Questions to ask before Signing a Life Insurance Contract

Before getting life insurance, it’s advisable to first find a policy that suits one’s needs. Just like buying something that’s high in value, the finer and more complicated details of the “product” must be discussed in detail.  In the case of getting life insurance, there are also certain questions that must be asked before one signs his or her life insurance policy contract.



I. Basic Questions that should be asked.

- What is covered by the policy?

Death, cancer, debilitating illnesses, and permanent or temporary disability should all be covered by the policy.  Always make it a point to read the fine print before signing the life insurance contract as you need to make sure that it complies to your needs. Do not sign anything that you do not understand properly.

- Who can be beneficiaries?

Usually, the spouse of the insured is often named as the beneficiary of the policy. However, other people may also become beneficiaries, usually close family members or offspring, who may suffer emotional and financial loss in the event of the insured’s death. This depends upon the insured so make sure that you get to make this choice.

- How are claims processed?

The main beneficiary along with the others who were included in the policy are the only ones who can make a claim. In order to get things moving quicker, do make sure that all the details regarding the insurance and the insured is ready before filing the claim.

II. Questions on Payment Schemes

- How are premiums paid?  Are there ways to reduce premium payments?

There are ways to save money when paying premiums and they depend on the mode of payment chosen. Making annual payments or by direct debit are slightly cheaper than paying the premiums on a monthly basis.

Premium payments are always based on the age and health condition of the insured and are also subject to adjustments.  Depending on the kind of insurance chosen, changes in premium prices may vary so it is always important to verify this before signing the insurance contract. In doing so, one is prepared to make the necessary adjustments in the premium payments should the need arise.

III. Questions on Policy Changes

- What if a payment is missed? Will the coverage cease or is there a grace period?

If a premium payment is missed, the insurance will not immediately expire. There is a one-month grace period which is usually given with no interests charged. However, if the payment is not provided for within the grace period, the insurance policy will usually lapse and become unenforceable.  Lapsed insurance policies are normally given additional grace periods within which they can be reinstated after payments are resumed and made current.  

- What happens when the insured uses another insurance company?

When the insured switches to another insurance company, there is a possibility that the premium payments on the insurance will increase. So before deciding to transfer to another company, make sure that you study the move properly and weigh all the possible consequences.