She is an MBA (Finance) and has over seven years of experience in Retail Banking. Ketki specialises in covering articles around banking, insurance, personal finance, and mutual funds and has been doing it for over three years now.

Disclaimer: Investment in securities market are subject to market risks, read all the related documents carefully before investing.

Disclaimer: This article is for information purposes only and is not meant to influence your investment decisions. It should not be treated as a mutual fund recommendation or advice to make an investment decision.