How To Buy Life Insurance - Slimmer Payments

How To Buy Life Insurance

Life insurance is paramount to financial security, but no one is really chomping at the bit to start the process. It can be confusing, boring, and a bit morbid. But if someone relies on you for financial support, like a spouse or a child, it’s definitely a good idea to obtain life insurance. We’ll walk you through the steps you need to take in order to procure a policy.

First — what is life insurance? Life insurance is a risk management tool that protects your loved ones if you die unexpectedly. Life insurance benefits protect your beneficiaries and can provide financial coverage for college, dependent care, burial expenses, and other debts that your family could be responsible for on your passing.

Obtaining a life insurance policy can be a lengthy process. This is not a “one-size-fits-all” purchase. You’ll need to decide on a coverage amount and type of policy, pick a provider, and go through the application process. 

Here’s how to buy the life insurance you need.

Ways to buy life insurance

Generally, there are three basic ways you can buy life insurance:

  1. Directly from an insurance company
  2. From an insurance agent
  3. Via an online insurance broker

It’s a good idea to shop around and make sure that you’re getting the best rates, so for that reason, it’s always better to buy life insurance from an independent broker.

What type of life insurance should you buy?

Term life insurance is the best option. The insurance industry turns a big profit — and big commissions for their agents — from products like whole life insurance, universal life insurance, or cash-value life insurance. For most people, however, anything other than term life insurance isn’t a good deal.

Term life insurance is easy to wrap your head around because it works just like your car or homeowner’s insurance. You’re covered for every year you pay your term life premium. If you die within the covered period, the policy pays a death benefit. If you stop paying your premium or your policy expires, the coverage ends. Pretty simple, right?

Term life insurance is also relatively inexpensive. For instance, a healthy person in their 20z might be able to buy a $1 million 20-year term life insurance policy for $500 a year. A smaller policy of $250,000 might only cost $20 a month.

Information you’ll need to get a quote

Before getting your life insurance quote, you’ll want to gather standard stuff like your social security number. You’ll need proof of identity, citizenship, and age — like a driver’s license or valid passport. Additionally, you’ll want to gather proof of income, such as pay stubs or a bank statement. You’ll also want to be familiar with your medical history and the results of your most recent physical exam. 

Most providers will ask you for your age, weight, gender, and whether or not you smoke. Smoking is actually the biggest factor in pricing life insurance, so be prepared to pay more if you’re a smoker.

You’ll want to be as honest as possible when the broker asks you questions about your medical history, as this information will be verified by your medical record or during an exam when you apply. 

Decide how much insurance you need, and for how long

It’s common practice to buy enough life insurance to replace your income until your children turn 18, plus an additional amount to cover debts or education expenses.

Common terms are 10, 20, and 30 years. If you’re unsure about which term you should choose, there are many life insurance calculators you can find online.

Apply for a life insurance policy

After you’ve finished shopping around and have found your best quote, you’re ready to apply. The application process can include some personal questions, paperwork, and a medical exam. 

First, you’ll need to hop on a call with an agent who will verify the information you provided and confirm that the quote you selected is your best policy option. Then they’ll provide some paperwork for you to sign and submit your application to the insurer.

Next, the insurance company may require a medical exam (most do). A paramedical professional will contact you to schedule.

Then, the examiner will take a thorough medical history to confirm the information you provided on your application. They’ll take your blood pressure, and draw a blood sample. Your sample will be sent to a lab to test for cholesterol and glucose levels, as well as tobacco and drug use, and diseases. You’ll get the results by mail. 

Remember to be completely honest, as misrepresenting information can have adverse effects on your ability to obtain life insurance. 

What to expect after you apply

You’re approved! Next, your policy is placed in force and you’ll be notified and receive a full copy of the policy. And, of course, it’s time to pay your first premium.

Be sure to ask when you policy will be effective (especially if you’re replacing an existing policy — don’t cancel the old policy before the new policy is in place). 

The agent will send you a hard copy of your policy, which you should make a copy of for safekeeping.

Finally, you’re done! Enjoy the peace of mind that comes with ensuring that a financial plan is in place for you and your family. 

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