Shopping Guide

How is the cost determined?

When you apply for life insurance, the company will consider your risk factors and determine what to charge you if it decides to sell you a policy. You’ll usually have to answer questions about your health. You may also have to provide medical records, take a physical exam, or answer questions about your finances.

Can the premium change?

The amount you pay for life insurance can change over time. When shopping for life insurance, be sure to ask:

• Can the premium change?
• How much can it change?
• How often can it change?

How does life insurance affect your finances?

Life insurance is an asset that can affect your finances and eligibility for government programs like Medicaid. Talk to an agent, a company, an attorney, or financial advisor to learn how having life insurance may affect your finances.

How much life insurance should I buy?

The money paid to your beneficiaries from your life insurance policy can help pay for their daily living expenses, any debt left on a home, college tuition, and any other future expense. Make a list of your current and future financial responsibilities and talk with your agent, company, attorney, or financial advisor to figure out how much life insurance you should buy, and whether you need a short or long period of time.

Can you add coverage?

You can add more coverage to a policy for more premium.

• Additional term insurance adds term life coverage to a whole life or universal life policy.

For example:

You already have a $100,000 universal life policy.

You need $500,000 worth of total coverage.

You can add $400,000 of coverage to your universal life policy by adding a term insurance option to it.
($100K + $400K = $500K)

• Guaranteed insurability means you can add to your coverage, no matter your age or health. There is usually a deadline for buying this coverage, like before retiring or reaching age 50.
• Accidental death is a death benefit that is paid if you die accidentally. Sometimes a company will pay double the death benefit.
• Disability waiver of premium pays the premium if you are “disabled” as defined in the policy. This is usually only for people under age 60.
• Accelerated death benefit option prepays some or all of the death benefit while you are living with a terminal illness, specified disease, or a long-term care illness. People often add this option to pay for care needed at the end of life. A doctor must confirm that you can’t do certain daily tasks, such as bathing, dressing, or eating.
• Spousal rider adds term insurance coverage for your spouse. This option combines two policies into one.
• Children’s rider adds term insurance for your kids. They usually must be at least 14 days old, and coverage usually ends when they turn 21 or 25.

Does the policy have different payment options?

Insurance companies usually pay the death benefit as a single lump sum, but there are other options. Either you or your beneficiary chooses how the death benefit will be paid. Common options include:

• Interest option. The company holds the death benefit. The interest earned on the death benefit is paid to the beneficiary on a regular basis.
• Fixed period. The company pays the death benefit with interest on a regular basis over a chosen period of time.
• Life refund. The company pays a set monthly amount to the beneficiary for the rest of his or her lifetime.

Does the policy automatically renew?

Guaranteed Renewability allows you to extend a term life policy for additional terms whether you are in good or bad health, and without having to pass a medical exam. If you are thinking about buying a term life policy, ask if it is “guaranteed renewable” or if you must reapply to renew the policy at the end of the term. With guaranteed renewability, you can renew a policy even if you get sick during the term. Also, ask your agent or company if there is an age at which you can no longer renew the policy.

Does the policy have a “free-look” period?

A free-look period gives you more time to look over your policy and decide if it is right for you. During a free-look period, you may cancel your policy for any reason and receive a full refund. Ask your agent or company if the policy you are considering has a free-look period.