13 steps showing exactly how to buy life insurance

life insurance buying guide
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    We put together our “13 Steps Showing Exactly How to Buy Life Insurance” guide for shoppers who are frustrated and overwhelmed with the life insurance buying process. With so many great life insurance companies to choose from, it’s easy get frustrated, but that frustration ends now!

    Studies have shown that over 18 million people have thought about getting life insurance but remain sitting on the fence.  In some cases, they look into buying life insurance but then feel it’s not for them – while others will start the process of applying online and then realize, in order to complete the application they must get with a provider in person!  

    Needless to say, they click out of the application and say nuts to that! If you’re nodding your head, you know what I’m talking about because you’ve been there! 

    What you need to know when buying life insurance

    There are many new life insurance plans out there and can become overwhelming and difficult to choose between.  Many do not require a physical exam and their rates will never change.

    Unfortunately, many people feel that shopping for life insurance has become so complicated because the terminology is way over the heads.  That said, there are insurance policies online that are not complicated and very easy to understand.

    13 steps showing exactly how to buy life insurance

    That’s where we come in.  We are going to go through the top 13 steps so you can find the best policy and understand how to apply quickly and easily:

    1.  Choose who you work with wisely

    There are three ways to buy life insurance and choosing the wrong once can cost you dearly.

    1. Through an online independent insurance broker.
    2. An independent local insurance agent.
    3. Directly through an insurance company.

    First and foremost, you should buy your life insurance policy from an independent broker either online or locally.  

    Insurance agents who work for a specific insurance company, such as Prudential, are more than happy to sell you a policy.  Even though these insurance companies are well-known and very reputable, the problem lies in how complicated the pricing will be.  If you don’t shop around or do not understand what you are signing off on, you will more than likely end up paying way too much.

    See Related: Expert life insurance shopping advice

    Prices are the same no matter who you shop with – just as long as you’re comparing the same products. In fact, it’s the law.  You can learn more about this topic by reading Can I save money buying direct from a life insurance company?

    For example, if you’re looking at a 30 year term life policy from Company A – it will be the same rate if you were to buy it from an agent or direct from a company. The difference is how many companies your agent can shop for you. Life Insurance Blog uses over 40 top rated companies in order to get the best policy in the marketplace. 

    2. Always ask for a free quote

    You can get any number of quotes by simply providing some basic information such as your age, resident state, health and income. You’ll also want to organize all the details so you know how to understand your life insurance quote.

    >>Get Quotes Here: Get started by using our free instant life insurance calculators to run your quotes.

    3. Choose your policy type

    Now let’s break down the two most popular types of life insurance for your quotes.

    These 2 types of life insurance are called Term life insurance and Whole life insurance. Term is the least expensive and Whole life is the most common and oldest form of permanent life insurance.

    Term Life Insurance

    This is probably the most popular type of life insurance most people are familiar with.  If you have a term life insurance policy, you pay a monthly premium for a certain period of time, which is referred as “term”.  If you were to pass away before the end of the policy, the beneficiary of your choice will receive the death benefits.

    Whole Life Insurance

    This type of insurance is also referred to as “permanent” life insurance but can also be a challenge to understand.  Whole life insurance is literally 50% an insurance policy and 50% an investment portfolio. This usually equal one hundred percent confusion for most shoppers.

    4. Terminology

    If you have bought insurance in the past, I’m sure you familiar with some of the terms they used but not really sure what these terms actually mean.  

    • Premium. Starting with “premium”, you might think this simply means you pay a given amount every month known as your premium.  In many cases that’s true, but did you know you can also pay your premium annually?
    • Beneficiary.  The beneficiary is the person who receives the death benefit.  
    • Death Benefit. The death benefit is the payout the beneficiary will receive when you pass away if the policy is still active at the time.  This is a decision you will have to make at the time you buy the policy. Keep in mind, the larger your death benefit is, the more you will pay for your premium.
    • Term. Another very common word is “term”.  The term is how long your life insurance policy will remain active and how long you will be paying the premium.  Your beneficiary will only receive a payout if you pass away while the policy is still active, if not, then the beneficiary gets nothing.

    Another thing to keep in mind – most term policies will give you the option to change it to a permanent policy at the end of the term but you will pay more for it.  

    When you are ready to get a life insurance quote, we will be happy to help you decide what will work best for you such as how long you want the term to be which is usually between 10 to 30 years.  We’ll also help you decide what you want the death benefit to be. Most people will buy insurance to help cover left behind expenses or debts such as paying off mortgages or student loans.

    Just remember, the larger the death benefit, the more you will pay on your premium so be sure you know exactly what you want to cover before you start shopping around.

    5. Information you will need for a life insurance quote

    Not to worry, you do not have to supply a lot of documents but you should have a good idea about your medical history and the results from your last medical examination.  Here are some basic steps for life insurance comparison shopping:

    You will fill out a form about yourself including your gender, age, weight, and whether you are a smoker or not.  If you are a smoker, you will probably pay double the amount for your premium. Most sites online will require an email address and your phone number before providing a quote – We Don’t!

    When you start your comparison shopping for quotes be prepared for the broker to ask you a lot of questions regarding your personal health which, unfortunately, is necessary.  Be as accurate as you can and always be honest because they will verify your medical record or during the medical examination when you apply for their insurance.

    6. Selecting duration and how much insurance you need

    You want enough life insurance to replace your income, should you pass away to provide for your loved ones.  Most people will purchase enough life insurance to replace their income, after taxes, until their children turn 18, and to cover expenses such as education and/or debts.

    As far as terms, the most popular choices are 10, 20, or 30 years.  Please feel free to use our insurance calculator to determine how much insurance you will need and what you can afford.

    You might be quite surprised to discover life insurance prices have a wide range of rates from different insurance providers.  Unfortunately, without more information, most of these figures are just estimates. Insurance companies have people who do nothing but crunch numbers all day to decide how to price insurance.  The more information you can offer, the more accurate your quote will be.

    7. Learn how you will be classified

    Insurance companies use these categories to classify customers by their risk factor.

    •  Preferred
    •  Super-Preferred
    •  Standard
    •  Substandard

    As an example, if you are in great health, are not overweight or have low body mass (BMI), and do not have risk factors such as smoking, a poor driving record, have a dangerous job or perform dangerous activities, you could fall into the Super-Preferred category.

    On the other hand, if you are overweight, suffer from high blood pressure, you may fall into the Standard category in which you will have to pay more for your insurance.

    Insurance classes or categories can give you a broader idea what you can expect to pay but all insurance companies work differently.  For instance, if you involved in high-risk activities such as flying a plane or rock climbing, some insurance companies will place you in a lower category while another might place you in a higher class but there will exclusions on your policy.  

    The exclusion could be, if you were to die while performing one of these activities, your loved ones would not receive benefits. This could be something like a lifestyle activity such as Skydiving.

    8. Choose the life insurance policy that’s best for you

    Once you have chosen the length of your policy and the amount of coverage you need, there is only one difference between different policies – the price.

    Comparing prices is easy when you work with an independent broker.  They will run quotes for you based on your specific requirements which will let you compare policy prices very easily.

    Using a broker will not cost you any money BUT, as nothing in life is free – the broker’s fee will be included in your insurance policy premium (even if you were to purchase your policy directly from an insurance company).  Keep in mind that insurance companies are state regulated and the pricing tables must be reported to the state.  A broker’s commission is included in these pricing tables, so whether you work with a broker or not, you will end up paying the same amount.

    These tables are regulated by the state and every broker will provide you with the same rate for insurance.  They cannot offer you discounts

    Life Insurance Blog is an independent broker where you can go through every aspect online in the comfort of your home or office.  Once you have gone through the quote engine, you can then move on to the next setup.

    9. Fill out the online or phone application

    Don’t worry if you’re asking is the process of buying life insurance easy. It’s a simple process when your agent prepares and guides you through the process. It’s very easy to fill out an application and will only take approximately 8 minutes to complete.

    Have all your documentation with you regarding your income and your latest tax return.  You will also have to sign authorization forms allowing your health information be shared with the life insurance company. If you need help filling out your application, you can set up a time for an expert to call you or you can call them during normal business hours.  Life Insurance Blog experts are licensed and will not share your information with anyone except the life insurance company.

    10. Free medical exam (if needed)

    Most life insurance policies require a medical exam before you’re approved. Many people are very nervous before going to their doctor for an exam, especially if your exam will affect how much you will have to pay for your insurance policy.  The good news, your exam will be completely free, will take approximately half an hour, will fit your schedule, and can take place in your office or at home. It is specifically designed for your convenience. Keep in mind, getting a medical exam does not commit you to buying a policy.  It’s free with no hidden requirements.

    11. Your phone interview

    This conversation is very casual and laid back.  Your interviewer will ask you basic questions about your lifestyle such as how you spend your Saturdays, do you work around the yard or jump out of airplanes?  

    You will be asked basic questions about your health history as well. You should be given a list of questions from the insurance company ahead of time so there are no surprises.  Your phone interview will only take approximately 20 minutes at tops.

    Have the name, address, and phone number of your primary doctor and any other doctors you have seen over the past few years.

    12. Waiting for the underwriter’s approval

    You’re almost done!  

    All you have to do now is wait for the underwriter’s approval.  Underwriting is a process the insurance company uses to assess their risks.  Your insurer will use your medical examination and phone interview to determine the final cost of your policy, to minimize their risk while making sure your policy is competitively priced. Some companies are more strict with certain risks. This is another reason to use an independent life insurance agent from the beginning. They’ll find the best companies for your specific situation.

    See Related: Do all life insurance companies look at you the same?

    The underwriting process can take anywhere from 2 to 6 weeks to complete.  A lot of this time is due to your doctor’s office. If you have any medical issues, the underwriter will want to look at your medical records.  Unfortunately, doctors’ offices are exceptionally slow at responding to these requests and can take as long as 3 weeks to get the records.

    13. Sign up and pay for your policy

    When your policy is ready, your broker or insurance company will mail it to you either through standard mail or through a carrier such as UPS or FedEx. Sign all the papers, authorize your payment method, and return the form.

    After that, Congratulations!  

    You now have life insurance and are no longer one of the millions that are still sitting on the fence trying to decide what to do.  Share this information with your family and friends so they will also know how to buy life insurance the right way!

    How can you easily buy life insurance? 

    It’s simple if you follow the 13 steps we laid out for you. All you need to do now is get started at step one.

    We’d be happy to help find the best life insurance policy available. We’ll help you throughout the entire process and provide you quotes, help you apply and approved. Have more life insurance questions?

    Visit our Life Insurance 101 learning center for more tips and advice.

    Michael Quinn

    Michael Quinn

    Michael is a licensed life insurance agent, expert & owner of Life Insurance Blog. LIB has helped thousands of shoppers understand life insurance and secure affordable coverage.

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