Once you select a specific life insurance policy, the first step in securing coverage is to complete and submit an application. Most policy applications require you to furnish detailed personal and medical information. The company reviews the information to determine whether you meet their guidelines. They will consider all information on your application and details from medical exams or tests. It is important that all questions are answered fully and accurately. Your application will become part of your policy contract. Any inaccurate or incomplete responses could lead to your policy being terminated or a claim being denied.
When you fill out the application for life insurance, the company will usually ask you to choose a beneficiary. This is the person to whom the benefits will be paid upon your death. A beneficiary is most often a family member, though non-family members, estates, trusts, etc., can also be designated. The beneficiary can may be changed later at the request of the policy holder.
- Shop around. Compare plans from more than one company. Do not feel pressured to make a quick decision. Life insurance is a long-term contract.
- Verify that the agent and company you choose to do business with are licensed in North Carolina.
- Do not pay cash. When you purchase a policy, make your check or money order payable to the insurance company, not the agent. Be sure to get a receipt.
- Make sure you fully understand any policy you are considering and that you are comfortable with the company, agent and product.
- Ask questions. Your life insurance policy represents a considerable investment and may significantly impact your family’s future.
- Determine the difference between guaranteed values and non-guaranteed projections.
- Ask your accountant about any potential tax consequences.
- Can you afford the initial premium? Buy only the amount of life insurance you need and can afford. If the premium increases later, can you still afford it? It may be very costly if you quit during the early years of the policy.
- Do not sign an insurance application until you review it carefully to be sure all the answers are complete and accurate.
- Keep in mind that you have a minimum 10-day “free look” period on new policies and a minimum
- 30 day “free look” period on replacement policies, in case you change your mind. If you cancel during the free look period, the company must return your premium without penalty.
- Periodically review your policy to make sure it continues to meet your insurance needs.
- Provide your beneficiaries with your agent’s name and a photocopy of your policy.
- Tell your beneficiaries where your policies are located.
- Your life insurance policy should be kept in a safe place with your other important documents, such as a safe deposit box or fire proof safe. The name of the company and policy number should be kept in a safe place (at a separate location from your original policy) in case the policy is misplaced or lost.
- Make sure the insurance company always has your current address.