5 Essential Questions to Ask Before Getting a Life Insurance Policy

Life insurance offers loved ones financial protection in the event of the policyholder’s death. They can use the life insurance death benefit to help replace the policyholder’s income and save for the future, maintaining financial stability in their absence.

However, policies come with many potential features and options to consider. From premiums to term life insurance quotes, understanding life insurance can be challenging for prospective policyholders to navigate.

This article will explore five questions one must ask before shopping for a life insurance policy.

1. Should One Get Whole or Term Life Insurance?

Whole and term life insurance are two of the most common policy types. Here is how each one works:

• Term life insurance: This lasts for 10-30 years based on the policyholder’s choice. If the policy expires, the policyholder must apply for a new policy or renew their existing one to continue coverage.
• Whole life insurance: Lasts for life and comes with cash value that grows with each premium payment and earns tax-deferred interest. Policyholders can borrow against or withdraw from this cash value when it grows enough.

Term life insurance quotes tend to be more favorable than whole life insurance as a result. However, many ask, “can one cash out a term life insurance policy?” Since term life insurance does not have cash value, policyholders cannot.

2. What Future Financial Needs Are There to Plan For?

Life insurance doesn’t just help loved ones cover living expenses. It can also assist with reaching future financial goals by helping replace the policyholder’s income and savings capabilities.

For instance, a family with one primary earner and several children may need a larger death benefit to account for higher living expenses, college costs, any outstanding mortgage balances, potential emergencies, and the surviving partner’s retirement.

On the other hand, a married couple with dual income and no kids could get by with a smaller death benefit. If the policyholder passes away, the surviving partner will not need as large of a death benefit since they earn income independently.

3. What Is One’s Budget for Life Insurance Premiums?

Knowing the policy type and coverage needs is a good start, but one must also consider their budget for premiums.

The more coverage one purchases, the more premiums one will pay. Similarly, permanent life insurance, particularly whole life insurance, will cost more. Beyond that, insurers may offer monthly or annual payment options, and they may offer discounts for those who pay annually.

Prospective policyholders should evaluate their current budgets and see what they can afford to ensure they get the coverage they need without going beyond their means.

4. Are Additional Riders Necessary?

Riders allow policyholders to customize coverage for free or by paying extra premiums.

For instance, an inflation rider grows a policy’s death benefit by a fixed amount each year to keep up with inflation. It also helps grow the death benefit’s value in periods of low inflation to help loved ones get a larger payout.

Another example is a long-term care rider which lets the policyholder tap into their death benefit while alive to help cover nursing home care, an in-home caregiver, or other long-term care costs.

Prospective policyholders should consider their unique goals and circumstances to determine which riders, if any, they need to add to their policies.

5. What Are the Policy’s Terms and Conditions?

Life insurance policies may come with other terms and conditions that impact premiums, payout eligibility, and more.

Here are some terms and conditions to look out for in a life insurance policy:

• Exclusions: Specific circumstances where the insurer can deny a payout, such as if the policyholder passed away while committing a criminal act.
• Grace period: How long the policyholder has to make late payments without the policy lapsing.
• Incontestability clause: A clause that prevents the insurer from disputing a policy’s validity due to misstatements. This often kicks in one to two years after the policy begins.
• Loan provisions: The terms for borrowing against a permanent life insurance policy’s cash value.

Life insurance policies may come with other terms and conditions, so reviewing the policy before signing the documents is crucial.

Know These Answers Before Life Insurance Shopping

Life insurance comes in so many forms, each with various options. It’s critical to know what one needs and what to look for. Before getting the policy, applicants should look into riders for customized coverage and evaluate terms and conditions.

By answering these questions, the life insurance search will be much clearer and easier.

Content within this article is provided for general informational purposes and is not provided as tax, legal, health, or financial advice for any person or for any specific situation. Employers, employees, and other individuals should contact their own advisers about their situations. For complete details, including availability and costs of Aflac insurance, please contact your local Aflac agent.

Aflac Coverage

Life (A68000 Series) – In Arkansas, Idaho, Oklahoma, Oregon, Pennsylvania, Texas, & Virginia, Policies: ICC1368100, ICC1368200, ICC1368300, ICC1368400. In Delaware, Policies A68100-A68400. In New York, NY68100-NY68400. Term and Whole Life (B60000 Series) – In Arkansas, Idaho, Oklahoma, Pennsylvania, Texas, & Virginia, Policies: ICC18B60C10, ICC18B60100, ICC18B60200, ICC18B60300, & ICC18B60400. Group Whole Life (Q60000 Series) – In Arkansas, Delaware & Oregon, Policy Q60100M. In Idaho Policy Q60100MID. In Oklahoma, Policy Q60100MOK. In Texas, Policy Q60100MTX. Group Term Life (Q60000 Series) – In Delaware, Policies Q60200M. In Arkansas, Idaho, Oklahoma, Oregon & Texas, Policies ICC18Q60200M, ICC18Q60300C, ICC18Q60400C.

Coverage is underwritten by American Family Life Assurance Company of Columbus. In New York, coverage is underwritten by American Family Life Assurance Company of New York.

Coverage may not be available in all states, including but not limited to DE, ID, NJ, NM, NY or VA.  Benefits/premium rates may vary based on state and plan levels. Optional riders may be available at an additional cost. Policies and riders may also contain a waiting period. Refer to the exact policy and rider forms for benefit details, definitions, limitations and exclusions.

Aflac’s family of insurers include Aflac, Aflac New York, Continental American Insurance Company, and Tier One Insurance Company.

Aflac WWHQ | 1932 Wynnton Road | Columbus, GA 31999.

Aflac New York | 22 Corporate Woods Boulevard, Suite 2 | Albany, NY 12211

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