Before you sign a life insurance application: the questions to ask the agent

Seven questions that tell you most of what you need

Before you buy, ask the agent whether they are licensed in Texas and registered if investments come up, which companies they can offer, how they are paid, what they need to know about your household before recommending anything, which parts of the policy are guaranteed and which are not, what happens if you miss a payment or want to cancel, and whether they are suggesting you replace a policy you already own. Then check the license yourself with the Texas Department of Insurance. The answers, and how comfortably the agent gives them, tell you whether you are getting guidance or a sales pitch.

I am a New York Life agent based in Frisco, and I would rather a client ask me hard questions than sign something they do not understand. A policy you buy at 35 may still be in force at 75. The list below is the one I would hand a friend before they sat down with anyone, me included. It is general information; for tax or legal questions, talk to a licensed professional in that field.

Is this person licensed, and for what exactly?

The Texas Department of Insurance tells consumers to make sure any agent or company is licensed by TDI, and notes that selling insurance without a license is illegal. You can call the TDI Help Line at 800-252-3439 to find out whether an agent or company is licensed, how many complaints have been filed and whether TDI has taken disciplinary action.

Licensing gets more specific when investments enter the conversation. TDI's life insurance guide states that agents who sell variable life insurance in Texas must have a federal securities license as well as a state insurance license. For anyone registered to sell securities, FINRA's BrokerCheck is a free tool that shows registration history, current qualifications and disclosures such as customer disputes and disciplinary events. I am a Registered Representative of NYLIFE Securities LLC, and my record is there for anyone who wants to look.

• Ask: Are you licensed to sell life insurance in Texas?
• Ask: Are you registered to discuss investment products, and with which firm?
• Check: TDI license status and complaint history.
• Check: BrokerCheck, if any investment or variable product is on the table.

Which companies can you offer, and how are you paid?

Some agents represent primarily one insurer; others place business with many. Neither model is automatically better, but you should know which one you are dealing with so you understand the range of options in front of you. My own site discloses that I sell insurance through New York Life Insurance Company and may also hold licenses with other insurers that are not affiliated with it, so certain products from other carriers may be available, subject to availability.

Ask directly how the agent is compensated. It is a normal question, and a good agent answers it without discomfort. Compensation does not make advice bad, but knowing it helps you weigh a recommendation, especially when the suggestion is a larger or more complex policy. If you are deciding whether you need an agent at all, my guide on buying online versus working with an agent lays out when each makes sense.

Did they ask about your life before they talked about a product?

The best test of an agent is what happens in the first half hour. Before anyone recommends a type or amount of coverage, they should understand who depends on your income, what you owe and for how long, what you have saved, what coverage you already carry through work or on your own, and what you want the money to accomplish if you die. TDI's guide makes the same point: the right amount depends on your debts and the income your family would need to replace.

If the meeting jumps from hello to an illustration, that is information. A recommendation built without your numbers is a guess, no matter how polished the printout looks.

Ask the agent to describe the problem the policy solves in one sentence, in your terms rather than theirs. Something like: this replaces my income until the kids are through school and pays off the house if I die before then. If neither of you can say it that simply, the recommendation is not finished yet.

Questions about the policy itself

Once a specific policy is on the table, slow down and ask about each moving part. These are the questions I make sure every client can answer about their own policy before they sign.

• What type of policy is this, and why this type for my situation rather than the alternative?
• Which values are guaranteed and which are projections? TDI notes, for example, that dividends are not guaranteed.
• How long is the coverage guaranteed to last, and what could make it end early?
• What happens if I miss a payment? TDI says most policies have a 31-day grace period after the due date.
• If this is term coverage, can I convert it to permanent coverage later without a medical exam, and until what age?
• Which riders are included, what do they cost and do I need them?
• Are there surrender charges if I cancel early?
• How long is the free-look period? TDI states Texas policies have a free-look period of at least 10 to 20 days, during which you can cancel for a full refund.

If the agent suggests replacing a policy you already own

Replacing an existing policy is sometimes the right move and sometimes an expensive mistake. TDI's guide warns that it is illegal for an agent to replace a policy just to earn a new commission, and that replacing a policy restarts the two-year contestable period and may trigger surrender fees. Ask the agent to show you, in writing, what you give up and what you gain, and keep the old policy in force until the new one is approved and delivered.

This is one of several traps I cover in my guide to the life insurance mistakes families discover too late. If you have a replacement proposal on your desk right now, a second set of eyes before you cancel anything is worth the time.

Who will be there after the policy is delivered?

Most people focus on the sale and forget the 20 or 30 years that follow it. Beneficiaries need updating after a marriage, a divorce or a new child. Coverage needs to be revisited after a promotion or a new mortgage. Someday, a spouse or adult child may need help filing a claim. Ask the agent how they handle all of that, and listen for a process rather than a promise.

It is also fair to ask what happens if the agent retires or changes careers. Your policy belongs to you and stays with the insurer, but you want to know who would service it and how you would reach them.

• How often will we review the policy, and who starts that conversation?
• How do I change a beneficiary, and will you help me do it?
• If my family needs to file a claim, what will you do for them?
• Will you coordinate with my CPA or attorney when a change affects my taxes or estate plan?
• Who services my policy if you are no longer available?

Red flags that should end the conversation

TDI lists several warning signs worth repeating: anyone asking you to pay in cash or to sign a contract with blanks, unsolicited calls, high-pressure sales tactics, and prices much lower than you find anywhere else. In my own experience, a few more belong on the list.

• An application in front of you before anyone has looked at your finances.
• Pressure to decide today because a price or offer is about to disappear.
• Vague answers about what is guaranteed and what is only projected.
• Discouraging you from talking with your spouse, CPA or attorney before you sign.
• Promises about returns or outcomes that sound certain.
• A recommendation to cancel existing coverage before the new policy is in force.

What a good agent will ask you in return

Expect questions back, and expect some of them to feel personal. A thoughtful agent will ask about your health history, your income and how it is structured, your mortgage and other debts, your children's ages, whether you support parents or other relatives, and what your employer provides. For sales professionals whose pay is heavily commission-based, they should also ask how much of your income your current coverage actually recognizes, which is the gap I describe in my stress test for high earners.

They should also explain the trade-offs between policy types in plain language. If you want to test that, ask them to explain term versus whole life as if you were explaining it to a teenager. If they cannot, keep looking.

How I handle these questions in my own practice

I work with households across Frisco, Plano and Dallas, and every relationship starts the same way: learning about your goals, where you want to be in 10 to 20 years and what resources are already in place. Together we turn those goals into measurable objectives, then I identify insurance and financial products that may help meet them, and I can consult with your tax and legal advisors so everything fits. New York Life and its agents do not provide tax, legal or accounting advice, so that coordination matters.

Talking with me carries no obligation to buy. Bring your list of questions, including every one on this page, and any policy or proposal you already have. You should leave understanding your options well enough to explain them to someone you trust, whether you work with me or not.

Questions people ask me