An Ultimate Life Insurance Buying Guide
Life insurance is one of those things that practically everybody needs but nobody wants to think about. It’s an important part of financial security but can make people uncomfortable when it comes to talking about it.
If you’ve recently added a new member to your family, then it’s time to consider buying life insurance or adding to your coverage. You shouldn’t wait to get life insurance because it’s cheaper when you’re young and healthy.
Our life insurance buying guide has all of the information that you need to make sure that you get the right policy. So keep on reading and we’ll take you through everything you’ll want to know!
How to Purchase Life Insurance
There are three main ways that you can purchase life insurance.
First, you can buy it directly from an insurance company. You can also get it via an independent online broker or through an independent local insurance agent.
It should be noted that you should always purchase life insurance from an independent broker. Whether this is an online or local agent.
If you shop with an agent who just works for one insurance provider, then your options are going to be very limited. You’ll also likely end up paying for more than you actually need.
If you work with an independent insurance broker who you trust, then they should be the first place where you go for personal life insurance advice. Just be aware that the broker might show you different kinds of life insurance and you might become overwhelmed.
After you know what kind of life insurance you want to get, it might be easier to compare policies. However, there are still many variables that you’ll have to take into consideration.
What Type of Life Insurance to Purchase
For many people, they really only need to consider term life insurance. This is a cheaper form of life insurance and makes the most sense financially.
Other kinds of life insurance include cash-value life insurance, universal life insurance, and whole life insurance.
Term life insurance is easy to understand because it works just like homeowner’s insurance or auto insurance. For every year that you pay your term life premium, you’ll be covered.
If you pass away within the period that’s covered, then the policy will pay a death benefit. When you stop paying your premium, or the policy expires, your coverage will end.
Term life insurance is fairly inexpensive. A young person in their 20s might only have to pay a premium of a few hundred dollars for a $1 million policy.
With that said, you should also consider paid-up additional insurance. This is an additional whole life insurance coverage that you buy using the dividends from your policy instead of the premiums.
This insurance is available as a PUA rider on a whole life policy. It lets you raise your living benefit and death benefit by increasing the cash value of the policy.
How to Apply for a Life Insurance Policy
After you find the best quote, you have to apply for your life insurance policy. This process can take many weeks. The application process can even involve a medical exam, paperwork, and many personal questions.
First, you have to verify your application. You can do this by talking with a broker on the phone who can verify some of the information that you gave online. They can confirm that the quote you chose is the best policy for you.
The agent is going to provide you with some paperwork to sign and send your application to the insurance company.
Schedule Your Medical Exam
If the insurance provider needs you to take a medical exam, then you’ll be contacted by a contractor. This contractor is referred to as a paramedical professional and they’ll schedule your exam.
The paramedical is a professional who has been trained in performing physical exams.
Complete Your Exam
The examiner is going to go over your medical history in order to confirm the information on your application. They will take your blood pressure and draw a sample of blood to test for diseases, cholesterol, drug use, and more. The results will be sent to you via mail.
When it comes to life insurance applications, it’s very important that you’re honest. Insurance companies share information with each other. If you lie, you won’t just be denied by one provider but you could end up being banned by many of them.
Even worse, lying could give legal grounds to the insurance company to deny paying out your family when you die.
The job of the insurance underwriter is to take all of the information on your application and your medical exam and decide if they should insure you. They also need to figure out how much to charge you.
This can take several weeks.
You’re going to want to ask your broker whether the carrier binds any life insurance upon receipt of the application. For example, when you send your application and check for your first premium, most providers will insure you for something. It won’t be the full amount that you request, as that will only be after the underwriting process is completed.
What to Expect After You Apply
After your policy gets approved, you’ll be notified and will be given a copy of the policy. Make sure to ask when the policy becomes effective.
Your agent will send a hard copy of the policy to you. You should make a copy of this so it stays safe.
Make Sure to Follow This Life Insurance Buying Guide
Hopefully, after reading the above life insurance buying guide, you now have a better idea of how to acquire life insurance. Buying life insurance can be scary and complicated, so simplify it by following our guide and working closely with a trusted broker.
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