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How To Buy Life Insurance

Purchasing life insurance may seem complicated if you have never done it before. Unlike home or auto insurance, there are many different types of life insurance policies. Each comes with potential pros and cons and, as well as a wide range of premiums.

Although some life insurance policies can be purchased online, it’s more common for life insurance policies to be purchased through an agent. Even if you can start a life insurance quote online, you’re often required to speak with an agent in order to complete the transaction. In addition, there are some aspects of the life insurance purchase process — like a medical exam, for example — which must be completed in person. Not all policies require a medical exam, but you’ll still likely need to answer health questions on the application.

If you are in the market for life insurance, here are the steps you may find helpful in purchasing a policy that is right for you.

PUBLISHED DATE :

31/01/2024

   Estimated reading time: 2 minutes

The first step in getting life insurance is to figure out how much coverage is right for you. In general, you should probably consider buying enough coverage to support your financial dependents for several years after your death, based on your current lifestyle and financial situation.

The coverage limit that is right for you will depend on your reason for buying a life insurance policy. If you want coverage to provide financial protection while you pay for a mortgage, for example, you may only need enough coverage to allow your beneficiary to pay the loan balance. If you want coverage to replace your lost income for your loved ones for many years, however, you probably need a higher death benefit. Your reason for choosing a certain amount of coverage could also influence if you buy Term Life insurance or a more permanent life insurance, which we’ll discuss in greater detail in the next step.

Although there are many ways to calculate a potential coverage limit, one popular method is the DIME formula, which takes into account your debt, final expenses owed, and total income based on what might be needed after your death, as well as the amount left on your mortgage and any outstanding or expected expenses for your dependants’ education or schooling. You can also use an online coverage calculator to help you out.

Step 2: Pick a life insurance policy type

There are two main types of life insurance: Term and Permanent. Within permanent insurance the two primary types of life coverage are Whole Life insurance and Universal Life insurance. Term Life insurance is usually less expensive with fewer benefits, while permanent life insurance is typically more expensive, because iit offers more benefits. 

Here’s a closer look at what these policies cover and how they work:

Term Life insurance: Term Lіfe insurance is generally the cheapest kind of life insurance while you are young. It provides coverage over a specific term period, usually between 10 and 30 years. If you pass away during this term, your beneficiaries will receive a payout from the insurance company. Once the term is over, the benefits end, unless the policy is renewable or convertible, which is offered by many insurers. It is important to note your premium will most likely increase with the new term.

Whole Life insurance: Whole Life insurance is a type of permanent life insurance that provides lifetime protection as long as you continue to pay the premium and with fixed premiums and cash value. With some Whole Life policies, policyholders have to pay their premium until they die, and other policies only require a premium for a certain number of years..

Universal Life insurance: Universal Life insurance is another type of permanent coverage. It also accumulates cash value, but this policy is flexible to allow you to change your death benefit and premium to fit your changing needs. There are several forms of universal life insurance, including variable universal life insurance and indexed universal life insurance.

Before you buy life insurance you may want to do more research to find out which option will best meet your needs.

Step 3: Research different life insurance carriers

Next, you will probably want to find a few life insurance companies that appeal to you. Remember that no two companies are the same. When choosing a life insurance company, search the website and look at the policy options. The best life insurance company for you may offer a combination of coverage options that fit your insurance needs and a positive customer service experience. You may also want to research and compare different life insurance riders, which are add-on coverage options that could give you a broader range of protection.

Step 4: Request and compare life insurance quotes

Once you have selected a handful of potential providers, you can get quotes from each company. Most companies do not include the price of premiums on their website because rates are highly dependent upon your personal and health metrics. Getting quotes may help you determine which provider can give you the most affordable rate. Be mindful that life insurance premiums are based on several factors, including your age, medical history, and occupation. Insurance providers also consider the coverage amount and type of policy you’re requesting.

Most major life insurance companies have an online quote generator that allows you to get an instant rate quote right from the website, but it’s not always available for all types of life insurance. If not, get in touch with an agent to provide you with a quote.

When you request to receive a quote, you will typically be asked to provide some personal information, including your age, address, and gender. Additionally, you will likely need to submit basic information about your medical history. This typically includes information about your lifestyle, smoking history, past surgeries, and medications you are taking. The insurance company will then use the information provided to calculate your life insurance rate, and although the quoted premium may change after your medical exam if one is required.

Step 5: Fill out the application

After choosing the provider that fits your needs, the next step is to fill out an application. You will be required to include basic personal information, as well as your Social Security number and driver’s licence number. Additionally, you might need to submit an Attending Physician Statement (APS) which helps the insurance company verify your medical history. Some life insurance applications can be filled out online, and it is usually a quick process. However, you should be prepared and have your medical information available, including a medication list and details regarding any chronic or pre-existing conditions.

Step 6: Prepare for your phone interview

After submitting an application, the insurance company might require a secondary phone interview. The interview is mostly used to confirm the information you included on the application, but there may be some additional questions asked. For example, the interviewer may want to know more about your lifestyle, hobbies, financial health, and your income, and any other life insurance policies you have. The interview is generally quick and will likely be scheduled shortly after submitting your physical application if it’s required at all.

Step 7: Schedule a life insurance medical exam

Many life insurance companies and policy types require applicants to get a physical exam before they can be approved for coverage. The life insurance medical exam is like a regular doctor appointment, but the insurance company’s medical examiner may be able to visit your home or office to see you. They will generally take your vitals like weight and blood pressure and draw blood. 

The exam usually takes about 30 minutes, and you may be able to schedule it during your phone interview. Not all life insurance policies require a medical exam. If you meet certain requirements, you might be able to get approved for coverage without an in-person exam. While this can expedite the approval process, no medical exam policies are usually more expensive because of the higher level of risk for the insurance company.

Step 8: Wait for approval

When the application process is complete and your job is done, the insurance company’s underwriter will take the information gathered from your application, phone interview, and medical exam to determine if you’re eligible for coverage and, if so, what your premium should be. As there is so much information to review, the approval process may take several weeks. 

If you get approved and are happy with the quoted premium, you will be sent the policy documents to sign and approve. Traditionally, this process is conducted with a physical copy, and technology sometimes allows this paperwork to be completed with a digital signature. You will also decide if you want to pay your premium monthly or annually. After the policy documents are signed, you might be asked to mail a physical copy to your insurance company.

Qualifying for Life Insurance

Insurers evaluate each life insurance applicant on a case-by-case basis, and with hundreds of insurers to choose from, almost anyone can find an affordable policy that at least partially meets their needs. On top of that, many life insurance companies sell multiple types and sizes of policies, and some specialise in meeting specific needs, such as policies for people with chronic health conditions. 

There are also brokers who specialise in life insurance and know what different companies offer. Applicants can work with a broker free of charge to find the insurance they need. This means that almost anyone can get some type of life insurance policy if they look hard enough and are willing to pay a high enough price or accept a perhaps less than ideal death benefit. 

Insurance is not just for the healthy and wealthy because the insurance industry is much broader than many consumers realise, and getting life insurance may be possible and affordable even if previous applications have been denied or quotes have been unaffordable.

In general, the younger and healthier you are, the easier it will be to qualify for life insurance, and the older and less healthy you are, the harder it will be. Certain lifestyle choices, such as using tobacco or engaging in risky hobbies such as skydiving, also make it harder to qualify or lead to higher rates.

Conclusion

In conclusion, navigating the realm of life insurance requires a thoughtful and informed approach to ensure that the chosen policy aligns seamlessly with individual needs and financial goals. The process of purchasing life insurance involves a series of strategic steps, beginning with a thorough assessment of one’s financial situation and the needs of dependents. 

Understanding the different types of life insurance policies, including Term and Whole Life, Universal Life, and Variable life, empowers individuals to make choices that resonate with their long-term objectives. Comparing quotes from multiple insurance providers and considering premiums, coverage amounts, and policy terms is instrumental in finding a policy that strikes the right balance between protection and affordability. Seeking guidance from licensed insurance agents or financial advisors adds a layer of expertise and ensures that potential policyholders navigate the complexities of the insurance landscape with clarity. 

Ultimately, the decision to purchase life insurance represents a commitment to securing the financial future of loved ones and providing a lasting legacy of protection and peace of mind.