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Life Insurance Basics

How to buy life Insurance in 6 easy steps

This article walks you through the six typical steps of shopping for and buying a life insurance policy.

Life insurance buying made easy

Whether due to a major life change like getting married or having a baby, or simply thinking more about the future, you may decide that life insurance is an important step to financially protecting those you love. 

There's a first time for everything. And if you've made the decision to purchase a life insurance policy for the first time, chances are you're wondering where to start. Fortunately, what may seem like a complicated process, isn't as intimidating if you invest in a little research and follow a few simple steps.

While everyone's situation is different, the following steps are a typical part of the life insurance shopping and buying process.

How to increase the likelihood of getting a lower life insurance quote

If you’re shopping for life insurance, it makes sense that you’ll want to find the very best coverage at a price you can comfortably fit into your monthly budget. There are a few things you can do to increase the likelihood of receiving a lower quote. First, purchasing a policy when you are young and healthy can keep premiums lower than purchasing a policy when you are older. 

Second, from the standpoint of the life insurance company, the healthier you are, the longer you are likely to live. Therefore, you’ll find that life insurance premiums are lower for individuals who have good habits that allow them to maintain a healthy weight, a safe blood pressure, and normal cholesterol levels.  

Learn the life insurance vocabulary 

Finding the right life insurance policy for you may require a bit of research. To better understand what you are reading, it is helpful to understand some basic life insurance vocabulary. Here are some common terms to help get you started.

  • Term life insurance — This type of life insurance is temporary. It provides a given amount of coverage for a specified period of time, which ends at the expiration date set in the policy. 
  • Permanent life insurance policy — Permanent life insurance does not expire as long as required premium payments are made on time. They are designed to last your entire lifetime and often accrue cash value over time.
  • Insured — The individual whose life is insured by the life insurance policy. Upon this person’s death, a benefit is paid to the named beneficiaries if the policy is in force. 
  • Premiums — Premiums are simply payments you make to keep your life insurance policy in force. Your life insurance policy will remain in force until the end of the contract or until you die, as long as required premium payments are made on a timely basis. 
  • Beneficiary — The beneficiary of a life insurance policy is the person or people named by the insured who receive the death benefit upon the death of the insured. 
  • Death benefit — This is the money paid to the beneficiaries when the insured dies. 

Tips for buying life insurance

While everyone's situation is different, the following steps are a typical part of the life insurance shopping and buying process. 

Step 1: Decide on a policy type

Don't let the different life insurance policy types confuse you. Basically, there are two fundamental types of policies - term and permanent.* By doing a bit of online research, you can better understand the particular type of life insurance that's best for you. Then, an experienced agent or company representative can explain what products they can offer you.

Step 2: Calculate how much life insurance you need

Simply put, if you were to die tomorrow, how much would your loved ones need to meet their immediate financial obligations? The fact is, when you die, your paychecks stop. So it makes sense to start by replacing your annual income. For example, if you currently make $45,000 a year, start there. Then, figure out how many years your family may need this income, add in any outstanding debts, and then finally, deduct any funds you may already have saved. Plug these numbers into a life insurance calculator that can instantly give you an estimate of your life insurance coverage needs.

Step 3: Check your budget

Life insurance is a lifelong commitment. You don't want to buy a life insurance policy today, only to have it lapse a year later. Once you understand the policy type that'll work best for you and have calculated how much life insurance you should have, review your budget. While you want to buy enough coverage to meet your needs, it should fit within your monthly budget. A qualified insurance agent can help you design a plan that considers both.

Step 4: Get quotes from reputable insurance companies

When shopping for quotes, aim to get at least three from reputable and established life insurance companies. You can spend some time on the Internet shopping for coverage, or make an appointment with an agent. Whatever method you choose, research how long the company has been in business and how financially sound they are.

Step 5: Ask questions

Once you have a few quotes, get answers on things such as how the company can bill your premiums (monthly, quarterly, or annually), policy rider options, and who you can contact for policy changes, updates, and billing questions.

Step 6: Prepare for your medical exam

Most life insurance companies will require a medical exam that typically includes a blood draw and urine sample. Because people tend to be more relaxed at home, try to get the examiner to come to your residence - if possible. Be sure to follow any instructions regarding how you should prepare for your exam (such as fasting for a certain amount of time, drinking enough water, and avoiding caffeine or strenuous exercise).

The decision to purchase life insurance for the first time is an important one. If you have questions along the way, don't hesitate to reach out to the insurance company or contact a financial professional.

*As long as required premium payments are maintained.



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All Learning Center articles are general summaries that can be used when considering your financial future at various life stages. The information presented is for educational purposes and is meant to supplement other information specific to your situation. It is not intended as investment advice and does not necessarily represent the opinion of Protective or its subsidiaries.

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