How to Buy Life Insurance

Did you just get married? Or maybe you had a baby? If either of these things are true, it is time to purchase life insurance! Oh, you already have some? Awesome! But with these new changes to your family and responsibilities, you might want to review your life insurance coverage and decide whether you need to buy more.


Life insurance is a critical component of financial security that most people want to handle. In many people’s minds, it is confusing, annoying, and depressing. However, it is also crucial. The reality is that as soon as somebody relies on you for financial support (be it a spouse, or a child), you need to have life insurance.


While it is easy to say, “I’ll get to it tomorrow.” Or “I’ll get around to it next week.” The reality is that if you keep putting it off the more likely, you are not to get it. Also, getting it early works out better in the end. This is because life insurance is significantly less expensive to buy when you are young and healthy.


How to Buy Life Insurance


There are two fundamental ways to buy life insurance: The first being through an independent local insurance agent, the second being directly from an insurance company or third from an independent online insurance broker.


If you decide to work with an independent insurance agent, one of the most important things you can do is to find one that you trust. Find an insurance agent that has your best interests in mind. Remember that it is their job to present you with several types of life insurance. At times this can be overwhelming. However, they are doing what they are supposed to do. It is also their job to answer any questions that you might have and to provide you with all of the information that you need to make a choice that you are knowledgeable about and confident in.


Now, if you are considering purchasing life insurance directly from an insurance company, you will be missing out. While doing this can be a fast option in some ways, as it narrows down what company you are working with, it also cuts down your options vastly and will likely result in your paying more. Remember above when I said that one of the most important things you can do is to find an insurance agent that you can trust? Well no offense to insurance agents that directly represent a specific company, but they do not have the customer’s best interest in mind – they have their job in mind. If you are set on working with a particular company, that is fine and entirely your prerogative. Just know that their priority is making money for their company – not your budget.


What Information do I Need in Order to Get a Quote?


If you decide to apply online to get a life insurance quote, you will not need any particular documents in order to get a life insurance quote. However, you should be familiar with your medical history as well as the results of your most recent physical.


Here is a rundown of some of the steps that are involved when  comparison shopping for life insurance:


You’ll Complete a Brief Form About You and Your History


When applying for a life insurance quote, there is some information that you will need to fill out before receiving your quote. Factors that will be considered include your weight, your age, your gender and if you smoke.


If you are hoping to compare several life insurance quotes, the broker will likely ask what feels like a multitude of personal medical questions. This is necessary in order to provide accurate estimates. Make sure that you are upfront and honest. It should be noted that much of this information will be verified either with your medical record or during a medical exam.


Select the Amount of Life Insurance You Need, and How Long You Will Need It For


In most cases, you need life insurance in order to replace your income in the event you pass away. This is done to provide for your family. It is common to buy enough life insurance that it will replace your after-tax income for between seven and ten years. Depending on your financial situation you might also want an additional amount to cover your children’s education expenses or debts.


The majority of term life options range between ten and thirty years. If you are not sure, how much to get, consider using a life insurance calculator.


You may be surprised to learn that there will likely be a wide range of prices available from different insurers. But without filling out a much more detailed application, most of these numbers estimates. Insurance companies have employees who are responsible for crunching the numbers that determine how to price insurance. The more information that you provide upfront, the more specific and accurate your quotes will be.

What are Life Insurance Classes?


Life insurance classes are there to provide broad guidelines of what applicants can expect to pay. Additionally,  every insurance company calculates this different. For example, if you have a hobby that insurance companies consider high risk. Some insurance companies may place you in what is considered to be a lower class. Because of this, they might charge you more for these “high-risk” hobbies. Another insurance company may insure you in a higher class while putting exclusions on your policy. These exclusions might mean that you won’t receive a benefit if you pass away as a result of those activities.

There are a number of different classes that you might be put into. The insurance industry uses these groups to sort customers by risk. For example, if you are healthy and reasonably fit, you don’t smoke and have a clean driving record you might be in a preferred class. Whereas someone who is an unfit, smokes and has a lousy driving record might be in the standard class. Because of this, the two policyholders would pay a significant difference in prices for the same coverage.

What to Expect After You Apply for Life Insurance?


Once your policy is approved, it is then put in place and valid. At this point, you will not only be notified, but you will also receive a full copy of the policy.


If you didn’t already provide your life insurance agent with a deposit, you would likely be expected to make the initial premium payment.


Some insurance may allow this payment to be made in order to bind your policy upon submission of your application (this is done before any medical exam). This gives the insurance company the right to terminate the policy if the exam reveals medical conditions that were undisclosed. This also gives the insurance company the power to raise your premium costs. Either way, make sure that you ask when your policy will be useful. This is especially true if you are replacing an existing life insurance policy. Do not cancel the old life insurance policy prior to the new one taking effect.


Your life insurance agent will then send you a hard copy of the policy. You should make at least one more copy of this policy. This is to ensure that you have duplicates in more than one safe spot (that your spouse is aware of) to provide safekeeping and easy access if needed. Now, you can relax knowing that one of the most important pieces a solid financial plan is in place for you and your family.