The selection of an insurance agent is your responsibility—choose wisely. You are not just buying insurance: you are building an insurance structure that will shelter you and your dependents for many years. The following are some important tips for buying insurance:

1. Understand what you want: Understand yourself, your goals, and your budget. How much insurance do you need versus how much insurance do you want? What kind of insurance policy will meet your needs the best, given your current family situation and cash flow? How much money do you want to spend? Do you have any pre-existing health conditions?

2. Compare the costs of competing policies: Do your homework and shop around, not just on price, but on benefits, coverage, and exclusions. Some possible comparisons are listed as follows:

• What are the annual premiums? Is the insurance policy participating (offers tax-free dividends) or nonparticipating?
• If participating, what is the five-year dividend history?
• If participating, what is this year’s expected dividend?
• What is the total premium cost over the next ten years (excluding dividends)?
• In ten years, what will your cash value be?
• What will the total premium cost be over twenty years?
• At what interest rate can you borrow against the policy? Is the spread guaranteed?

3. Select only a high-quality insurance company; base your choice on company ratings: Price is not the only criteria you should look at when selecting an insurance company. You also want the company to be around to pay the benefits years down the road. Remember, you are looking for a long-term insurance relationship. Check with A.M. Best at www.Ambest.com or Standard & Poor’s at www.Standardandpoors.com for ratings of your company. Make sure the insurance company is sound!

4. Select an insurance agent with whom you feel comfortable and who does not pressure you: Study the agent’s recommendations and ask for a point-by-point explanation if there are items you don’t understand. If the agent can’t explain all the costs and benefits, go to someone who can. While it is not necessary to have an insurance agent, it can be helpful because an agent can explain the many options and details of the life insurance contract. In addition, ask the insurance agent’s commission on any recommended product.

5. Use wisdom in your decisions: Make sure you check out the insurance company; read your policy when you receive it to ensure that it is correct. Consider alternative approaches to finding life insurance: use the Internet or an advisor to help you. Make sure you feel good about the decision before you sign anything or send any money.

Before you purchase life insurance, consider a few final thoughts: don’t rush into a decision just because you are feeling pressured. Wait a few days and then decide. This is not a short-term decision. Take your time and choose wisely—but choose!

Make your check payable to the insurance company, not the agent. The insurance company will pay the agent. Be sure the insurance agent gives you a receipt for all payments. Make sure there is an adequate paper trail in case there are questions or problems later on.

Read your policy carefully during your “free-look” period. You are given a specific amount of time in which you have the option to cancel the policy. Make sure you understand your policy completely at the beginning and then review your policy annually. Your life situation may change, so make sure your policy is sufficient to meet your needs as your needs change.

If you are changing policies, make sure you clearly understand the consequences. Surrendering one insurance policy to buy another insurance policy could be very, very, very (get the hint?) costly. Understand all the costs of making a change before you make it.

Finally, if you have a complaint, contact your insurance agent first. If you don’t get an adequate response from your agent, contact your state insurance department. The state insurance department can help.