Once you establish a life insurance policy, it’s normal to still have questions about how your plan works. With so many factors in play, any number of details can affect your coverage and the level of protection you and your family have at your disposal.
Here are a few important tips to help you better understand the nuances of your life insurance policy. If you need extra assistance or have any additional questions, a AAA life insurance agent will be happy to help.
The Basic Structure of a Life Insurance Policy
Most life insurance policy documents follow a very similar layout, and if you’re going to break down your plan’s details, knowledge of this roadmap can certainly help lead the way.
The first few pages essentially offer a summary of coverage details, the companies and individuals involved and the plan selected. From there, the schedule of benefits typically takes the forefront, detailing the services included and their associated fees. This is followed by the declaration page, which includes basic information such as the policy type, the premium amount and any additional conditions that apply to your policy.
Speak the Language
If you’re new to life insurance, you might feel overwhelmed by all the industry-specific terminology. Take the time to familiarize yourself with key terms, and you’ll quickly gain a better understanding of how it all works. For example, just knowing the difference between the insured (the person whose death triggers the life insurance payout, often the owner of the policy) and the beneficiary (the person, trust, estate or business designated to receive the benefits) can clear up many questions you might have about your policy.
A quick Google search will help you in a pinch, but your life insurance agent is always the best person to ask to clarify the details and terminology in your policy.
Pay Attention to the Calculations
When it comes to matters as important to your family’s future as your life insurance policy, don’t make any assumptions. Review the calculations of your plan thoroughly to ensure your wishes are always accurately depicted.
Remember the Future
In many cases, your premium and the benefits therein will change over time, a fact that depends largely on whether you have a term or whole life insurance policy. Regardless, it’s important for you to keep tabs on how these figures may evolve in the coming years.
For instance, your whole policy’s cash value – and the resulting death benefit – could be affected by any number of factors. Pay extra attention to any charts or other detailed breakdowns within your policy, which may or may not list the long-term charges and how they will change in the future. This will allow you to be better prepared for what lies ahead and adjust your finances and your policy as necessary.
Note Any Exclusions
Life insurance standards tend to vary widely from one carrier or policy to the next. Sure, your policy might seem perfect at first glance, if not for its exclusions. These are the listed conditions under which your life insurance policy would fail to provide coverage. Historically, this has included everything from dangerous recreational activities and lifestyle choices to designated health conditions. Ask your insurance agent about any exclusions that apply to your policy.
Don’t Wait to Review
Even the smallest details could impact your life insurance policy. Don’t remain in the dark about the potentially life-changing stipulations that might be included. You owe it to yourself and your family to keep a close eye on the details, the math involved and especially the designated beneficiary who will receive financial protection upon your death.
Your life insurance plan plays too great a role in your family’s future to remain complacent as to what your investment dollars are going toward. Reviewing your policy regularly can prevent a disastrous scenario in which the details are not precisely what you had in mind.