If you are shopping around to find an adequate term life insurance policy at a rate you can afford, you should be prepared to ask insurance agents a few important questions that will clarify the policy and prevent any unpleasant surprises in the future:
- Are the premium rates fixed? Some insurance companies will sell you a policy with variable premium rates that are likely to increase after the initial low-rate period is over. If the price you were quoted looks too good to be true, make sure to check if it will stay the same for the entire duration of the policy.
- Are there any exclusions in the policy? Among the most common life insurance policy exclusions are Suicide Clause (no payout if the policyholder commits suicide), Dangerous Activity Clause (if the policyholder dies in an accident while participating in a dangerous activity such as rock-climbing or auto racing), Act-of-War Exclusion (often applied to the military personnel).
- Can You Renew Your Policy? Since you will be investing a lot of money into your life insurance policy, make sure you will be able to renew it at the end of the term. Another important factor to check is whether a medical examination is required for policy renewal.