You don't need to be an expert – five good questions are enough to find out whether you've received a fair quote, and from a fair person. You can hold any quote up against this list, including mine. In fact, hold mine up against it first.
- The five questions cover cost, flexibility, and exit terms – the territory where after-the-fact surprises happen most often.
- It's a good sign if the answers are concrete: numbers, specific clauses in the terms – not adjectives.
- It's a bad sign if the answer is evasive, pushy, or “we'll get to that later”.
1. “What's my TKM for my specific term – and what's its range?”
Why this comes first: TKM is the language of comparability – anyone who can't answer immediately hasn't prepared for your specific situation. A good answer gives a value for the same term and a range across asset funds (what it means).
A bonus question for the more advanced: “And what isn't included in the TKM?” – the answer will show you how transparent the person you're talking to really is.
2. “How do the initial units affect my costs – and when do they free up?”
The cost structure of the early years is the least advertised part of the policy – yet it's exactly what shapes the surrender-value table (details). A good answer is concrete: how many years, how large a charge, and from when the trajectory becomes “normal”.
If the answer is “don't worry about that, you're not going to exit anyway” – that's exactly the moment when it's worth worrying about it.
3. “What can I do if I can't pay the premium?”
The flexibility rules are what save the policy in a bad month: when a premium holiday can start and how long it can last, the minimum for a premium reduction, the conditions for making the policy paid-up (the toolkit). A good answer is itemized – a bad answer is a reassuring wave of the hand.
This question is also about you: if hearing the answers makes you anxious, the premium may simply be too high (sizing it right).
4. “What bonus am I entitled to – and exactly what could make me lose it?”
A bonus sounds nice – but the condition attached to it is what matters: continuous premium payment? accepting indexation? completing the full term? (the bonus article). A good answer also covers the “what would make me lose it” question – without that, the bonus figure is just marketing.
A follow-up: “Is the bonus calculated on the premium or on the account balance?” – the two are very much not the same thing.
5. “What exactly happens if I need to exit in 5 years?”
The three bills of exiting – repaying the tax credit, tax on the gain, the surrender value – can honestly be shown to you before you sign (the full bill). A good answer shows all three, broken down by year; a bad answer says “we'll deal with that when it happens”.
And the final test: has anyone ever told you something like “this will be worth this much in X years”? Promising future value is the surest sign of unprofessionalism – proper advice shows you the rules and the costs, not a forecast of the future. My answers: live, in 20 minutes.
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