How To Buy Life Insurance

Shawn Plummer

CEO, The Annuity Expert

Buying life insurance can seem overwhelming and intimidating. With so many types of policies available in the market, it’s easy to feel overwhelmed by all your options. Fortunately, you can take some simple steps to ensure you get the right coverage for your needs and budget. This guide goes over buying life insurance to ensure you get the protection you need—without breaking the bank!

How Can I Buy Life Insurance?

Buying life insurance is relatively straightforward, but it’s essential to understand what you’re getting and any potential risks associated with the policy before signing a contract. Here are some steps to follow when looking for life insurance:

  • Determine your coverage needs: Before purchasing a policy, it’s crucial to think about how much coverage you need. Consider your family’s current and future financial needs, any debts you may have, and the amount of money you wish to leave behind for your loved ones.
  • Research insurance policies: Once you know how much coverage you want, it’s time to start researching different life insurance policies to find the best option. Consider costs, term length, and riders that may be included in your policy.
  • Select a provider: Once you’ve narrowed your choices, it’s time to compare providers to determine which company will offer you the best coverage at the best price. Consider factors such as customer service, financial ratings, and any additional benefits the provider offers.
  • Gather necessary documents: Before applying for life insurance, make sure you have all the necessary documents gathered together, such as copies of your driver’s license or passport, bank statements, tax returns, and medical records.
  • Apply: Once you’ve collected all the necessary documents and chosen your provider, it’s time to submit your application. You may need to take a medical exam or answer questions about your lifestyle and health history for the insurer to determine your eligibility for coverage.
  • Review policy details: Finally, reading and understanding your policy before signing is essential. Ensure all details are correct and you fully understand the terms of your coverage. Once you sign off on the policy, you should begin receiving regular statements from your insurer about payments and any changes to the policy.

What Are The Three Main Types of Life Insurance?

Life insurance is a financial contract between an insurance company and a policyholder. It protects against the financial loss that can result from the death of an insured person. Three main types of life insurance are available: term life, whole life, and universal life.

  • Term life: This is generally used as a temporary solution for specific financial needs. It provides coverage for a set period (the “term”) and pays out a death benefit if the insured person dies within that term. Premiums are typically lower than other types of life insurance, but no cash value or savings component is attached to this type of policy.
  • Whole life: Whole Life insurance covers the policyholder’s entire life. Premiums remain level, and a savings component can be accumulated over time, potentially earning dividends. Whole-life policies typically have higher premiums than term-life policies. Still, they have more flexibility in terms of customization and can provide support for final expenses or creating an inheritance.
  • Universal life: Universal Life insurance is a more flexible policy that combines term and whole-life features. This type of policy allows the policyholder to change their death benefit, premiums, and payment options over time. Universal and permanent life insurance policies also offer cash value growth potential and access to those funds through loans or withdrawals.

No matter what type of life insurance plan you choose, it is crucial to consider your individual needs and goals when making a decision. Be sure to speak with a qualified professional for additional advice on which type of policy would be best for you.

What Are The Three Main Types Of Life Insurance?

Is Buying Term Life Insurance a Good Idea?

Term life insurance can be a great way to protect your family’s financial future during your death. In addition, it offers an affordable option for those who need coverage but may not have the means to purchase a permanent policy. Here are some things to consider when deciding if purchasing term life insurance is right for you:

  • Coverage Length: Term life insurance policies typically have a set coverage period, usually 10 to 30 years. This means that you will only be covered for the length of the policy, and your beneficiaries will not receive any benefits after the term has expired.
  • Premiums: Term life insurance premiums are lower than permanent policies since you are only insured for a specified period. Since the cost is lower, it can be a great option if you’re on a budget and need coverage quickly.
  • Age & Health: If you are older or have pre-existing health conditions, you may not qualify for particular policies, or your premiums could be higher than someone in a better health situation. Considering these factors is essential when considering life insurance and finding the right policy.
  • Financial Needs: When considering term life insurance, evaluating your current financial needs is essential. Consider how much money your family would need to comfortably cover expenses such as medical bills, funeral costs, and other debts in the event of your death.

What is Simplified Issue and Guaranteed Issue Life Insurance Policies?

Many life insurance policies require an extensive medical exam to gauge the risk of insuring you. However, some do not. These include the simplified and guaranteed issue plans designed for people who may not qualify for policies with a medical exam due to older age or pre-existing health conditions.

Term and final expense policies that are either simplified or guaranteed issues don’t require an exam. Instead, you’ll need to fill out a health questionnaire for the former. No medical information is necessary for the latter to qualify for approval–you’re automatically accepted. That being said, these types of policies usually have lower levels of coverage than others and consequently higher premiums because there’s greater risk in providing them.

Do I Need Life Insurance Coverage?

While not everyone needs life insurance, it can benefit those who don’t have enough wealth or assets to care for themselves and their loved ones in the event of their death. For example, you might not need life insurance if you’re a single person with no children. Young couples with limited assets may also decide to wait before purchasing life insurance as their financial obligations remain relatively low.

However, if you are married with children or have elderly parents depending on you to help pay their bills, life insurance can provide peace of mind that your family will be taken care of if something happens to you. Even if you are single but have close friends or a large debt, life insurance can ensure that your final wishes are taken care of and that your heirs will be reimbursed for any outstanding debts.

What is the Difference Between A Group Life Insurance Policy and an Individual Life Insurance Policy?

Group life insurance is not “owned” by the policyholder. If the person were to leave their current company, they would likely lose their group coverage. More often than not, once employment terminates, so does the associated insurance.

An individual life insurance policy has many benefits, unlike a group policy. For example, you are the policy owner, which can continue even if you change jobs or retire. In addition, riders, such as waiver of premium and critical illness coverage, offer additional protection against unforeseen events.

At What Age Should You Get Life Insurance?

When it comes to something as important as life insurance, you must make sure you have the right coverage. However, the question remains: at what age should you get life insurance?

The answer will depend on your particular situation and goals. For example, if you are married and have children or other dependents, you may want to consider getting life insurance sooner rather than later. On the other hand, if you are single or don’t have dependents, it may be wise to wait until you are older and your financial responsibilities increase.

Buying life insurance should be a priority for those who just got married and have a family. The younger and healthier you are, the lower your premium rates will be. It is also important to remember that life insurance can help provide financial protection in the event of an unexpected death or illness.

Life insurance may not be necessary for single people who don’t have dependents until later in life. However, as you age, you may take on more financial responsibilities such as a mortgage, car loan, or student loan. In these cases, life insurance can help provide financial protection for an unexpected death or illness.

Life insurance is vital for those with dependents and those taking on more financial obligations. When you’re younger and healthier, getting life insurance sooner rather than later is best to get the most affordable premiums. Life insurance may not be necessary for those who are single or don’t have dependents until their financial responsibilities increase. It is essential to consider your situation and goals before deciding when to purchase life insurance.

At What Age Should You Get Life Insurance?

Do I Need a Medical Exam Before Obtaining a Life Insurance Policy?

A life insurance health exam is a physical examination that helps your insurer determine your specific characteristics and risks. This information is used to help the carrier decide if they will approve your application and how much you will be charged for your life insurance policy. As a result, a life insurance physical exam is usually required before getting a life insurance policy.

Some carriers offer term and permanent life insurance without needing a physical medical exam. Instead, the insurer usually relies on other information, such as a health questionnaire and a more detailed application, to determine your risk class and eligibility.

The three main types of life insurance policies that don’t require a medical exam are called the simplified issue, guaranteed issues, and final expense coverages. With a simplified issue policy, you’ll have to answer some health questions on the application. However, with a guaranteed issue policy, no health questions or medical exams are required.

No medical exam life insurance may be more convenient, but it is almost always more expensive than policies that require one. Additionally, the death benefit payout is usually lower for no-exam policies. Guaranteed issue coverage is typically the most expensive life insurance a person can buy without health qualifications.

Where Do I Purchase Life Insurance?

When shopping for life insurance, you typically have three options depending on location. You can either go through an independent local insurance agent, purchase it online from an independent broker, or directly from the company.

  • Using an Independent Local Insurance Agent
  • Buying Life Insurance Online via an Independent Broker
  • Going Directly Through a Life Insurance Company

Can You Buy a Life Insurance Policy Completely Online?

The short answer is yes! Many life insurance companies have made it easier than ever for consumers to purchase and manage their policies online. In addition to being more convenient, purchasing a policy online is typically faster and cheaper due to the lack of overhead costs associated with traditional agents or offices.

Online life insurance policies are generally structured in the same way as those purchased in-person. They offer the same protection and coverage but with a much more convenient buying process. Online providers often allow customers to compare different policies side by side and customize their coverage with riders or add-ons. Many online policies also offer discounts based on specific criteria such as age, occupation, or health status.

When shopping for a life insurance policy online, it is vital to research and compares different companies. Many insurers offer free quotes that can be obtained in just minutes. However, be sure to read the terms and conditions of each policy carefully since some may have hidden fees or restrictions on coverage. It’s also wise to speak with an independent life insurance agent first to get advice on which policy may be right for you.

Buying a life insurance policy online is becoming increasingly popular due to its ease and convenience. Consumers can now compare policies quickly and efficiently while still receiving the coverage they need at a price that meets their budget. However, knowing the potential risks of purchasing a policy online and researching each provider before committing is essential.

Can You Buy A Life Insurance Policy Completely Online?

What are the Benefits of Buying a Life Insurance Policy Through a Local Independent Insurance Agent?

Local insurance agents who work independently offer a more personal touch when helping you find quotes to individualize your life insurance policy. If you choose this option, an agent may be able to help with paperwork and give personalized advice. You can search for agents in your area through the National Association of Insurance Commissioners (NAIC). Another option is buying life insurance online, which is usually more convenient but requires additional research.

What are the Benefits of Buying a Life Insurance Policy Online Through an Independent Broker?

You can explore numerous insurers and options with an independent online broker while remaining digital. In addition, you compare quotes and coverage from multiple providers to ensure that you make the best decision for yourself. What’s more, you may have access to exclusive discounts or offers by utilizing an independent broker.

What are the Benefits of Buying a Life Insurance Policy Directly Through a Life Insurance Company?

Life insurance companies are always up-to-date with their policies. You can get quick answers to your questions by talking with the company directly, online, over the phone, or in person. In addition, many life insurance companies offer discounts if you sign up for automatic payments.

No matter which approaches you to prefer when shopping for life insurance, make sure that you take the time to research the best life insurance companies to compare different rates and plans before making a final decision. Doing research and seeking the help of an independent broker can go a long way in finding the most suitable and cost-effective policy for you.

What Are The Benefits Of Buying Life Insurance?

What Are The Best Life Insurance Companies to Purchase a Policy From?

When looking for the best life insurance companies to purchase a policy from, it is crucial to consider several factors. First, you should research your options carefully and choose a company that offers competitive rates, solid financial ratings, and excellent customer service. It is also essential to compare different policies and providers to find the right one.

When shopping for life insurance, look for companies with excellent customer service. Assess the company’s customer support and complaint resolution processes to ensure you get the best possible policy. A good insurer should provide access to a knowledgeable agent who can answer all your questions and helpful resources like online calculators and FAQs to help you determine the best policy for your needs.

It is also essential to compare life insurance rates from different companies. Rates for similar policies can vary significantly depending on the provider, so looking at multiple offers will help you find the most competitive option. Be sure to pay attention to any additional fees that may be required and read through the fine print carefully before signing a contract.

Finally, research the financial strength of each company you are considering. Insurance companies that have good ratings with independent agencies like A.M. Best and Standard and Poor’s assure that your policy will remain in force, no matter what happens financially to the insurer.

Can I Get Life Insurance Through My Employer?

Most employers include group term life insurance in their employee benefits package. Depending on the company, your employer may cover some or all of the premium costs for an employer-provided policy. In addition, you usually have the option to purchase extra coverage.

Group insurance plans are typically less expensive than individual policies because they are based on the average risk of a larger pool of people. Generally, employers will offer different levels of coverage, such as primary and supplemental. For example, basic coverage may provide a lump sum benefit to your beneficiaries in the event of your death, while supplemental coverage can supplement that initial amount.

Group life insurance policies usually have no medical exams, and death benefit payments are made directly to your beneficiaries upon the insured person’s death. Furthermore, group policies may include other benefits such as accelerated death benefits, waiver of premium, and a conversion option.

How Much Life Insurance Coverage Do I Need?

Calculating your salary by ten is a simple way to determine your needed coverage. However, some professionals say multiplying it by 5 or 7 can also give an accurate estimate.

While that method may be straightforward, it may not be the best. The easiest way to determine how much life insurance you need is by adding up the payments you want your policy to cover (like your mortgage, student loans, daycare costs, and other debts) and then deducting any funds your family could already access (like social security, pensions or investments). The difference between the two figures is the life insurance coverage you need.

You can also include future expenses in your calculations to get an even more accurate figure. For example, if you have young children, consider whether savings and other resources will cover their college tuition or if you’ll need life insurance to cover those expenses.

Once you estimate the life insurance coverage amount, you can determine whether it fits within your budget and compare different policies to find one that works for you. Before taking out a policy, review all available options to ensure you get the best possible deal for your needs. Then, consult a financial advisor, a life insurance broker, or a life insurance company to help you evaluate different plans and make the right decision for your family.

How Much Does it Cost to Have Life Insurance?

The cost of life insurance will depend on various factors, including age, health status, and the coverage amount. Generally speaking, getting life insurance when you’re younger and in good health is more affordable. However, as you age, your life insurance cost and premiums will increase as the risks of covering your life also increase.

To determine the exact insurance cost, you’ll need to consider the type of coverage you’d like. You can typically choose from term life or whole life policies with various levels of coverage. Each will come with a different premium amount.

Calculating your expenses and comparing life insurance quotes from different providers is the best way to estimate how much life insurance will cost. This way, you can find the right balance between cost and coverage.

In conclusion, the cost of life insurance will depend on various factors and is highly individualized. To get an accurate estimate, it’s essential to consider your age, health status, coverage amount, and policy type. Comparing quotes from different providers will also help you select the best life insurance policy for your needs at the most affordable rate.

How Much Does It Cost To Have Life Insurance?

Can You Buy Life Insurance For Someone Else?

Yes, you can buy life insurance for someone else. For example, if a parent wants to provide financial security for their child, they may purchase life insurance in the child’s name to take care of their future needs should anything happen to them. There are also cases where an individual may purchase life insurance on behalf of a spouse or relative.

When taking out a policy on another person, the individual purchasing the policy will usually be referred to as the “owner” or “applicant,” and the person being insured is referred to as the “insured.” Therefore, it is essential for both parties involved to understand their rights and responsibilities regarding the life insurance policy.

The policy owner is typically responsible for paying the premiums, ensuring that all information given to the insurance company is accurate, and notifying the company if any changes need to be made. The insured generally has no control over the policy or its management. However, they may be able to make specific policy decisions, such as when to start receiving payments and how much coverage they wish to have.

When buying life insurance for someone else, it is vital to ensure you get a policy from a reputable company with competitive rates. It is also essential to consider the cost of premiums and any other fees associated with the policy before signing any documents or committing.

What Are The Drawbacks of Buying Life Insurance?

When it comes to purchasing life insurance, several potential drawbacks should be taken into consideration before making a final decision.

First, the cost of life insurance can be expensive depending on your age, health status, and the desired coverage amount. Premiums can vary significantly from life insurance company to company and often take time to understand fully.

Secondly, receiving an affordable policy could be difficult if you have a pre-existing medical condition or are deemed high-risk. This is because life insurance companies will assess your health as part of the application process and may decline coverage due to any existing illnesses or perceived risks associated with them.

Thirdly, life insurance policies usually come with some restrictions. These can include restrictions on the length of the policy, what it covers, when you can make claims, and other factors. It is essential to understand all of these before buying a life insurance policy.

Finally, if you pass away during the duration of your life insurance policy, taxes may be associated with any payments received by beneficiaries. Depending on your policy and the type of payouts stated, you may need to consult a lawyer or tax adviser to ensure all taxes are paid correctly.

These are just some of the potential drawbacks associated with purchasing life insurance. Considering each of these before buying life insurance is essential to ensure it is the right financial choice for you.

What Are The Drawbacks Of Buying Life Insurance?

Can I Cancel My Life Insurance Policy After Purchasing?

The free look period lets you decide whether to keep your life insurance policy. This period usually lasts from 10 to 30 days. Call your insurer to cancel the policy if you do not want the policy. You will get all of your money back for the premiums you have paid.

After the free look period ends, the process of canceling your policy differs based on what type of policy you have.

Next Steps

Purchasing life insurance is one of the most important decisions you will ever make as an adult. Ultimately, it could give your family much-needed financial strength, security, and peace of mind. YoYou’llant to do your due diligence to ensure you get the coverage you need at the right price. Working with a reputable insurance company can help you make informed choices when selecting a life insurance policy. Ask questions and shop for the best deal before signing the dotted line. Ultimately, being well-informed should give you confidence in knowing that you are making a wise decision by investing in a life insurance policy for yourself and your loved ones. Contact us today to discuss your needs and get a free quote.

How To Buy Life Insurance

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Frequently Asked Questions

What are the three main types of life insurance?

Term life insurance provides coverage for a specific period of time, such as 10 or 20 years, and pays a death benefit to the beneficiary if the insured dies during that time. Next, whole life insurance covers the insured’s entire life. It includes a savings component that grows over time, allowing the policyholder to build cash value that can be borrowed against or used to pay premiums. Finally, universal life insurance is similar to whole life insurance but offers more flexibility regarding premiums, death benefits, and cash value accumulation. It also allows policyholders to adjust the coverage and premiums as their needs change.

What do you need to buy a life insurance policy?

To buy a life insurance policy, you typically must provide personal information such as age, gender, occupation, health history, and lifestyle habits. You may also need to undergo a medical exam or provide medical records. Additionally, you must choose the type and amount of coverage you want and select a beneficiary who will receive the death benefit if you pass away while the policy is in effect. Finally, you will need to pay premiums to maintain the policy.

Shawn Plummer

CEO, The Annuity Expert

I’m a licensed financial professional focusing on annuities and insurance for more than a decade. My former role was training financial advisors, including for a Fortune Global 500 insurance company. I’ve been featured in Time Magazine, Yahoo! Finance, MSN, SmartAsset, Entrepreneur, Bloomberg, The Simple Dollar, U.S. News and World Report, and Women’s Health Magazine.

The Annuity Expert is an online insurance agency servicing consumers across the United States. My goal is to help you take the guesswork out of retirement planning or find the best insurance coverage at the cheapest rates for you. 

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