Life Insurance Questions & Answers
May 22, 2007
Our insurance company sent us an advertisement listing several questions about life insurance. The spin was “don’t let unanswered questions keep you from getting the financial protection your family needs.” So I called them up to see how they answered the questions. My plan is to go back and do my own research on life insurance and see if what I find matches up with their answers.
1) Do I need a doctor’s physical before getting a life insurance policy?
Yes, some insurance companies will send someone to your home to perform the checkup at your convenience.
2) How do I know what amount of life insurance is right for me?
The insurance company looks at your assets, liabilities, and dependents and recommends how much insurance you need.
3) I’m young and healthy. Why should I buy life insurance?
The answer to this one was to plan ahead. Whether you qualify and how much you pay for life insurance depends on factors such as your health, age, occupation, and others. His argument was that 15 – 20 years from now you may find yourself in a much more expensive category or even uninsurable so you should lock in your insurance rates now.
4) I have a life insurance policy from my employer. Isn’t that enough?
He recommended against relying wholly on my employer for coverage. If a person wants coverage their company doesn’t offer, moves to a new job that doesn’t have the coverage they need, or wants to start their own company then having a separate life insurance policy would fill those gaps.
5) Wouldn’t I be better off investing the money I’d otherwise spend on insurance premiums?
He gave a pretty simple answer to this one. You could just put the money in the stock market but there is more risk using this approach. You could lose all your money in the stock market but the coverage provided by the life insurance policy is guaranteed.
6) Can children be named as beneficiaries of a life insurance policy?
Yes, but he stressed that it should be done through a will. The legal documents should appoint an executor to manage the money and a guardian to take care of the kids.
7) Why should I care if a company charges sales commission?
This one is pretty obvious but I asked it anyways because it was on the list. Sales commission will make your premiums higher. If you have a policy that builds value over time it will take longer to accumulate money
8) Should I buy life insurance on my children?
People do this for two reasons. The first is to help through a transitional stage in the horrible event you do lose a child. The second is to lock in life insurance at a low rate for your kids.
Of course the insurance agent ended by asking if I was ready to start the application process for a life insurance policy. I thanked him for his time and said I’d look into it. Now that I’ve heard the answers from the insurance company’s point of view my next step will be to go to an independent third party to research them farther. I’ll let you know what I find out. Do you disagree or find fault with any of their answers?
All posts by Ben Edwards