The right life insurance policy can be crucial in ensuring the financial protection of your loved ones. This guide will walk you through the steps with ease

Couple with a young child and dog holding an umbrella for protection

So you’ve decided to buy life insurance, but did you know aside from protecting your loved ones in case of life’s uncertainties, it can also help you build wealth and cover you if you’re unable to work. That’s why finding the right policy can be so useful in building a strong foundation for risk management. As you start your research, the steps in purchasing life insurance can seem overwhelming between knowing what kind of insurance you need, who to get a quote from, how buy it and more. But that’s why we’ve created a guide to help you navigate these steps, so you can walk away with a plan that best suits your needs!  Let’s walk through the steps and make this complicated process a little more manageable.

Step #1: Figure out what kind of insurance you need

The two most common types are term and whole life insurance, but each plan provides different features

Couple holding a small baby

Term life insurance provides coverage for a certain number of years and can only provide financial protection to your loved ones during that term. This term is generally 10 or 30 years. If you outlive the term, the benefits are no longer active unless the policy is renewed. It’s the cheapest kind of life insurance because it imposes less of a financial risk to insurance companies, so you can expect to pay far less premiums than whole life insurance. This is why we recommend term insurance to new parents especially.

Whole life insurance offers the same benefits, but the main advantage is that it doesn’t expire, so your beneficiary will receive the payout no matter what. It is also able to accumulate a cash value over the course of your life which you can then use. This is commonly used on medical bills late in life or nursing care. Because of these added benefits, whole life insurance policies tend to be more complex and expensive.

Step #2: Research different types of carriers

There are many insurance companies to choose from which might make the process confusing, but narrowing it down to a few might help

Hand holding couple and child surrounded by different insurance policy symbols

When researching life insurance companies, keep in mind, each company’s policy options will vary, so try to find a few that suit your needs as much as possible. Search each company’s website and learn about their policy options. Some factors you may want to consider are competitive rates, coverage options, customer service and more to help you find which one would be the right fit. For example, you can review a company’s level of customer service by reviewing J.D. Power studies for life insurance.

Step #3: Request multiple quotes

Once you’ve narrowed down your pick of carriers, requesting a quote from each one will assist you in determining the most affordable rate

Paper cut out of a family on top of dollar bills

Once you’ve narrowed down your pick of providers, request multiple quotes. The quotes will help you determine the price of the potential premium you would have to pay, so you can then decide what provider would be best for your budget. Before requesting a quote, know you will be asked to submit basic information such as your medical history, smoking history, lifestyle along with personal information such as age, address and gender. This information is used to calculate your life insurance rate. Most life insurance companies also have an online quote generator that allows you to get an instant term life insurance quote so no need for waiting!

Step #4: Fill out the Life Insurance application

After you’ve selected your carrier of choice, now you just have to fill out a quick online application form

Man using pencil and magnifying glass to fill out application

Congrats! You’re almost there! Now that you’ve selected your provider, your next step is to fill out an application. Similarly to the quote request, you will be required to include your personal information along with your social security number and driver’s license number. Questions may also include information regarding your work history, beneficiaries, identity and more. This information helps insurance companies confirm your identity as well as know how to calculate the potential risk of having to pay out a death claim. Most life insurance applications can be filled out online and are quick!

Step #5: Stand by for follow ups

Many insurance companies require a physical exam, phone interview, and health records as part of the application process

Patient holding clipboard for approval with two doctors

After submitting your application, the insurance company might require a secondary phone interview to confirm the information you included on the application. The interview is generally quick. Many life insurance companies also require applicants to submit a physical exam before they can be approved. These exams are conducted by the company’s medical examiner in your home or their office. It’s generally recommended to take a medical exam because your rate will probably be much lower versus opting out on it. But know that the waiting process will be slightly longer by a few weeks.

Step #6: Wait for approval

You did it! You’ve completed the process, but it may take up to several weeks to learn about your eligibility, rate and coverage.

Three people sitting next to each other in a waiting room

Now that you’ve completed the application, the insurance company’s underwriter will take the information you’ve submitted and determine if you’re eligible for coverage and what your premium will be. Because of the breadth of information to review, the approval process generally takes a few weeks to one month. Once you get approved, you can also decide if you’d like to pay your premium monthly or annually and once your first payment is made, your policy is officially active!

We hope this guide helped you break down the steps in purchasing life insurance!