Life insurance provides financial protection for your loved ones in the event of your death. Here’s a step-by-step guide on how to get life insurance.
Decide Why You Need Life Insurance
Before applying for a life insurance policy, think about why you need coverage and how much you require. Common reasons to get life insurance include:
- Replace lost income –If you die, your income will be lost. Life insurance provides funds to replace that income for dependents.
- Pay final expenses -Funerals, burials, and debt can be costly. Life insurance covers these expenses so your family isn’t burdened.
- Fund college savings- Life insurance death benefits can fund college savings if you pass away before your children reach adulthood.
- Support aging parents -Your parents may rely on your financial support. Life insurance will care for them if you can’t.
- Pay off mortgage – Life insurance can pay off your remaining mortgage balance so your family keeps their home.
- Cover business needs – Partners can use life insurance proceeds to buy your share of a business if you die.
Once you know why you need coverage, determine how much you need. Aim for 10-15 times your annual income in coverage.
Choose the Type of Life Insurance
There are two main types of life insurance:
Term Life Insurance
Term life insurance provides coverage for a set period of time, usually 10 to 30 years. It has lower premiums but coverage expires unless renewed. It’s best for covering temporary needs like paying off a mortgage.
Permanent Life Insurance
Permanent life insurance provides lifelong coverage. The premiums are higher because the policy accumulates cash value. It’s best if you want coverage for your entire life.
The most common types of permanent life insurance are:
- Whole life – Offers fixed premiums, death benefit, and cash value that grows over time.
- Universal life – Offers flexible premiums and adjustable death benefit and cash value.
- Variable life – Offers investment options for cash value which fluctuates based on performance.
Consider your budget and needs when choosing between policy types. Term life works well for temporary needs while permanent life is better for lifelong coverage.
Compare Quotes From Insurers
Get quotes from multiple highly-rated insurance companies before selecting a policy. Comparing quotes helps you find the most coverage for the lowest cost.
Insurers consider factors like age, health, lifestyle, and family history when determining premiums. Even with the same coverage limits, quotes can vary significantly between insurers.
Online insurance marketplaces like Policygenius allow you to get customized quotes quickly by answering a few questions. An independent insurance agent can also provide quotes from multiple companies.
Make sure to compare policy features and not just the premium cost. Look for added perks like accelerated death benefits that pay out part of the death benefit early if you become terminally ill.
Get a Medical Exam
Most life insurance companies require a medical exam as part of the application process. An examiner will check vital signs like blood pressure, height/weight ratio, pulse, and cholesterol.
You’ll also provide blood and urine samples so the insurer can check for any medical conditions. Nicotine tests are common for smokers applying for coverage.
In some cases, insurers may accept applications without an exam. This usually applies to smaller policies with coverage up to $100,000 to $250,000. You’ll pay higher premiums for a no-exam policy.
If you have a chronic illness, get declined for standard insurance, or want larger coverage limits, expect to complete an exam. Being honest about your health helps prevent delays with issuing the policy.
Submit Your Application
With your quotes and medical exam complete, it’s time to fill out the insurer’s application forms. Most applications can be completed electronically for faster processing.
You’ll share personal information like:
Full legal name and contact details
Date and place of birth
Social security number
Income and net worth
Health and family medical history
Lifestyle questions about tobacco use, alcohol, drugs, aviation, etc.
Avoid mistakes like submitting incorrect names or dates. Precise details ensure your beneficiaries can make an accurate claim later if needed. Sign and submit all forms.
Get Approved and Pay Your Premiums
It takes 2 to 8 weeks for life insurance approval after submitting an application. You may need to provide follow-up medical records if the insurer finds any red flags.
Once approved, you’ll get your insurance contract outlining your policy details. Check that your beneficiaries, coverage amount, and premiums are listed correctly.
Most insurers allow you to pay premiums monthly, quarterly, or annually. Paying annually costs less overall. Make sure to pay premiums on time to prevent your policy from lapsing.
Now you can relax knowing your loved ones have financial protection. Review your policy as your needs change and update beneficiaries if necessary.
Frequently Asked Questions About Getting Life Insurance
How much does life insurance cost?
Life insurance premiums are based on your age, health, lifestyle, policy type, and amount of coverage. A healthy 30 year old may pay $30 per month for a $250,000 20-year term policy. Permanent insurance for lifelong coverage costs more, often $100-$500 per month.
How long does it take to get life insurance?
It can take 2 to 8 weeks to get approved and issued a policy. Well-qualified healthy applicants can get approved quicker. Waiting periods are longer if medical records are needed or clarification required. Applying electronically speeds up processing times.
Does life insurance cover suicide?
Most life insurance policies will pay out the death benefit in case of suicide. But policies may exclude suicide claims within the first 1-2 years after getting coverage. Read the fine print to confirm the suicide clause details.
Can you be denied life insurance?
Existing medical conditions like cancer, heart disease, and diabetes can lead to being declined for traditional life insurance. In this case, guaranteed issue life insurance or final expense policies are an option although with lower coverage limits.
Is life insurance taxable?
For most beneficiaries, life insurance death benefit payouts are not taxable income. There are exceptions like when a business is the beneficiary of a policy on an employee. Consult a tax advisor to be sure.
Getting life insurance provides important financial protection for the people and purposes you care about most. Following the steps in this guide will help you find the right policy. Consider your budget, life stage, and future needs as you make decisions. With the right planning, life insurance can give both you and your loved ones peace of mind.