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4 Questions to ask an agent if you're in the market for
Rhode Island Life Insurance

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Life insurance used to be a simple product, but today's policies are so complicated that even many agents have trouble understanding exactly what they're selling. With that in mind, here are strategies to avoid four common life insurance buying traps.

1. DOES THE POLICY GUARANTEE A DEATH BENEFIT ?

The death benefit is the amount of money that the insurer promises to pay to your beneficiary. With "term" policies, the death benefit is guaranteed as long as the policy is in force. But with some "cash value" policies (also called "whole life" " variable life" or "universal life"), what appears as a guaranteed payout in, say, 35 years is really a projection that's based on the company's own interest rate assumptions. The old garbage in garbage out trick can produce some pretty misleading numbers.
When an agent shows you an illustration of a policy that projects a death benefit in future years, ask what amounts, if any, are guaranteed. When you turn 80, for example, the illustration may indicate that your survivors will get a precise sum, such as $1,302,607. But then you learn that none of that is guaranteed, or that only $500,000 is guaranteed.
Buying Lesson: Don't just buy the policy that offers the largest projected death benefit when you reach your golden years. Determine whether the amounts are mere guesses or contractual guarantees.

2. DOES THE POLICY GUARANTEE CASH VALUES ?

If you buy a term policy - which is temporary coverage that expires after the term ends- then this question is irrelevant. But if you're considering cash-value life insurance, which lets you accumulate cash value in the policy as an investment beyond the pure purchase of life insurance, then watch what's guaranteed.
Say you're 50 years old and looking for life insurance. Some life insurance policies may protect a rich cash value that's all yours if you turn 85. But ask the agent how much, if any, of that amount is guaranteed.
One company may not guarantee a dime, while another can commit to paying $200,000 or more on your 85th birthday. The policies may seem similar on the surface until you learn how much each one guarantees.
Buying Lesson: Determine exactly how much cash value or what rate of return is guaranteed over time. Beware of policy illustrations that "promise" lottery-like winnings based on rosy assumptions

3.WHAT ARE THE MORTALITY CHARGES, SURRENDER FEES AND OTHER EXPENSES ?

You may wonder how five life insurance policies that all cost $2000 a year can project such drastic variations in cash value over the next 10 years or so. WHAT GIVES ?
Aside from each insurer's interest rate assumptions, the differences are probably due to mortality charges (deductions from your cash value that pay for the insurance), surrender fees (the amount you are forced to pay if you decide to cash in your policy too soon), and the company's internal expenses.
The only way to truly compare policies is to calculate each of these amounts and see how they affect the policy's cost.
Buying Lesson: Ask the agent to spell out all the fees and the charges, including the insurance company's expenses.

4. HOW IS THE AGENT COMPENSATED ?

Here's a touchy subject. Some people just love their neighborhood insurance agent; they implicitly trust him or her to take care of everything.
While the majority of life insurance agents are honest and ethical, you should still know how insurance companies motivate sales reps with high commissions, Caribbean cruises and other juicy incentives.
There's nothing wrong with any of this, of course, but customers are better off realizing just how much is at stake for a salesperson who pitches a certain life insurance policy.
Many companies offer the same cash-value life insurance with different commission. That means an unscrupulous agent may sell you on the highest-commission version of the product rather than trying to save you money.
Buying Lesson: After your agent recommends a specific policy, ask if the insurance company offers the same product with a lower commission