There are things you probably won’t hear from your life insurance agent, but you should definitely know about them before purchasing life insurance. Once you know which questions to ask, your life insurance agent is going to have to give you the answers. Here are the things that they might not be telling you:
1. Agents represent the interests of their company, not your interests
Your life insurance agent isn’t really your agent because they represent the interest of a life insurance company they work for. Most agents are going to care about your interests too, but they still work for a company and want to sell you something. This is just one of the things you probably won’t hear from your life insurance agent.
2. Agents work for commissions
Life insurance agents get a percentage when they sell you a life insurance policy. Their commission varies depending on the type of insurance policy. This means that your life insurance agent might try to convince you to purchase a life insurance policy that will help them earn a higher commission. This is one of the things you probably won’t hear from your life insurance agent even if you ask them about it. Your agent’s commission shouldn’t determine which life insurance policy is the best for you, so try to get as much information about all the possibilities and choose according to your needs. If your life insurance agent tries to convince you to purchase an expensive policy, see whether they can really justify the cost because they could be thinking about their commission which is larger when the policy is expensive.
3. Maybe you don’t need life insurance
There are many reasons why you need life insurance if you are the primary breadwinner in your family. However, what if no one depends on your income? The purpose of getting life insurance is so that it could replace your income after your death, and help those who were depending on you. If you have kids or a spouse who rely on you for finances, it’s probably a good idea to get life insurance. However, if no one depends on your income, you might be wasting your money unless you have arranged for it to go to your favorite charity. Even if someone depends on your income, you might already have the financial resources that will keep them taken care of even if something unexpected would happen to you. If you have investments and savings that could cover the primary expenses you might not need to purchase life insurance.
4. You can purchase more life insurance than you need
It’s possible to purchase more life insurance than you need, and this is one of the things you probably won’t hear from your life insurance agent. Too much coverage could place a strain on the bank account for no real reason. Paying off your mortgage is important, and you should have enough coverage for that. The remaining amount depends on your family’s needs, but you probably won’t need half a million or a million dollars in coverage. If your kids are grown, and you’re widowed, you don’t need the same life insurance as a primary breadwinner who has young children and a spouse. Always consider your needs and goals before agreeing to a life insurance policy.
5. Life insurance isn’t really an investment
Most life insurance agents will talk about the possibility to fund your retirement and similar ways you can use the cash value for other investment goals. You should stay focused on the fact that you’re paying for a life insurance policy, so it only makes sense to purchase it if you actually need it, not because it can be looked at as an investment.
6. There are two types of agents
Things you probably won’t hear from your life insurance agent include the fact that there are two types of agents. Independent agents represent multiple companies, while captive agents work for one company. This means that if your agent is a captive life insurance agent, they’ll only offer you products of their company. Independent agents usually offer products from different life insurance companies, which gives you more possibilities. There’s nothing wrong with working with a captive agent, but you need to make sure that the company they work for is the right one for you.
7. Paying more in premium after a while
Premiums aren’t always guaranteed, and you could pay more than you anticipated. Products with premiums are guaranteed universal life insurance, whole life insurance, and guaranteed level premium term life insurance. Products with premiums that aren’t guaranteed are variable, indexed, and universal life insurance. Life insurance agents are probably not going to inform you that you’ll have to increase your premiums to continue your policy as planned.