How to Buy Life Insurance in 8 Steps

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As you get older, having a life insurance policy provides financial peace of mind. It can replace income after retirement, help you pay off outstanding debts and support loved ones after your death. You can purchase a life insurance policy at almost any age, and there are many reliable providers on the market. However, purchasing life insurance is different from buying other types of insurance. In this guide, we’ll explain the steps you need to take to get a life insurance policy.

How to buy a life insurance policy

Purchasing life insurance can be complicated if you’ve never done it before. Unlike home or auto insurance, there are many types of life insurance policies. Each comes with pros and cons and different price tags. If you’re in the market for life insurance, here are the steps you should follow to purchase a policy that is right for you.

1. Decide if you need life insurance coverage

First, decide if you need life insurance. The main reason why people buy life insurance is to financially support their spouse or children after they die. If you are widowed, unmarried or have no children, there’s a good chance you don’t need life insurance. However, if you have debt, a mortgage or little income due to retirement, having life insurance can give you financial support when you’re older.

2. Pick a life insurance policy type

There are two types of life insurance coverage—term and permanent. There are also two types of permanent insurance—whole and universal. Term life insurance is less expensive with less benefits, while permanent life insurance is more expensive with more benefits.

  • Term life insurance: Term life insurance is generally the cheapest and most common option. It provides coverage over a specific term period, usually between 10 and 30 years. Term life insurance is used to provide financial support to your designated beneficiaries. For example, if you pass away during the term, your children or spouse will inherit the money from the insurance company. Once the term is over, the benefits end.
  • Whole life insurance: Whole life is a type of permanent life insurance that has consistent premiums and accumulates cash value overtime. If you get insurance from a mutual company, the policy is typically eligible for dividends. With some whole life policies, policyholders have to pay their premium until they die, and other policies only require a premium for a certain number of years.
  • Universal life insurance: Universal life is the other type of permanent coverage. It accumulates cash value and comes with investment options. It can also be broken down into variable and indexed universal life insurance. Universal life insurance is recommended for people who are comfortable with financial investments. It can be tricky to navigate universal life insurance, so speak with an insurance agent if you have questions.

You may want to do more research to find out which option will best meet your needs.

3. Research different life insurance carriers

Next, you’ll want to find a few life insurance companies that are appealing to you. Remember that no two companies are the same. When choosing a life insurance company, search the website and look at the policy options. The best carriers offer flexible coverages and customizable plans. It’s also important to look at customer service reviews through J.D. Power or the BBB to see what existing customers have to say. Also, check for financial strength by reviewing each company’s ratings from AM Best, S&P and Moody’s.

4. Request multiple life insurance quotes

Once you’ve selected a handful of potential providers, get quotes from each company. Most companies don’t include the price of premiums on their website, so getting quotes will help you determine which provider can give you the best deal. Most major life insurance companies have an online quote generator that allows you to get an instant rate quote right from the website. If not, get in touch with an agent.

When you receive a quote, you’ll be asked to provide some personal information, including your age, address and gender. Additionally, you will need to submit basic information about your medical history. Usually, you’ll be asked about your lifestyle, if you smoke, past surgeries and medications you’re taking. There’s no need to submit official medical records to get a quote. The insurance company will use that information to calculate your rate.

5. Fill out the application

After choosing the most affordable provider with the best coverage, fill out an application. You will be required to include basic personal information, as well as your Social Security number and driver’s license number. Additionally, you will need to submit an Attending Physician Statement (APS), which helps the insurance company verify your medical history. The APS ensures you get the right policy, and is used when calculating death benefits. Most life insurance applications can be filled out online, and it’s usually a quick process.

6. Prepare for your phone interview

After submitting an application, the insurance company might require a secondary phone interview. The interview is mostly used to confirm the information you included on the application, but there may be some additional questions asked. For example, the interviewer will want to know more about your lifestyle and hobbies, your financial health, your income and any other life insurance policies you have. The interview is generally quick and will be scheduled shortly after submitting your physical application.

7. Schedule a life insurance medical exam

Most life insurance companies require applicants to get a physical exam before they can be approved for coverage. The life insurance medical exam is like a regular doctor appointment, but the insurance company’s medical examiner will visit your home or office to see you. They will take your vitals, like height, weight and blood pressure, and draw blood. The exam takes roughly 30 minutes, and you can schedule it during your phone interview.

8. Wait for approval

When the application process is complete, your job is done. The insurance company’s underwriter will take the information they gathered from your application, phone interview and medical exam to determine if you’re eligible for coverage, and if so, what your premium is. Because there is so much information to review, the approval process can take several weeks, or up to a month.

If you get approved and are happy with the quoted premium, you’ll be sent the policy documents to sign and approve. You will also decide if you want to pay your premium monthly or annually. After the policy documents are signed, you’ll mail a physical copy to your insurance company. It’s also a good idea to keep a second copy on hand in your home.

Frequently asked questions

At what age should you buy life insurance?

The younger you are, the less you’ll pay for life insurance. However, most people don’t need to use life insurance benefits until they are older or retired. If you can afford to purchase life insurance in your 30’s or 40’s, it’s a smart idea. Most life insurance companies will allow you to purchase a policy up until age 80.

What are the best life insurance companies?

There isn’t one life insurance company that stands out as the best for everyone. Look at the customer reviews, financial strength and policy options that each company offers. You’ll also need to get multiple quotes to determine which company can offer you the best deal.