Lesson 5 of 6
Questions worth asking before you choose coverage
After this lesson, you should be able to
walk into any life insurance conversation with ten specific questions, and know what replacing existing coverage can cost you.
These are yours. Take them to whoever you end up talking to, and if a question gets a vague answer, that is information too.
1. How long does this need to last?
Everything else follows from this. Answer it before anyone names a product.
2. Who is this money for, and what would they use it for?
If the answer is fuzzy, the amount will be fuzzy.
3. Is the premium guaranteed, and for how long?
Some premiums are fixed for a stated period and then change. Find out what happens at the end of that period, before it arrives.
4. Under what conditions can anything change?
Premium, cost of insurance, credited interest and policy charges may each be adjustable within contract limits, depending on the product. Ask which ones are fixed and which are not.
5. Which values are guaranteed and which are not?
If you are shown a projection, ask for the guaranteed column and read that one first. A non-guaranteed value is an illustration of what could happen under stated assumptions, not a forecast and not a promise.
6. What happens if I miss a payment?
Ask about the grace period, what happens after it, and what reinstatement involves. Policies lapse, and the reason is usually mundane.
7. What riders are attached, what do they do, and what do they cost?
Some are included, some are paid for, and some have conditions that matter enormously at the moment you would want to use them.
8. What happens if I want to change or cancel this later?
Surrender charges, conversion rights, reduced paid-up options. Ask what your exits are before you need one.
9. If I am replacing existing coverage, what am I giving up?
This one gets its own section below.
10. Who do I call when my life changes?
New child, marriage, divorce, house, job. A policy set up once and never revisited is how an ex-spouse stays named as beneficiary for fifteen years.
Before you replace coverage you already have
Replacing an existing policy is sometimes the right call and is sometimes an expensive mistake made on someone else's advice. Both states where this site operates have replacement rules requiring disclosure, and there are good reasons for them.
What replacement can cost you:
- A fresh contestability period. A new policy typically restarts the period during which the company can contest a claim. An old policy may be long past it.
- A fresh suicide exclusion period, on the same logic.
- Higher cost. You are older than when you bought the original, and your health may have changed.
- Features the old contract had that the new one does not.
- A gap in coverage, if the old policy is cancelled before the new one is actually in force. Never cancel anything until the replacement is issued and in force.
| What resets or changes | Why it matters |
|---|---|
| Contestability period | A new policy typically restarts the window in which a claim can be contested. An old policy may be long past it |
| Suicide exclusion period | Restarts on the same logic |
| Your age and health | You are older than when you bought the original, and your health may have changed |
| Contract features | The old policy may have had something the new one does not |
| Continuity of coverage | Cancelling before the new policy is in force leaves a gap with no protection at all |
None of that means never replace. It means make it a decision rather than a side effect, and ask for the comparison in writing.
What a good answer sounds like
Ask question five of any policy that projects future values, and a good answer sounds roughly like this:
"This column is guaranteed by the contract. This other column assumes a rate that is not guaranteed, and here is what the policy does if that assumption is not met."
An answer that only shows you the better column, or that treats a projection as what will happen, has skipped the part you most needed.
An invented household, used to show how the idea works. It is not advice and it is not about you.
Check yourself
Nothing is scored and nothing is recorded. Answer in your head, then open it.
Why should you never cancel an existing policy before the new one is in force?
Because the new policy is not coverage until it is issued and in force, and the gap in between is a period with no protection at all. Underwriting can also come back with something other than what was applied for, at which point you would want the old policy still standing.
Of the ten questions, which one should be answered before anybody names a product?
The first one: how long does this need to last. Everything else follows from it, and a product named before that question is answered was chosen for some other reason.
You ask which values are guaranteed and get a vague answer. What have you learned?
Something useful. A guaranteed value is written into the contract and a person who sells the product should be able to point at it without hedging. The vagueness is itself an answer, and it is worth acting on.
The one thing to remember
These ten questions are yours, and they work on any agent, including Amber. The quality of the answers tells you at least as much as the answers themselves.
Underneath this lesson
Each of these is a real subject in its own right. They are deliberately not in the beginner sequence, and they are what the Learning Center grows into next.
- Replacement rules in California and Texas Both states require disclosure when coverage is replaced, and there are good reasons for it.
- Grace periods and lapse What happens when a payment is missed, and what reinstatement involves.
- Riders in detail What each one does, what it costs, and the conditions that matter when you use it.
Have a question about your own situation?
This page is general information. What applies to you depends on things a web page cannot know. The conversation is free and carries no obligation to buy anything.
Amber Early, Licensed Life Insurance Agent
CA #4417160 · TX #3543971
Insurance Licensing
Amber Early is an Independent Agent, licensed for life insurance, and is not an employee of any insurance company. This website advertises life insurance. Insurance is the subject of this solicitation.