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Where do I purchase life insurance? About 1,700 companies in the United States sell life insurance. While some consumers prefer to buy policies directly from a company, most people buy life insurance through agents or brokers.

How do I choose a company? Before purchasing a policy, check the company's financial condition. Ask an agent or request information from your state's insurance department. Contact the insurance department to be sure the company is licensed in your state. You can also check the financial health of a company by looking at its "rating." A number of services rate the financial strength of companies, and publications that list these ratings usually can be found in large public or business libraries.

How do I choose an agent? Collect the names of several agents through recommendations from friends, family and other sources. Find out:

Is the agent licensed in your state? All states require agents to be licensed to sell life insurance. In addition, agents who sell variable products must be registered with the National Association of Securities Dealers and have additional state licenses.

What company or companies does the agent represent? Ask the agent which company he or she represents and what types of policies these companies sell.

Does the agent have any professional designations? Professional designations that life insurance agents may earn include Chartered Life Underwriter (CLU) and Life Underwriter Training Council Fellow (LUTCF). Agents who are also financial planners may have other designations, such as Chartered Financial Consultant (ChFC), Certified Financial Planner (CFP), or Member of The Registry of Financial Planning Practitioners.

Is the agent a member of a professional organization? The major association for agents is the National Association of Life Underwriters (NALU). NALU's local associations provide educational seminars and help update agents on trends. Similar training and services for financial planners are available through the American Society of CLU & ChFC, Institute of Certified Financial Planners (ICFP), and International Association for Financial Planning (IAFP).

What can I expect during the agent's visit? The agent will meet with you to discuss your life insurance needs. He or she will ask questions about family income and your net worth. With the information you have already assembled about your personal goals and financial situation, you'll be able to discuss your insurance options.

What can I expect the agent to do for me? The agent should be willing and able to explain various policies and other insurance-related matters. You should feel satisfied that the agent is listening to you and looking for ways to find you the right type and amount of insurance at an affordable price. If you are not comfortable with the agent, or you aren't convinced he or she is providing the service you want, find another agent.

Will the agent ask questions about my health? Be prepared at the initial meeting to answer questions about your health. For example, you can expect questions about your age, medical condition, medical history, family history, and personal habits. When you apply for life insurance, you may also be asked to have a medical exam. Often, a licensed medical professional will make a personal visit.

Always answer questions about medical history and health carefully and truthfully; this information helps a company establish a premium for your coverage based on your risk. For instance, you may pay a lower premium if you don't smoke. On the other hand, if you have a chronic illness, you may charged a higher premium.

Also, in the event of a claim, accurate and truthful answers enable your beneficiary to receive prompt payment. Inaccurate or untruthful answers, however, may cause delay or even denial of a claim.

How do I know if a life insurance policy is right for me? The agent will recommend a life insurance policy that he or she thinks will meet your needs. Look at the recommended policy with care to be sure it fits your personal goals. Often, an agent will provide a "policy illustration" that shows how the policy will work.

Carefully study your agent's recommendation and ask for a point-by-point explanation. Make sure the agent explains items you don't understand. Because your policy is a legal document, it is important that you know what it provides.

If your agent recommends a term policy, ask:

• How long can I keep this policy? If I want the option to renew the policy for a specific number of years or until a certain age, what are the terms of renewal?
• When will my premiums increase? Annually? Or after a longer period of time, such as five or 10 years? Can I convert to a permanent policy? Will I need a medical exam when I convert?

If your agent recommends a permanent policy, ask:

• Are the premiums within my budget?
• Can I commit to these premiums over the long term?
• How much will I receive if I surrender the policy?

Keep in mind that permanent insurance provides protection for your entire life. If you don't plan to keep the policy for many years, consider another type. Cashing in a permanent policy after only a few years can be a costly way to get short-term insurance protection.

What does my policy illustration show? A policy illustration shows premiums, death benefits, cash values, and information about other factors that may affect your costs.

 

 

What You Should Know About Buying Life Insurance What is Term Life Insurance? Permanent Life Insurance Where do I Buy Life Insurance? Policy Illustrations Premiums and Riders Buying Tips Contacts for more questions