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Top 50 Insurance Interview Questions & Answers (Update)
1) What are the different types of Insurance Coverage?
Insurance policy is categorised into two
a) General or Non-life Insurance
b) Life Insurance
2) What do you mean by ‘insurance coverage’?
The term ‘insurance coverage’ means, when an individual takes an insurance policy the insured will be covered by insurance company for a specific amount for themselves or the things that he had taken the insurance policy, for which he would be paying premiums to the insurance company. The insurance company will pay the insured in case of damage or claims made by the insured according to their ‘insurance coverage’.
3) What is a premium’?
It is the amount to be paid for a contract of insurance to the insurance company. It is the sum that a person pays monthly, quarterly or annually according to their plan, in return of the coverage he/she has taken from the insurance company.
4) What do you mean by term ‘Insurer’ and ‘Insured’?
Insured is the one who holds the policy and Insurer is the company that covers the insured.
5) Who is the beneficiary?
Beneficiary is the one whom you have nominated for the insured amount in case of your death.
6) What is the contestable period’ in insurance policy?
‘Contestable period’ is usually 1 or 2 years, during which the insurance company holds all the right to investigate the policy and decide whether to pay or not to pay to the insured.
7) What is the difference between “revocable beneficiary” and “irrevocable beneficiary”?
‘Revocable beneficiary’ designation gives right to the policy holder to change the beneficiary name without the consent of the named beneficiary. While in ‘Irrevocable beneficiary’ the policy holder has to take consent of the beneficiary before the name is changed.
8) What is no-claim bonus?
No claim bonus is a benefit for those who have not claimed insurance during the preceding year of cover. This will lower the premium on the following year.
9) What is ‘declaration page’ in insurance policy?
‘Declaration page’ in insurance policy, bears all the information of the policy holder like name, address, vehicle information, type of coverage and loss payee information.
10) What do you mean by ‘Loss Payee’?
The loss payee is a person or institution (Bank) that receives the insurance payment on the loss of the property or vehicle you own. It is a legal definition used to cover the investment of other parties or bank that is owned by you. For example, you have a car on loan, and also you have insurance for that car. Now you met an accident, and your car is a total loss(meaning completely damaged beyond repair). Your bank still owes money from you in such case when you claim the insurance; the insurance company will pay money directly to Bank or person you owes money. Here bank is a loss payee.
11) What do you mean by ‘Deductible’?
Deductible is one of the several types of clause that are used by the insurance company as a threshold for policy payment for health insurance or travel insurance. Deductible is a decided amount that you have to pay from your pocket while claiming the insurance. For example, you have a deductible of $500, and you have insurance coverage for $2000, then you are responsible for paying for $500 and the remaining amount $1500 will be paid by insurance company.
12) What is Co-insurance?
Co-insurance term is usually referred to health insurance companies. In this type of policy, you share the coverage with, the insurance company in percentage of the policy value, after paying deductible or co-payment. It is the split of insurance coverage between you and insurance company; usually the split would be 80/20 % where you are liable to pay 20% and the remaining amount by the insurance company. For example, for health policy you have claimed for $200, according to policy clause you have to pay deductible, let say $100, now after paying deductible the remaining amount is $100, now you have a co-insurance which is split into 80/20%. So you will pay $20 out of $100 from your pocket while the $80 will be paid by co-insurance(meaning the insurance company).
13) What do you mean by term “Annuity”?
An annuity is the term used for the regular amount paid by the insurance company to the insured, after a certain period of time. The payment can be monthly or quarterly, this is often done to supplement income after retirement.
14) What is the Surrender Value?
Surrender Value is the amount when you stop paying the premium and withdraw the entire amount. The policy ceases as soon as you withdraw the money, and the insured will lose out all the returns on it.
15) What is Paid Value?
The paid value is something, when the insured stops paying the premium but do not withdraw the amount. The sum assured by the insurance company is reduced proportionally depending when insured has stopped paying the premium. You will get the amount at the end of the term.
16) Is it advisable to replace the policy with another policy?
If it is not a long duration that you have bought the policy, then you can replace the policy. But in other case it is not advisable as you will lose all the benefits of the previous policy also the premium will go high as you go older. Also, the two-year period of contestability will also begin again.
17) How to claim the policy?
In order to claim the policy, you have to fill up the claim form and contact your financial advisor from whom you have bought the policy. You have to supplement all the required documents like original payment receipt to your insurance company. If everything is ok, you will be paid within seven days of the policy claimed.
18) What happens if you fail to make required premium payments?
Usually, Insurance Company gives a grace period of 10-15 days to the insured if they fail to pay the premium before the due date. Further, if you fail to pay a premium, then your policy will lapse. You can revive your policy by paying the outstanding premium along with the interest, counted from the date the policy got lapsed. Different Insurance Company has a different norm for reviving the policy.
However, if your policy is in force for alonger period like say more than2-3 years,and if you fail to pay a premium, then insurance company will deduct the premium amount from your accumulated funds, especially in permanent life insurance. This will continue till there is an available fund after which your policy will be terminated.
19) Is it safe to pay the premium through Insurance Agent?
It is safe to pay the premium through your agent as far as you are making the payment through cheques on the name of Insurance Company and receiving all the receipts for the payments.
20) Is it possible to get the full payment on cancelling the new policy in free look period?
‘Free Look Period’ is a time-period where the insured can cancel their newly bought policy in a specific period of time from the date of issuing the policy without any penalties or surrender charges.
Yes, it is possible to get the full payment in free look period; you can cancel your new policy in 15 days by returning the policy to the life Insurance company after you receive all the documents related to the policy.
21) What is the difference between the participating and non-participating policy?
Participating policy is a policy, where the profit or benefits of the insurance company is shared with the insured in theform of a dividend or reversionary bonuses. While, the non-participating policy, does not share their profit with insured.
22) Is it possible to restrict the premium payment for a lesser number of years than the duration of thepolicy?
Certain Insurance company have a provision of Limited Premium Payment, through which you can pay the premium in 3, 5, 7 or 10 years depend upon your income,and you still can have the coverage for the entire tenure of the policy.
23) Can beneficiary claim the policy if the insured person is missing or disappeared for several years?
It is possible to claim, if the beneficiary has court declaration that says that the insured person is missing or legally dead (disappeared for more than 7 years).
24) Can an individual take two policies and claim for both of them?
Yes,an individual can take two policies and claim for both.
25) What do you mean by ‘Additional Insured’?
‘Additional Insured’ is the status associated mainly with property insurance and liability insurance. The additional insured will be protected under the main policy holder. For example a vehicle insurance policy which covers all the members of family and not only the owner.
General Insurance
26) What is General Insurance policy? What does it cover?
General Insurance is basically an insurance policy that protects you from losses and damages other than covered by life insurance. For example it covers
a) Personal property such as car or house
b) Accident and health Insurance
c) Liability Insurance – legal Liabilities
d) Property against natural calamities like flood, fire, earthquake etc.
e) Burglary and theft
f) Coverage on transport vehicles carrying goods like Cargo Ship
g) Coverage against machinery breakdown
h) Travel
27) What does ‘Indemnity’ term means?
‘Indemnity’ term in theinsurance is used to cover the loss or damage claimed by another person. For example, the owner of the gym has indemnity insurance to compensate it customers in case of injury or accident and to avoid the financial loss due to a lawsuit.
28) What do you mean by term ‘Double Indemnity’?
‘Double Indemnity’ is a provision provided by certain insurance companies, where according to their policy they are liable to pay double the face amount in case of death by accidental means or murder. This type of policy does not cover suicide, and death caused by gross negligence of the insured person. For example, a person who dies due to natural causes including heart disease or cancer, Murder or conspiracy by beneficiary, or death due to an injury from sheer negligence.
29) What is subrogation?
‘Subrogation’ is referred as the process of seeking reimbursement from the responsible party for a claim that they had already paid. For example, you have an accident where your car gets damaged,and you have car insurance, the insurance company will pay you the money. But the insurance company comes to know that the accident occur due to other party fault, now they will claim themoney from the other party this is known as ‘subrogation’.
30) What do you mean by term ‘cash value’?
‘Cash Value’ is the cash amount offered to the policy holder while cancelling the policy, where a portion of thepremium paid goes into saving plan. It is also referred as surrender value. This term is normally used for life Insurance contract.
31) What happens to the cash value after the policy is fully paid up?
After the policy is fully paid up, the company plans to use the cash value to pay your premium until you die. If you take the cash value out, the insurer will require you to pay the premium or reduce the amount of the death benefit so the remaining cash value will support.
Life-Insurance
32) What is thedifferent type of Life Insurance?
There are two type of life insurance
a) Term Life Insurance :
Term life Insurance is a type of life Insurance, which provides coverage for fixed rate of premium for a limited period of time. Term Insurance can cover you for the term of one or two years.
b) Permanent Life Insurance:
Permanent Life Insurance coversan individual for the whole life; people take permanent life insurance about 25-30 years normally. The premiums are slightly higher than Term Life Insurance.
33) What is Elimination period in insurance?
In the disability income insurance or loss of income insurance, the elimination period is the amount of time you have to wait before benefits are paid. In other words,it is a time-periodbetween the beginning of theinjury and the benefits you are paid off. Longer the Elimination period lower the premium and vice versa.
34) What is an ‘Endowment Policy’?
An endowment policy is a combination of saving along with risk cover. This type of policy is specially designed to accumulate wealth and at the same time cover your life. In this type of policy the insured will pay a regular premium for specific time period. And in case of death the money will be paid to beneficiary but, if you outlive the policy tenure, you will receive the sum assured along with accumulated bonus.
35) What does it mean when company says “no physical exam”?
Such insurance company that says,“No physical exam” gives freedom to the policyholder to take policy and exempt the physical test that is mandatory by certain life insurance company. Normally, such insurance company is more expensive and the insured has to pay a higher premium on their policy.
36) What is ‘group life’ insurance?
‘Group life insurance’ is a single policy that covers an entire group. Such policy is taken by an employer for thebigger organization to cover their employee, as anindividual policy holder, it may cost more than a group policy.
37) Does beneficiary have to pay tax on the proceeding of life insurance policy?
Generally, the benefits on the life insurance policy are tax free and the beneficiary is not liable to pay any tax after the death of the policy holder. But if you are changing your beneficiary for monetary gain or other purposes then the beneficiary has to pay tax on it.
38) Is it possible to convert a part of term life insurance into permanent life insurance?
Yes, it is possible to convert as far as you are having a convertible life insurance policy. But there is a deadline that has to be taken care of, for converting term life insurance into permanent life insurance. Also, your premium will rise soon you convert your policy.
Auto-Insurance
39) What is third party Insurance?
An insurance policy that covers the damage caused by another person or party is known as third party Insurance. In this type of insurance, the insured is the first party, insurance company is the second party while the damage done by another is referred as thethird party. This type of Insurance policy is purchased for vehicles, so that in case of theaccident they can claim it.
40) What is Personal Accident cover? Does it cover anywhere in the world?
Personal Accident Insurance is for your personal vehicle and covers any fatal accidents to you or your family excluding driver. Most of the insurance companies gives coverage anywhere in the world.
41) In what all Instances you cannot claim your Personal Accident Insurance?
1) If your injuries are a result of sickness or disease
2) If your injuries are self-inflicted or attempt to suicide
3) Stress fractures, sprains and strains
4) Injury occurred while committing crime
5) Deliberately cause an car accident
42) What is ‘gap insurance’?
‘GAP insurance’ is also known as Guaranteed Auto Protection. It covers the difference between the actual cash value of the vehicle and the balance still owed on financing like loan. GAP insurance amount is generally paid up front.
43) What is the difference between the ‘single limit liability’ coverage and ‘split liability coverage’?
‘Single limit liability coverage’ covers asingle person for bodily injury and property damage, for instance, in case of accident only single person will be covered no matter how many persons were injured. While, in ‘split liability coverage’each person is covered separately.
44) What is ‘collision coverage’ and ‘comprehensive coverage’ in Auto insurance?
Collision coverage covers when you have a collision with any other object or vehicle while comprehensive coverage covers your vehicle other than collision, when your car is not in use.
45) What is a ‘PLPD’ insurance stand for?
PLPD stands for ‘personal liability and property damage’. Personal liability covers when an individual cause injury to others in an accident while property damage is done when any property get damaged. In both, the injured party or third party will claim for insurance money from the insurance company of the offender.
Home Insurance
46) Does it cover silver or golden ornaments if I have ‘Home insurance’?
You can cover your valuable items like silver or golden ornaments in home insurance, but your premium and policy amount will rise accordingly.
47) What is the difference between the ‘All perils’ and ‘Specified perils’ coverage in home insurance coverage?
In home insurance coverage, ‘All perils’ protects you from thewidest range of risks besides common risks while ‘Specified perils’ will give coverage only for the common risks, that is listed in your policy.
48) What is ‘schedule of loss’ in home insurance?
Schedule of loss is a document submitted to theinsurance company to claim the policy; it gives the information of damaged or lost items like model number, when it was purchased, cost of the item etc.
49) What in case if my house completely damagein, fire or flood,and if I stay in a rented house, will insurance company bear all my additional living expenses?
If your policy has Additional Living Expenses coverage, then sure the insurance company will pay you additional expense that you require, to maintain your normal standard of living.
50) To claim your personal property in a ‘Home insurance’ policy, how important is to keepinventory list?
Incase of fire or natural calamities, if your house is completely damaged and if you want to claim your personal property to insurance company, inventory list is very important. The insurance company will only pay you for those items where you are able to show the evidence that the damaged items belong to you. So, it is advisable to keep a list of inventory in a safe place.
5 Life Insurance Questions You Should Ask
If you’re in the market for life insurance, you might have been tempted by those ads claiming, “For just a few dollars a day, you can protect your family with $1 million in life insurance!” It sounds like a great deal, doesn’t it? These ads typically refer to term life insurance. As its name implies, term life insurance provides protection for a limited amount of time or term, such as 10, 20, or 30 years.
The concept is fairly simple: If you die while your policy is active, your family will receive a death benefit. But the many types of term insurance and options can be confusing. Is term life insurance likely to pay off for you? Start by asking yourself the following five questions.
key takeaways
- Nobody really wants to talk about life insurance; it sounds expensive and brings to mind our own mortality.
- Nevertheless, having the proper life insurance in place can bring peace of mind, knowing that your loved ones and beneficiaries will be taken care of financially when you die.
- Depending on your lifestyle, family structure, and financial position, different types of life insurance coverages exist that can be customized to meet your particular needs.
1. Why Do I Want Life Insurance?
Before you buy any kind of life insurance, think about why you’re buying it. Are you protecting your family in case of early death? Have you taken on additional debt that requires you to provide coverage? Are you looking to leave an inheritance or a gift to a charity?
If you want insurance to potentially cover financial obligations you’ll have for a very long time—possibly for the rest of your life—you may want to consider permanent life insurance. If you’re in a cash crunch and have immediate obligations to your family, business partners or lenders, term insurance can provide you with a short-term solution.
2. What Type of Coverage Is Available?
Most people will have access to at least one of the two types of term insurance policies: group or individual.
Group Life Insurance
Most companies offer their employees some form of term life insurance as an employee benefit. This is called group term insurance because you’re getting protection as part of a larger group. Usually, it’s deducted right from your paycheck, and the only requirement for coverage is to complete a brief questionnaire with details of your health history. Here are some of the advantages of group term insurance:
- It’s convenient. You can usually sign up for a policy when you take a new job and enroll in your company’s benefits program. You may also have an opportunity to sign up during the annual enrollment period at your company when you can sign up for other benefits, such as medical or dental insurance or an employer-sponsored retirement plan.
- No medical exam required. Most group plans don’t require a physical exam. A statement of good health, along with a medical history, is usually all that’s required to secure coverage.
- Automatic payments. Through payroll deduction, you’ll hardly feel the financial hit of paying premiums every month.
Individual Life Insurance
As its name implies, an individual policy is one in which you apply for coverage on your own. You, or a family member, will own the actual policy. To obtain an individual policy, you’ll probably have to undergo a medical exam of some sort, provide a detailed medical history, and give the insurance company permission to look into your medical records and perform a background check on any driving offenses or criminal activities. This might sound a little invasive, but there are some great benefits to owning an individual life insurance policy.
- It’s portable. If you take a new job at a different company, you don’t have to worry about losing your life insurance protection.
- Level premiums. Generally, individual policies can be structured to have level premiums for the duration of the policy.
- Flexibility. If you ever want to upgrade or convert your term policy to a permanent policy, you might have more options available with an individual policy than you would with a group plan.
3. What If I Don’t Die?
Ironically, some people who buy term life insurance get upset when they find out that if they don’t die, they don’t get anything back. If this is a concern for you, it’s important to get an understanding of what will happen to your policy as you near the end of the term.
As you near the end of your policy term, you may have the option of keeping your policy. If you do, and you have been paying level premiums, you can expect a hefty jump in your premium. So, if you are still healthy at that point in your life and you want to keep the coverage, it may be best to apply for a new policy.
Perhaps you only wanted your policy to cover you as long as you had a mortgage, or until your children’s college education was paid for. If that’s the case and you have no other obligations to protect, you might want to let the coverage expire.
4. How Can I Upgrade My Current Policy?
Most term policies come with a “conversion privilege.” This allows you to essentially trade in your old term policy for a new permanent policy and continue paying premiums, which may be higher. This is a great feature that provides future flexibility, but because some policies have limitations, you should familiarize yourself with the conversion rules of any policy you’re considering.
The conversion privilege might have a time limitation on it.2 For example, you may have to convert it before you hit a certain age. Other policies allow conversion during the entire term of the policy. The most generous term policies allow you to convert to any type of permanent policy available, such as whole life, universal life or variable universal life. Some term policies may force you to convert to one type, and some companies may not offer all types, which can limit your options.
5. Where Do I Buy a Policy?
A number of online companies offer term insurance policies. These distributors typically focus on finding the policy with the lowest cost based on the personal information you provide.
For a more personalized experience, you might consider finding a professional. An insurance agent will help you understand the different types of insurance and should be able to answer any questions you might have. You can find one by visiting any of the major company websites or combing through your local phone book, but probably the best way to find a representative is to ask for a referral from a friend or business associate.
Finally, for group coverage, you can check with your employer. If you’re self-employed, you may have access to a group plan through a professional association, or you may even be able to put a group plan in place for yourself and your employees.
The Bottom Line
After going through these five questions, you will be able to decide for yourself if that million-dollar coverage offered in the ad is really what you need to provide for you and your family. If it’s not, don’t be afraid to pass it by—there are hundreds of policies waiting to provide you with the peace of mind you’re looking for.
14 questions you should ask about life insurance
1. Do I need life insurance at all?
If any of the following statements describe your situation, you should consider a life insurance policy:
- Other people depend on my income
Youdon’t have to be your family’s primary wage earner – if people would feel economic hardship without you, they depend on your income. If you’re single but planning to get married and have children in the next few years, your answer to this question should also be “Yes.”
- I have debts that others would be responsible for if I die
Do you have student loans that your parents will have to repay if you can’t? A car, mortgage, business, or personal loan with co-signers? If so, a life insurance policy can keep you from burdening a loved one with thousands of dollars in debt payments.
- I don’t have enough savings or assets to cover all my obligations
Most individuals don’t have enough saved to fully pay off their debts and support family members in their absence. So, if you’re like most adults withfinancial obligations, you should consider buying life insurance.
2. How much life insurance do I need?
There are several ways to get a life insurance coverage estimate. Our life insurance calculator uses the “Human Life Value” method, which looks at what you’re earning now plus what you expect to earn in the future. Between the ages of 18 and 40, it multiplies current income by about 30; as you get older and have fewer working years left, that multiple decreases.1 Other rules of thumb to estimate how much coverage you need include:
Consider multiplying your income by 10
Take your annual salary and add a “0” at the end. So, $50,000 salary equals $500,000 of coverage, $75,000 equals $750,000, and so on.
Consider multiplying your income by 10 – and add college for each child
How much should you add? Account for somewhere between $100,000 and $150,000 per child. If you split the difference – and have two kids – that’s an extra $250,000.
Consider using the DIME formula
DIME stands for Debt, Income, Mortgage, and Education. This method estimates your life insurance need as the sum of your financial obligations and other expenses:
· Debt: Total all your debts other than your mortgage.
· Income: Take your salary and multiply by the number of years you think your family needs protection – or at least as long as you have children at home.
· Mortgage: Look at your last statement and get the payoff amount.
· Education: The anticipated cost for sending each of your children to college.
3. How much will the policy cost?
There’s an easy way to find out. Get a complimentary quote for a life insurance policy in about a minute with our calculator. It shows the cost for a 20-year term policy, with a life insurance premium that reflects your age and gender. The life insurance policy you end up buying may cost more (e.g., if you decide to buy a permanent life insurance policy) or less (e.g., if you choose a lower coverage amount). But term life insurance quotes can provide a helpful start by giving you an educated guess of how much life insurance you need and what that could cost.
4. What are the three main types of life insurance?
The three main types of policies are term life, whole life, and universal life. Term life policies provide affordable temporary protection; whole life and universal life policies are also called “permanent” insurance because they are designed to provide life-long protection with wealth-building benefits:
Term life insurance
This form of protection lasts for a limited time, typically 10, 15, 20, or 30 years. Most term policies feature “level” premiums, but with some, premium payments may periodically increase, for example, at 5-year intervals. It can be more affordable than universal or whole life. Still, when your term ends, you’re no longer protected – you either have to apply for a new life insurance policy at a higher cost (because you’re older) or go without coverage.
Whole life insurance
This is permanent life insurance that can provide guaranteed protection for the rest of your life while building cash value that can be used for things like policy loans – or even cash supplement retirement income.1,2,3 Whole life policies don’t expire as long as the premium is paid. A mutual life insurance company (such as Guardian) may also provide dividends.4
Universal life insurance
Like whole life coverage, this type of policy provides permanent protection and can build cash value.5 However, universal life policies can give the added flexibility of adjusting your monthly payments within a specific range to help deal with variations in your income.5 Universal life flexibility must be monitored to help ensure that the policy does not lapse.6
5. What other types of life insurance can I choose?
Here are some other kinds of life insurance that can help people in different situations get coverage:
Final expense insurance
This is only meant to cover end-of-life expenses such as funeral and burial costs. The coverage is permanent, in the sense that if you keep paying your premium, the policy will remain in effect, but there may be minimal cash value with these policies. It is often bought by older people who want to protect their adult children from covering these expenses. While the cost tends to be modest, the death benefit is also minimal.
Simplified and guaranteed issue insurance
Life insurance policies are typically underwritten: the insurance company requires a medical exam to assess your risk to insure. Simplified issue and guaranteed issue policies don’t require an exam; they are typically for older applicants or those with health problems who may not qualify for an underwritten policy. A simplified issue policy will ask you to fill out a health questionnaire in place of an exam. A guaranteed issue policy won’t ask for an exam or any medical information. These policies typically offer low levels of coverage at relatively high rates because the insurance company must assume a high level of risk.
Group life insurance7
This is a life insurance plan you buy as part of a group – typically through work or via a member organization. These policies are often simplified issue, at least for lower coverage amounts. Group life may not provide all the coverage you want, but that’s ok. You can own multiple policies, and group insurance can be an easy, affordable way to start or supplement your life insurance protection.
6. Does the policy provide cash value (also called “living benefits”)?
If you are getting term life insurance, you should know that there is no cash value. That’s why these policies are sometimes called “pure life insurance”: they are designed solely to give your beneficiaries a payout if you die during the term. If you want the advantages of cash value that grows in a tax-advantaged way – with funds that can be accessed while you are still alive – you should look into permanent whole or universal insurance.
7. What’s covered if I become disabled?
Many policies have a “waiver of premium” rider (or optional feature): If you become disabled and can’t work, this rider will help pay your premium, allowing you to keep your insurance policy in effect.8 It can be a valuable option to consider, especially since the additional cost is relatively affordable. However, life insurance doesn’t pay a benefit if you are disabled. If you want a policy that provides replacement income benefits when you are too ill or injured to work, then you need short- or long-term disability insurance (which is also called disability income insurance).9,10
8. How are death benefits paid?
The death benefit is paid out as an income tax-free lump sum unless the beneficiary chooses to take the benefit as an annuity or in installment payments. There are a few policies where the premium is paid with pre-tax dollars (for example, with some employee benefit plans); in that case, the death benefit may not be income tax-free. A death benefit can also be split: the policyholder can designate more than one beneficiary, for example, by dividing the benefit equally (or not) between their children.
9. Will my premiums change over time?
Two kinds of policies feature premiums that don’t change over time. One is “level” term life insurance (the most common form of term life), where the premium stays the same from the day coverage starts until the end of the term. The other type is whole life insurance, where the premium remains the same for life. However, it’s important to note that after some years, the cash value grows and can be used to pay part or all of the monthly premium – so the policyholder no longer has to pay the entire amount out of pocket.
10. Do life insurance policies require a physical exam?
Many do, but not all. It may be in your best interest to get a medically underwritten policy – with a physical exam – if you qualify for it. Why? Life insurance policies are underwritten: It’s the process in which insurance companies assess a person’s risk to insure. That assessment is done statistically, using tables of actuarial data that show how long someone of your age, gender, and health status (among other factors) would be expected to live. People in good health who don’t smoke almost always get the lowest rates. And “simplified issue” policies (see #5 above) don’t require a medical exam; “guaranteed issue” policies don’t even ask any health questions. Either way, the insurer is taking a more significant risk – and has to charge higher rates – because without a medical evaluation, they have no real way of knowing your health status or verifying your medical history. Some people don’t even realize they have a health problem, such as hypertension, until discovered in a life insurance exam.
11. What happens if I’m late on a payment or can’t pay?
That depends on the terms of your policy contract (and, in some cases, the regulations that apply in your state). With a term policy, there is often a grace period: a time period after the payment due date (for example, 30 days) during which you can pay premiums without losing coverage. After that grace period, coverage will lapse. However, some companies may let you reinstate your policy if you bring your premiums up to date. A permanent policy typically offers more options, depending on how large the cash value has grown: Many whole life policyholders will tap into the cash value (for example, after they retire) to keep premiums up to date. A universal life policy, which features flexible life insurance premiums, offers even greater flexibility.
12. How do I know if the insurance company reputable?
That’s an excellent question. All large insurance companies may seem alike, but they aren’t. Some are more financially sound. Others are easier to work with. If you want to find and work with some of the best life insurance companies, there are objective metrics that can help:
- High Financial Strength Ratings11
Independent organizations rate the financial strength of insurance companies to ensure their ability to provide coverage and meet obligations.
- High customer satisfaction score
Customersurveys and reviews can tell you how satisfied others are with an insurance company’s services. Many in the industry consider J.D. Power & Associates to be a reliable source of insurance satisfaction data because they conduct an annual customer satisfaction survey of more than 5,000 U.S. life insurance policyholders. In the 2019 J.D. Power survey, Guardian was ranked “Better than most” .12
- Low customer complaints
The National Association of Insurance Commissioners (NAIC) collects data about complaints with state regulators. According to a recent analysis by NerdWallet, Guardian Life has had significantly fewer complaints to state regulators than expected for a company of its size over the last three years, as of [DATE].13
13. Who should be the beneficiary? Can I change beneficiaries?
In theory, anyone can be named as a beneficiary: a family member, business partner, charitable organization, even a friend. However, if you are married and live in a state with common property laws, you may need your spouse’s consent to name anyone other than him or her as your primary beneficiary. There are also issues around naming children as life insurance beneficiaries because minors cannot legally manage their own money. If you are unmarried with minor children and want to name them (or any other person below the age of legal consent), the life insurance company may require that you name a legal guardian as the beneficiary or designate one for them under the Uniform Transfers of Minors Act.
As the policy owner, your life insurance company will ask you to designate each beneficiary as either revocable or irrevocable. Revocable means that you can change later on and decide to remove that beneficiary for another without notifying them. If a beneficiary is irrevocable, then you can’t change your mind without their consent – the death benefit must go to that person if they are still alive.
14. What questions should I ask an insurance professional?
These questions are a good start – but it’s even more important to find an insurance professional who asks you questions. What’s your current situation? What are your plans for your family? Your obligations? Your financial goals? There are a lot of different kinds of life insurance because people have so many different protection needs. If you’re looking for more than just a complimentary quote, then you should talk with a knowledgeable financial professional who will take the time to learn about your needs, answer your questions, and guide you to the right type of coverage – or coverages – for your needs. If you don’t have someone to discuss insurance with, Guardian can help you find a nearby financial representative who will take the time to learn about your situation and present you with options that fit your specific needs and concerns.
Picking a health insurance plan: Top 10 questions to ask
Health insurance options got you overwhelmed? Don’t be discouraged.
While it can sometimes seem like shopping for health insurance is about as easy as getting across the Twin Cities during rush hour, it’s important to know both your options and how you’ll choose among them.
That’s why we’ve created a list of ten questions to ask when picking health insurance plans. These questions can help you sort through different plan details to find the right choice for you, your family, your health and your budget. Think of it as your personal “health insurance GPS.”
With this information in hand, you’ll be ready to compare health plans with confidence and get closer to finding an option that checks all your boxes. Whether you’re picking a plan for the first time – or thinking about changing health insurance plans – these are good questions to ask yourself.
1. Will this health insurance plan help me save money if I’m healthy?
Imagine that, under the plan you’re considering, you and your family have a good health year: You go to the doctor a few times for checkups, your partner takes a couple prescriptions, the kids visit urgent care a couple times – and that’s about it.
If you don’t expect to use your plan that often, pay close attention to recurring costs to see if there’s an opportunity to save money. But remember: It’s impossible to fully plan for the unexpected, so be sure to also factor in the cost of getting care if (and when) you need it.
Related questions to ask:
- How much will I pay each month (monthly premium)?
- How much will I pay to see my doctor, visit urgent care, go to the emergency room or fill prescriptions (copays)?
- If I get the same care as last year, what would it cost?
- Does the bottom line fit my budget?
2. Will this health insurance plan be affordable if I’m sick?
Now imagine the opposite scenario, where you use your plan a lot: You come down with an infection and need to stay in the hospital for a few days, your partner’s prescription list grows, the kids break a few bones at practice on top of getting strep in the fall – and more.
It’s always hard to see situations like this coming, so it’s wise to be sure that your plan makes care affordable if you need to use it. In the end, you’ll want to aim for a good balance between expenses you can plan for (like monthly premiums, deductibles and the out-of-pocket maximum) and ones you can’t (like copays or coinsurance you pay only when you need care).
Related questions to ask:
- How much will I have to pay before the plan starts to help (deductible)?
- What’s my share of the cost of other care, like getting an X-ray or staying in the hospital (coinsurance)?
- What’s the most I’d have to pay for care next year (out-of-pocket maximum)?
- Could I afford the out-of-pocket maximum if I had to pay it?
3. Are my doctors covered by this plan?
Health insurance companies work with different doctors and clinics to help you get the best deals on your care.
Getting care from a person or place your plan covers saves you money. On the other hand, getting care somewhere else may mean your health plan pays less, leaving you with bigger bills. That’s why you’ll want to check that the doctors and clinics you expect to visit will be covered by the health insurance plan you’re considering.
Related questions to ask:
- How big is the plan’s coverage network? What kind of network is it?
- Is my current doctor covered by this plan (are they in-network)?
- How much will I pay if I see a doctor who isn’t covered by this plan (out-of-network)?
- Do I plan to get out-of-network care? Am I willing to switch doctors or locations if the ones I want aren’t in-network?
4. What is this health insurance plan’s prescription drug coverage like?
According to Georgetown University, two-thirds of all adults in the United States use prescription drugs, so there’s a fair chance you will, too (if you’re not already).
It’s not unusual for people to get so focused on the medical details of their health insurance plan they forget to look at the prescription drug coverage. These costs can add up, so be sure to review the plan’s formulary (drug list).
The formulary will tell you which drugs are covered and how much they’ll cost. That way, you can better plan your budget for any current drugs you’re taking (and any future ones you might need, like antibiotics).
Related questions to ask:
- How much will I pay for my regular prescriptions? Are they affordable?
- Do I need my health plan’s approval for any prescriptions before I fill then?
- Which pharmacies are in-network? Are their hours and locations convenient?
- What are my options if my prescriptions aren’t covered?
5. Will this health insurance plan make it easy to get care if I’m sick?
Waking up with a sore throat or sinus infection is never fun. When it happens, you want to feel better and find care – fast.
Everyone gets sick from time to time, so before it happens, consider how easy your plan makes it to find covered care. With this information in mind, you’ll know where to go and what to do as soon as you feel the first inklings of illness coming on.
Related questions to ask:
- Do I have to pick one primary clinic or doctor I always go to first?
- Are there covered urgent care clinics or emergency rooms nearby?
- Does the plan cover virtual care options, like Virtuwell?
6. Will this health insurance plan make it easy to get care if I’m well?
Remember: health care is health care. To make the most of your plan, you’ll want to investigate what kind of benefits it has not only when you’re sick but also when you’re already well.
With a better sense of how your health insurance plan will help you keep feeling your best, you can save a few trips to the doctor’s office (and probably a few bucks, too).
Related questions to ask:
- Are there free services to keep me healthy? Which ones are important to me and my family?
- Will I pay anything for regular checkups, annual OB-GYN visits or routine tests?
- Will I pay anything for regular immunizations, like a flu shot?
7. If I’m interested in alternative therapies, how does this plan’s coverage work?
See a chiropractor? Planning to have your baby at home? Curious about acupuncture?
Different health plans treat alternative therapies (alternative medicine) different ways. In some cases, you’ll be covered the same as any other care. In other cases, you’ll only be covered a little or not at all. If this kind of care matters to you, take a close look at your plan’s benefits.
Related questions to ask:
- How much do alternative therapies or services cost?
- Is there any kind of cost-sharing for alternative medicine?
- Do I plan on using alternative therapies often? Am I comfortable using other treatments instead?
8. Are there extra perks and benefits that come with this plan?
Health insurance plans aren’t all about numbers, medical coverage and drug coverage. Oftentimes, there are additional perks and benefits that can really help you improve your health or save money.
For example, will you have access to health coaches? Will you get a discount on your gym membership, or at the grocery store? Are there visits to a virtual clinic, like Virtuwell , at no cost to you? Dig into the options – you may find welcome some surprises.
Related questions to ask:
- Does this plan offer any extra benefits that other plans don’t?
- Will I actually use these additional perks? Which ones do I care about?
9. Will this health insurance plan still be right for me if my needs change?
Sometimes it’s expected and sometimes it’s not – but life changes, and so does what you need from your health plan.
If you know how your plan can grow with you, it’s easier to make a decision you’re comfortable with from the start. That way, you’ll have a good understanding of how different changes will affect your and your family’s coverage.
Related questions to ask:
- What happens if I move or get a new job?
- If I have a baby or decide to adopt, how will the child be covered?
- What if I or someone in my family develops a serious health condition?
- Am I expecting any big life changes in the next year or so?
10. Is it easy to get support and advice with this plan?
Health care can be complicated, so it’s not unusual to have questions about using your insurance or getting care.
Whether it’s when you’re signing up, searching for clinics near your vacation rental or wondering if you need to get care at 3 a.m., it’s vital to find a plan that makes member support easy and straightforward.
Related questions to ask:
- Can I call a 24/7 nurse line whenever I have a health question?
- Who will I call if I have a question about my insurance? When are they available?
- Are there people available to help me and my family pick the right plan?
- Will I know how to get in touch with the right people when I need to?
10 questions to help assess your changing insurance needs
1. Have you gotten married or divorced?
If you have gotten married, you may qualify for a discount on your auto insurance. Couples may bring two cars into the relationship and two different auto insurance companies, so take the opportunity to review your existing coverage and see which company offers the best combination of price and service.
If you are merging two households, you may need to update your homeowners insurance. And you may want to consider increasing your insurance for any new valuables received, such as wedding gifts, and for jewelry, such as wedding and engagement rings.
After getting married, it is important to review your life insurance needs. If one spouse is not working, he or she might be dependent on the working spouse’s income; if so, reviewing life and disability insurance coverage is prudent. The spouse who is not working outside the home should also consider having a separate life insurance policy because, in the event of premature death, the services he or she provides for the household would need to be replaced, and that could prove costly to the surviving spouse. Moreover, even if both spouses are working, couples often make financial commitments based on both incomes so the loss of one spouse’s income due to death or disability could be financially devastating without adequate insurance.
In the other hand, if you got divorced over the past year, you will probably no longer be sharing a car with your former spouse and have likely moved to a different residence. If this is the case, you should inform your insurer as you will need to set up separate auto and homeowners policies.
2. Have you had a baby?
If you have recently added a child to your family, whether by birth or adoption, it is important to review your life insurance and disability income protection.
If you are planning for your life insurance to match your survivors’ expenses after your death, the new child will no doubt add to those expenses, requiring more life insurance to keep your family secure. If you plan to save for your child’s college education, life insurance can assure completion of that plan. And if you keep your current life insurance policy, don’t forget to update the beneficiary designations to include the new child.
3. Did your teenager get a drivers license?
It is generally cheaper to add your teenagers to your auto insurance policy than for them to purchase their own. If they are going to be driving their own car, consider insuring it with your company so you can get a multi-car discount. And choose the car carefully—the type of car a young person drives can dramatically affect the price of insurance. You and your teens should choose a car that is easy to drive and would offer protection in the event of a crash.
Also, encourage your kids to get good grades and to take a driver training course. Most companies will give discounts for getting at least a “B” average in school and for taking recognized driving courses.
If your teenagers move at least 100 miles from home—for example, to go to college—you can get a discount for the time they are not around to drive the car (assuming they leave the car at home).
4. Have you switched jobs or experienced a significant change in your income?
If you had life and disability insurance through your former employer, and your new employer does not provide equivalent protection, you can replace the “lost” coverage with individual policies.
In the case of an income increase, you may have taken on additional financial commitments that your survivors will depend on. Make sure to review your life and disability insurance to ensure it is adequate to maintain those commitments.
If your income decreased, you may want to cut your life insurance premiums. Term life insurance is a good option, as the premium rates are very reasonable. And if you already have two or more policies you might be able to replace both with a single policy at a lower rate because you may reach a “milestone” amount of insurance. (For example, at many life insurance companies, $500,000 of insurance costs less than $450,000 because of the milestone discount.) But don’t drop existing life insurance until after you have a new policy in place.
5. Have you done extensive renovations on your home?
If you have made major improvements to your home, such as adding a new room, enclosing a porch or expanding a kitchen or bathroom, you risk being underinsured if you don’t report the changes to your insurance company. An increase in the value of the structure of the home may require an increase to your homeowners insurance coverage limits.
And don’t overlook new structures outside of your home. If you built a gazebo, a new shed for your tools or installed a pool or hot tub, you should speak to your insurance professional.
If, as part of a renovation, you purchase furniture, exercise equipment or electronics, you may need to increase the amount of insurance you have on your personal possessions. Keep receipts and add any new items to your home inventory.
6. Have you decided to buy a second home?
If you are searching for a vacation home or a second home you might retire to, make sure you research the availability and cost of homeowners insurance before you commit to the purchase.
The very factors that make a vacation home seem ideal, whether it is a waterfront property or a mountain retreat, can often introduce risks that make it costly and difficult to insure, such as proximity to the coast and the likelihood that it will be vacant for long periods of time.
In the event you have already bought a vacation home, don’t skimp on the insurance. The risk of theft or disaster is just as significant, if not more so, in a second home as in your primary residence.
If your new property is close to the water, be sure to ask about flood insurance. Damage to your home or belongings resulting from flood is not covered under standard homeowners insurance policies. Flood insurance is available from the National Flood Insurance Program (NFIP), as well as some private insurers, and is generally sold though private agents and brokers. You can ask your insurance professional whether your home is at risk for flood, or enter your address on the NFIP website to find out whether your home is in a flood zone. If you have a very valuable home, some homeowners insurers offer excess flood coverage over and above that provided by the NFIP policies.
7. Have you acquired any new valuables such as jewelry, electronic equipment, fine art, antiques?
A standard homeowners policy offers only limited coverage for highly valuable items. If you have made purchases or received gifts that exceed these limits, you should consider supplementing your policy with a floater or endorsement, a separate policy that provides additional insurance for your valuables and covers them for perils not included in your policy, such as accidental loss. Before purchasing a floater, the items covered must be professionally appraised. Keep receipts and add the new items to your home inventory.
8. Have you signed a lease on a house or apartment?
If you are renting a home, your landlord is responsible for insuring the structure of the building, but not for insuring your possessions—that is up to you. If you want to be covered against losses from theft and catastrophes such as fire, lightning and windstorm damage, renters insurance is a good investment. Like homeowners insurance, renters insurance includes liability, which covers your responsibility to other people injured at your home, or elsewhere, by you and pays legal defense costs if you are taken to court.
Regardless of whether you are a renter or an owner, you will have the following options when it comes to insuring your possessions:
- Actual cash value pays to replace your home or possessions minus a deduction for depreciation.
- Replacement cost pays the cost of rebuilding or repairing your home or replacing your possessions without a deduction for depreciation.
Think carefully about what your financial position would be in the aftermath of a disaster, and make sure you have the type of policy that is right for you.
9. Have you joined a carpool?
If you are a frequent carpool driver, whether it is to work, or ferrying kids to school and other activities, your liability insurance should reflect the increased risk of additional passengers in the automobile. Check with your insurance professional to make sure your coverage is adequate.
10. Have you retired?
If you commuted regularly to your job, in retirement your mileage has likely plummeted. If so, you should report it to your auto insurer as it could significantly lower the cost of your auto insurance premiums. Furthermore, drivers over the age of 50-55 may get a discount, depending on the insurance company.
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