Steps to Buying Life Insurance

1.  Understand what you want

• Know yourself

• Know your goals

• Know your budget

• Know how much insurance you need

• Know how much money you want to spend

2.  Compare costs of competing policies

•Do your homework and shop around, not just on price, but on benefits, coverage, and exclusions.  Possible comparisons:

•Annual Premiums:  Participating or non-participating?  If participating,  the 5 year dividend history? This year?

•Total premium cost over the next 10 years (excluding dividends)

•In 10 years, what will be your cash/loan value?  Paid-up conversion value? Extended term conversion value?

•Total Premium cost over 20 years?

•In 20 years, what will be your cash/loan value?  Paid-up conversion value? Extended term conversion value?

•At what interest rate can you borrow against the policy?  Is the interest rate guaranteed?

Steps to Buying Life Insurance (continued)

3. Select only a high-quality insurance company based on company ratings

•Price is not the only criteria.  You also want the company to be around to pay the benefits.  Remember, you are looking for a long-term insurance relationship

4.  Select an insurance agent with whom you feel comfortable and are not pressured

•Study the agent’s recommendations and ask for a point-by-point explanation if there are items you don’t understand

•Understand how the agent is getting compensated

•If they can’t (or won’t) explain all the costs and benefits, go to someone who can

•Do your homework

ü5.  Use wisdom in your decisions

•Make sure you check out the insurance company and read your policy when you receive it to ensure it is correct.  It must all be in writing!

•Consider alternative approaches: the net or an advisor

•Make sure you feel good about the decision before you sign anything or send money. Don’t rush into a decision.

•Make your check payable to the insurance company, not the agent, and be sure you are given a receipt for all money’s given.

Steps to Buying Life Insurance (continued)

There is a difference between choosing an agent, and being chosen by an agent.  The selection decision is up to you—use it wisely.

•Read your policy carefully during your “free-look” period.  Review your insurance policy annually after that.

•If you are changing policies, make sure you clearly understand the consequences.  Surrendering your policy to buy another could be very, very, very (get the hint) costly.

•If you have a complaint, contact your agent and the state insurance department

üb. Other information for a needs approach would be funeral expenses, debt elimination, children’s educational expenses, mission expenses, social security benefits, etc. Notice that the earnings multiple approach does not take into account your individual level of savings or your current financial condition.

Questions

•Do you have any questions on life insurance?

B. Understand the Key Areas 

of Disability Insurance