Life insurance is an essential need in today’s society, and there is no better way to protect your family and loved ones than by having an adequate life insurance policy with enough coverage for your particular situation. Figuring out how to buy life insurance; however, can be confusing and overwhelming, as the technical aspects of the policy can seem daunting. In this article we will discuss various ways for you to obtain quotes and discuss how to purchase your policy. Depending on your age, buying life insurance could potentially be the longest financial commitment you enter into in your entire life, and should be regarded with the appropriate seriousness and rigor that you would treat a similar financial commitment such as buying a house with a mortgage.
In many ways, buying a life insurance policy has changed a lot from the days of door to door salesmen, but in other ways it is still quite similar. Above all, we hope that you come away from reading this article with confidence to tackle the buying process and an understanding of the pros and cons of each method.
Method #1 – Use an online quote comparison engine
Buying life insurance online has come a long way, and today is our most recommended method for obtaining the cheapest life insurance. Even if you decide to not purchase your policy online, you should at the very least, use an online tool to obtain various quotes and ensure you are getting the most competitive price for your policy. It is important to note that not all online life insurance buying options are created equal. Some companies are more “tech-enabled” than others, and as a result, some may require quite a high level of human interaction instead of being a fully digital process.
Method #2 – Contact a trusted life insurance agent
The most traditional and still very common way to buy life insurance is to purchase through a licensed life insurance agent. A life insurance agent will walk you through the steps to obtain an accurate and fair quote, and then will help you through the process of purchasing your policy. Agents often provide after-sale support, being the first person a policyholder contacts whenever they have any questions about the policy specifics, such as what is covered, or whenever they wish to make a change to the existing policy.
You can verify the license status of a life insurance agent by checking their status on the National Association of Insurance Commissioners (NAIC) Producer Registry. Insurance licensing is regulated at the state level,and NAIC coordinates standards and the registry for all jurisdiction. As the licensing is per state, it is important to ensure your agent is licensed to sell life insurance in the state you (the life insurance buyer) live in, not where the agent resides. Additionally, being licensed to sell one kind of insurance does not automatically license the agent to sell life insurance. It is possible that somebody may be licensed to sell property and casualty insurance but does not have a life insurance license – a check in the NAIC registry should provide full clarity on the agent’s license.
Method #3 – Contact your current employer’s benefits administrator
Life insurance is viewed as an essential safety net, in a similar way to health insurance. As a result, many large employers offer discounted life insurance rates as part their benefits package. Not only that, but some employers will even provide complimentary basic life insurance without the employee themselves having to pay anything out of pocket. Do not be lulled into comfort by this; though, as many Americans make the mistake of believing they are adequately covered with their employer’s complimentary policy, when in reality they are severely underinsured. These policies often only provide less than 1 year’s salary, a far cry from the million dollar life insurance policy many families need in order to be protected after a policyholder passes.
Things to be aware of when buying life insurance
- Start early – The main factor, by far, that determines how expensive your life insurance premiums will be is your current age. This is why, if you can afford it, we highly recomend you obtain life insurance as early in your life as possible. If you are over 50 or over 60, you will generally pay more, but do not despair, as there are still ways that you can find affordable life insurance at those ages.
- Document your health history – You do not need to have perfect health to buy life insurance, but you should document your health history as much as possible, and understand that any insurance company will take your history and pre-existing conditions into account when deciding how much premium to quote for your life insurance policy.
- Understand the impact of your habits and/or hobbies – You may be surprised, but your hobbies, particularly some eccentric hobbies such as scuba diving and skydiving can actually cause you to pay higher life insurance premiums.
- Stop smoking for 12 months prior to obtaining your life insurance quote – This will show insurance companies you are serious about improving your health and quitting smoking, and will result in lower premiums.
- Be honest – Above all, you need to be 100% honest not only in your application but throughout the entire life of your policy. An insurance company can deny a claim for lack of honesty or misrepresentation, and this has happened in many occasions. The last thing you want is for your loved ones to have no payout because you saved a few dollars on your monthly premium by omitting some aspect of your health or life.
We hope that this article has been helpful in educating you about your various options for purchasing life insurance. Above all, the most important things are to obtain various quotes, use a trusted advisor (even a friend or family member knowledgeable in the field can help), and to mitigate and document any problematic health conditions.