The hardest part of buying life insurance isn’t the products. It’s figuring out whether the person selling them to you is recommending what’s actually right for your situation. The right questions sort that out quickly. Asking them politely but firmly tells you a lot about who you’re working with.
This guide walks through ten questions worth asking any agent before you sign anything, what a good answer looks like, and what a concerning answer looks like.
1. “Are you independent or captive?”
This is the first question and it changes how to read everything that follows.
Independent agents represent multiple insurance carriers — sometimes a dozen or more — and shop across them to find the best fit for each client. They earn commissions from whichever carrier issues the policy.
Captive agents represent a single insurance company. They can only sell that company’s products. The largest captive systems are well-known household names — the kind with regional offices and a single-carrier book.
Neither structure is unethical, but the answer tells you what to expect. A captive agent’s recommendation is constrained by their carrier’s product lineup. An independent agent’s recommendation is theoretically shaped by who has the most competitive product for your specific situation — but only if they actually shop the market.
Good answer: Direct. “I’m independent — I represent [number] carriers, and I shop across them.” Or: “I’m a captive agent for [company], so my recommendations come from their product lineup.” Concerning answer: Vague, evasive, or “kind of both.” Most agents are clearly one or the other.
2. “How are you compensated on the product you’re recommending?”
You’re not entitled to a dollar figure. But you are entitled to ask about structure.
A good agent will tell you, in general terms, that:
- Term policies pay a relatively modest first-year commission (often 50-70% of the first-year premium).
- Permanent policies pay a substantially higher first-year commission — sometimes 70-110% of the first-year target premium.
- Annuities pay a commission on the rollover amount, typically 3-7% of the contract value, with variations.
Good answer: Willing to discuss compensation structure openly, including the fact that the product they’re recommending pays them more than alternatives would. “I make more on this IUL than I would if I sold you term, and here’s why I still think IUL is the right answer for you.” Concerning answer: Refuses to discuss compensation at all, or insists it has no influence on the recommendation. Of course it has some influence; the honest agents acknowledge that and then justify why the recommendation still holds.
3. “Can I see this same illustration at a more conservative crediting assumption?”
This question matters most for IUL and other indexed products.
An IUL illustration shows projected cash value and death benefit growth based on an assumed crediting rate — the rate the carrier credits the index account each year. Carriers are allowed to illustrate at fairly aggressive rates (currently within regulatory caps, but still optimistic relative to long-run historical results). The illustrated number can look great at the top rate and underwhelming at a more conservative one.
You want to see both. The maximum illustrated rate tells you “best case.” A conservative rate (often 1-2% below the illustrated max) tells you “what if returns are more like real history.” If the policy still looks attractive at the conservative rate, the recommendation is robust. If it only works at the aggressive rate, you should know that.
Good answer: “Sure, let me re-run it.” Then they pull a second illustration on the spot or send it within a day. Concerning answer: “The carrier’s illustrated rate is realistic, you don’t need to see anything else.” That’s not how illustrations work. Ask again.
4. “What happens if I stop paying premiums after year 5?”
Every policy has a “what if I stop paying” scenario. You want to understand yours before you sign, not after.
For term life, the answer is simple: the coverage lapses, no payout, no cash value. You walk away clean (subject to whatever grace period the policy includes).
For permanent life, it’s more complicated. The policy might:
- Continue running on its accumulated cash value until the cash value depletes (then lapse).
- Convert to a reduced paid-up policy or extended term insurance, depending on contract options.
- Trigger surrender charges if you formally surrender the policy.
- Generate a 1099 if the cash value at surrender exceeds the cost basis (taxable gain).
Good answer: A specific walk-through of what would happen, ideally with the illustration’s non-guaranteed and guaranteed columns visible. Acknowledges that permanent policies depend on being adequately funded. Concerning answer: “You’ll just keep paying it, that’s the assumption.” Bad framing. Real life happens; the policy needs to make sense even in the years you might have to pull back.
5. “Can I convert this term policy to permanent later?”
Most term policies include a conversion privilege — the right to convert some or all of the term coverage to a permanent policy with the same carrier without new medical underwriting. Conversion windows vary:
- Some carriers allow conversion only during the first few years of the policy.
- Some allow it throughout the entire term.
- Some have age limits (e.g., conversions allowed only before age 65 or 70).
- Some restrict which permanent products you can convert into.
For a young, healthy buyer, the conversion option is mostly insurance against a future health change. If you’re diagnosed with something serious five years from now and your term policy has another 15 years to run, conversion lets you secure permanent coverage you couldn’t otherwise qualify for.
Good answer: Knows the specific conversion terms on the policy being illustrated — “you can convert any portion of this policy to permanent coverage from the same carrier through year [X], with conversion windows ending at age [Y].” Concerning answer: Doesn’t know, or hand-waves the answer. The conversion privilege is contract language; it’s not something you guess at.
6. “What’s the surrender period on this annuity?”
The single most important number on an annuity contract that doesn’t appear in the marketing pitch.
Surrender periods on fixed and fixed-indexed annuities typically run 5-10 years. During that window, withdrawals above the free-withdrawal amount (usually 10% of contract value per year) trigger a surrender charge. The charge declines each year — a typical schedule might be 9%, 8%, 7%, 6%, 5%, 4%, 3%, 2%, 1%, 0%.
The reason this matters: if you might need access to the money during the surrender period for any reason, the charge will eat into your principal. A 9% surrender charge on $200,000 is $18,000 — real money.
Good answer: “It’s a [X]-year surrender period, and here’s the year-by-year schedule.” Pulls out the contract or illustration to show you. Concerning answer: “You won’t need to surrender it, so it doesn’t matter.” It always matters. Read the schedule.
7. “What’s the difference between the guaranteed and non-guaranteed columns?”
Most permanent life and annuity illustrations have two sets of columns. Guaranteed values are what the contract is obligated to deliver regardless of what happens. Non-guaranteed values are what the carrier currently expects to deliver based on today’s assumptions — a projection, not a promise.
The gap between them can be large, especially on IUL. Guaranteed often shows worst-case (0% credited, maximum allowable charges); non-guaranteed shows the illustrated rate.
Good answer: Walks you through both columns and explains what would have to happen for the policy to fall to the guaranteed values. Concerning answer: Points only to non-guaranteed columns and treats them as the expected outcome.
8. “How will my premium change over time?”
For level term, it doesn’t — locked for the full term.
For permanent policies (especially universal life and IUL), it can. Some products have flexible premiums; some have planned schedules that depend on actual policy performance. A common decades-later surprise: the policy was illustrated to be paid-up at age 65, performance fell short, and additional premiums are needed to keep it in force.
Good answer: Specific to the product being illustrated, with reference to what happens if performance trends below the illustrated rate. Concerning answer: “Your premium will never change.” Only true for level term.
9. “If I needed coverage on my spouse or kids, would you recommend the same product?”
Tests whether the agent has a default product they sell to everyone or is actually tailoring to situations.
A good agent’s answer changes based on the person. A 30-year-old new parent gets a term recommendation. A 55-year-old maxing out their 401(k) with estate-planning concerns gets a different conversation. A 70-year-old looking for final expense coverage gets a third.
Good answer: “It depends on what we’re solving for. For your situation, term makes sense. For your retired father, the conversation is different.” Demonstrates that the recommendation is contingent on the situation. Concerning answer: “Yes, this product fits everybody.” No product fits everybody.
10. “If I take this home and think about it for a week, will this offer still be available?”
The good ones will tell you yes. Locking in a rate within a 30-90 day window after underwriting completes is standard, so taking a week is no problem. Some products may have minor changes if the carrier updates a cap or rate, but you’ll be told what’s at stake.
Good answer: “Take all the time you need. The application can be in motion or paused — we don’t lose anything by you reviewing the illustration carefully.” Concerning answer: Pressure. “This rate ends today, the carrier is making changes Monday, you need to act now.” Real life insurance pricing doesn’t move that fast for most products. If you’re being pushed, slow down.
Bottom line
- The right agent welcomes these questions. They expect them and they have good answers.
- The wrong agent gets defensive, evasive, or steers you toward urgency.
- You’re hiring someone to recommend a long-term financial product. Hiring slowly is fine.
Want to have this kind of conversation with someone who’ll answer all ten directly? Call (480) 322-7400 or request a quote on the contact page. We’ll walk through your situation, show you multiple illustrations at conservative assumptions, and you can decide on your own timeline whether anything we’re showing you is the right fit.