If you are planning to purchase life insurance, you may be concerned about what you need to know and what kind of questions you will face. But buying life insurance is different for everyone as your needs are unique, but a little preparation can ensure that you get a policy that is tailored to your needs.
Here are three things you can do first to prepare.
1. Estimate how much insurance you need
Probably the most important step in preparing to buy life insurance is to get an idea of how much insurance coverage you may need. While a professional can help you with this decision, having a general idea of your needs can save you time.
Start by looking at your existing financial situation and your future financial goals. These are the kinds of questions you might ask yourself:
- How much debt do I currently have? List your mortgage, any auto loans, lines of credit, student loans, and any other money you currently owe.
- What future releases do I expect? This can include the cost of raising a child, paying for post-secondary education, and saving for retirement.
- What are other terminal costs? This may include funeral expenses, potential capital gains, legal fees, estate taxes, and small cash gifts to beneficiaries.
Once you add these together, you’ll have a better idea of the amount of insurance that’s right for you — and you’ll be better prepared to get the most out of meeting with an advisor.
2. Find the right professional advisor for you
The next step is to find a professional advisor you trust.
Life insurance can be an important step in securing your financial future – helping to ensure that financial goals are attainable, even if the unexpected happens. That’s why it’s important to find a professional that fits your family, your situation, and your goals.
What characteristics should you pay attention to with an insurance adviser? The right advisor for you is someone who:
- Communicates well with you and your family. You and your family should feel comfortable asking your advisor questions and answering detailed questions about your finances.
- Show that they want the best for you. Your advisor should take the time to get to know you and build the trust needed for a successful partnership.
- Is a certified life insurance consultant. Your advisor is there to help you understand different types of policies, consider your coverage options, and help you decide what best suits your needs.
How do you find an advisor who meets these qualifications?
Your best option is to interview multiple candidates to find the best match. Ask friends, family, and others you trust for their recommendations, or speak to a trusted organization you’ve worked with in the past. Do not hesitate to contact more than one potential advisor. Credible advisors often offer free insurance reviews with no purchase obligation. This can be another great way to find out if they’re a good fit for you.
3. Prepare answers to interview questions
When you buy life insurance, your policy is tailored to you, based on factors such as your health, your habits and your activities. That means that in addition to financial questions, you also need to answer questions about your health, your work and what you do in your spare time, such as:
- Do you smoke? Many insurers classify people as smokers if they regularly use tobacco or nicotine in any form.
- What kind of activities does your job require? Are you at risk in your work?
- What hobbies or activities do you do in your spare time? Do you participate in potentially riskier activities, such as snowboarding or scuba diving?
In addition to answering these types of questions, your overall health will likely be assessed as well. This information is used to ensure that you receive an insurance quote that is appropriate for your health and to confirm that the information is correct. While these questions may feel overly personal and even intrusive, they are important in ensuring that the policy you get is the right one for you.
By doing these three things, you’ll be better prepared to talk to an advisor about life insurance. Knowing how much coverage you may need, the types of questions you may be asked, and being willing to answer them honestly and completely can make applying for insurance easier.
Another way to prepare is to do some initial research online. RBC Insurance has tools and information to explore all aspects of your insurance needs — from calculators to help you understand how much life insurance is right for you, to information about: the different types of insurance for your needs.
If you have any questions about life insurance, please contact an RBC Life Insurance Advisor who will be happy to assist you.
This article is for general information only and should not be construed as legal, financial or other professional advice. A professional advisor should be consulted about your specific situation. The information presented is believed to be factual and up to date, but we cannot guarantee its accuracy and it should not be considered a complete analysis of the topics discussed. All expressions of opinion reflect the judgment of the authors as of the date of publication and are subject to change. No endorsement of any third party or their advice, opinions, information, products or services is expressly given or implied by Royal Bank of Canada or any of its affiliates.