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Video — 7 Questions To Answer In Choosing Life Insurance

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If you are considering life insurance, determine your answers to these questions in order to compare policies. One, what's your current health status? This may include both personal and family health. Two, How long will you need life insurance coverage? Three. Do you need extra help with your expenses while you're still living? Do you have any dependents who will need financial assistance once you are gone? Five. What final payout amount do you want? Six. Can you switch from a term policy to a full life policy? And of course, seven. How much can you afford to pay for regular premiums?

13 Great Questions To Ask About Life Insurance

"What do I need to know about life insurance?" Even if they know a lot about life insurance, that may be the first question most people have when they want to buy it. Whether you know a lot or very little about the different types of life insurance, here are some important things to find out before you sign a life insurance contract.

How should you begin to learn about life insurance? Get an actual quote.

1. Do I really need life insurance?

If any of the following are true about you, you should think about getting life insurance:

Others depend on the money I make.

You don't have to be the main wage earner in your family, but if people would have trouble paying their bills without you, they depend on your income. If you are single but want to get married and have kids in the next few years, you should also say "Yes" to this question.

If I died, other people would have to pay my debts.

If you can't pay back your student loans, will your parents have to? A co-signed loan for a car, mortgage, business, or personal use? If so, a life insurance policy can keep your loved ones from having to pay off your debts, which could cost them thousands of dollars.

I don't have enough money saved or assets to pay all of my bills.

Most people don't have enough money saved to pay off all of their debts and take care of their families if they die. So, if you have bills to pay like most adults, you should think about getting life insurance.

2. How much insurance do I need?

There are several ways to get an estimate of how much life insurance you need. Our life insurance calculator uses the "Human Life Value" method, which looks at what you earn now and what you expect to earn in the future. It multiplies your current income by about 30 between the ages of 18 and 40. As you get older and have fewer years to work, that number goes down. 1 Other general rules that can help you figure out how much coverage you need are:

Think about ten times your income.

Add a "0" to the end of your annual salary. So, a salary of $50,000 means coverage of $500,000. A salary of $75,000 means coverage of $750,000.

Think about multiplying your income by 10 and adding the cost of college for each of your kids.

How much do you need to add? Plan to spend between $100,000 and $150,000 on each child. If you have two kids and split the difference, that's an extra $250,000.

You might want to use the DIME formula.

Debt, Income, Mortgage, and Education is what DIME stands for. This method figures out how much life insurance you need by adding up all of your debts and other expenses:

  • Debt: Add up all of your debts besides your mortgage.
  • Income: Take your salary and multiply it by the number of years you think your family needs protection, or at least as long as you have kids at home.
  • Mortgage Look at your last  statement to find out how much you still owe.
  • Education: How much you think it will cost to send each of your children to college.

3. What will the cost of the policy be?

You can find out very easily. With online calculators, you can usually get a  quote for a life insurance plan in about a minute. It shows how much a 20-year term policy with a premium based on your age and gender will cost. If you decide to buy a permanent life insurance policy, for example, the policy you buy may cost more or less (e.g., if you choose a lower coverage amount). But term life insurance quotes can be a good place to start because they can give you a good idea of how much life insurance you need and how much it might cost.

4.How many types of life insurance are there?

There are three main types of insurance: term life, whole life, and universal life. Term life insurance is a cheap way to protect yourself for a short time. Whole life and universal life insurance are also called "permanent" insurance because they are meant to protect you for your whole life and help you build wealth:


This type of protection is usually good for 10, 15, 20, or 30 years. Most term policies have "level" premiums, but some may have premiums that go up every so often, like every five years. It may be cheaper than universal or whole life insurance. Still, when your term is over, you're no longer covered. You can either get a new policy at a higher price because you're older, or you can go without coverage.

Whole Life

This is permanent life insurance that can protect you for the rest of your life and build cash value that you can use for things like policy loans or to supplement your income in retirement.

As long as the premium is paid, a whole life policy will never end. Dividends may also be given by a mutual life insurance company.

Universal Life

Like whole life coverage, this type of policy offers permanent protection and can build cash value.

On the other hand, with a universal life policy, you can change your monthly payments within a certain range to help deal with changes in your income.

The flexibility of universal life insurance must be kept an eye on to help make sure that the policy does not lapse.

5. What are my other options for life insurance?

Here are some other types of life insurance that can help people get coverage in a variety of situations:

Final expense insurance

This is only meant to pay for costs related to death, like a funeral or a burial. Permanent coverage means that as long as you keep paying your premium, the policy will stay in effect, but these policies may not have much cash value. It is usually bought by older people who don't want their grown children to have to pay for these costs. Even though the cost is usually not very high, the death benefit is also not very high.

Simplified and guaranteed issue insurance

Most life insurance policies are underwritten, which means that the insurance company gives you a medical exam to figure out how much of a risk you are to insure. Simplified issue and guaranteed issue policies don't require an exam. They are usually for older people or people with health problems who might not be able to get an underwritten policy. In place of an exam, a simplified issue policy will ask you to fill out a health questionnaire. A guaranteed issue policy won't ask for a physical exam or any information about your health. Most of the time, these policies offer low levels of coverage at high prices because the insurance company has to take on a lot of risk.

Life insurance for a group

This is a group life insurance plan that you buy through your job or a member organization. Most of the time, these policies are easy to understand, at least for lower amounts of coverage. Group life insurance may not cover everything you want, but that's fine. You can have more than one policy, and group insurance can be a simple and inexpensive way to start or add to your life insurance.

6. Does the policy have a cash value, which is also known as "living benefits"?

You should know that there is no cash value if you buy term life insurance. So, these policies are sometimes called "pure life insurance" because they are only meant to pay out if you die during the term. Permanent whole or universal insurance is what you should look into if you want a cash value that grows tax-free and can be accessed while you are still alive.

7. What is covered for disability?

"Waiver of premium" is a rider (or optional feature) that can be added to many policies: If you become disabled and can't work, this rider will help pay your premium so you can keep your insurance policy. 8 It can be a good choice to think about, especially since the extra cost is not too high. But life insurance doesn't pay out if you get sick or hurt. If you want a policy that gives you money when you can't work because you're sick or hurt, you need either short-term or long-term disability insurance (which is also called disability income insurance).

8. How are benefits after death paid?

The death benefit is paid out as a lump sum that doesn't have to be taxed, unless the beneficiary chooses to get it as an annuity or in payments over time. There are some policies where the premium is paid with money that was taken out of the person's paycheck before taxes were taken out. If this is the case, the death benefit may not be tax-free. A death benefit can also be split. For example, the policyholder can name more than one beneficiary, such as their children, and divide the benefit equally (or not) among them.

9. Will my rates go up or down over time?

There are two types of policies with premiums that stay the same over time. The most common type of term life insurance is "level" term life insurance, in which the premium stays the same from the first day of coverage until the end of the term. The other kind is called "whole life insurance," and the payment stays the same for the rest of your life. But it's important to know that after a few years, the cash value grows and can be used to pay part or all of the monthly premium, so the policyholder no longer has to pay the whole amount out of pocket.

10.Does a physical exam have to be done for life insurance?

But not all of them do. If you qualify for it, it may be in your best interest to get a policy that is based on a physical exam. Why?

Underwriting is how insurance companies decide whether or not to cover someone. This is done statistically, with the help of tables of actuarial data that show, among other things, how long a person your age, gender, and health would be expected to live.

People who don't smoke and are in good health almost always get the best rates. And "simplified issue" policies (see #5 above) don't require a medical exam, and "guaranteed issue" policies don't even ask about your health. In either case, the insurance company is taking on a bigger risk and has to charge more because, without a medical exam, they can't really tell how healthy you are or check your medical history.

Some people don't even know they have a health problem, like high blood pressure, until a life insurance exam shows it.

11. What happens if I can't pay or am late on a payment?

That depends on what your insurance policy says (and, in some cases, the regulations that apply in your state).

There is often a grace period with a term policy. This is a period of time (for example, 30 days) after the payment due date during which you can pay your premiums without losing coverage. Coverage will end after that grace period. But if you pay your premiums on time, some companies may let you get your policy back if you pay them again.

Depending on how much the cash value has grown, a permanent policy usually gives you more choices: Many people with whole-life insurance will use the cash value to pay their premiums, for example after they retire. With flexible life insurance premiums, a universal life policy gives you even more freedom.

12. How can I tell if the insurance company is going to be around?

That's an excellent question. It may seem like all big insurance companies are the same, but they aren't. Some are better off with money than others. Some people are easier to get along with. There are objective measures you can use to find and work with some of the best life insurance companies:

High Scores for Financial Strength

Insurance companies are rated by independent groups to make sure they have enough money to cover people and pay their bills.

High rate of customer happiness

Customer surveys and reviews can help you find out how happy other people are with the services of an insurance company. Many people in the insurance industry trust J.D. Power & Associates because they survey more than 5,000 U.S. life insurance policyholders every year to find out how satisfied they are with their insurance. Guardian was ranked "Better than most" in the 2019 J.D. Power study. 12

Customer complaints are low

The National Association of Insurance Commissioners (NAIC) gets information from state regulators about complaints. A recent analysis by NerdWallet shows that, as of [DATE], Guardian Life has had a lot fewer complaints to state regulators than would be expected for a company of its size.

13. Who should benefit ('beneficiaries')?

In theory, a beneficiary can be anyone: a family member, a business partner, a charity, or even a friend. But if you are married and live in a state with "common property" laws, you may need your spouse's permission to name someone other than him or her as your main beneficiary. There are also problems with making children the beneficiaries of a life insurance policy, since they can't legally handle their own money. Under the Uniform Transfers of Minors Act, if you are single with minor children and want to name them (or anyone else under the age of legal consent), the life insurance company may ask that you name a legal guardian as the beneficiary or designate one for them.

As the owner of the policy, your life insurance company will ask you to choose whether each beneficiary can be changed or not. Revocable means that you can change your mind and choose a different beneficiary without telling the first one. If a beneficiary is irrevocable, you can't change your mind without their permission. If that person is still alive, the death benefit must go to them.

These questions are a good place to start, but it's even more important to find an insurance professional who asks you questions. How are you doing right now? What do you want to do with your family? What are your duties? Your financial goals? People need different kinds of protection, so there are many different kinds of life insurance. If you want more than just a free quote, you should talk to a knowledgeable financial professional who will take the time to learn about your needs, answer your questions, and help you find the right type of coverage – or coverages – for your needs. Guardian can help you find a local financial representative who will take the time to learn about your situation and give you options that fit your specific needs and concerns if you don't have anyone to talk about insurance with.

Marco Giordano
Writer, Researcher & Video Editor
January 27, 2023
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