As you may know, life is full of uncertainty. From unexpected illnesses to natural disasters, many unforeseen events can leave you and your family financially vulnerable. Because of this, it is crucial to have a safety net in place for your loved ones in case something happens to you.
One way people provide for their families even after their death is through life insurance. Life insurance policies can help your family cover financial costs that may arise due to your passing, such as medical bills, funeral expenses, or mortgages.
You may think that purchasing life insurance is an easy process. However, there are specific steps involved that you should be aware of. To make sure you’re prepared for this important investment, check out our beginner’s guide to purchasing life insurance:
Step 1: Decide How Much Coverage You’ll Need
The first step in purchasing life insurance is to consider how much coverage you will need. Although it can be challenging to determine the precise answer, there are certain factors you can consider to help make the right decision, such as:
- Your loved one’s regular expenses (food, clothing, housing, medical costs, etc.)
- Financial needs of your family (education for your children, etc.)
- If you have any mortgage or debt to pay off
- Your funeral expenses
When determining how much coverage you will need, it’s good to know what your goals are. For example, if you want to ensure that your family will be able to cover basic expenses, you should purchase enough life insurance to help pay for these costs.
However, if you are looking to provide your loved ones with more financial flexibility after your death, it may be wise to aim for a policy that could meet your family’s regular expenses and even future needs, such as your children’s college tuition.
Step 2: Choose a Life Insurance Policy Type
When buying life insurance, the next step is to decide which type of life insurance policy works best for your financial goals. There are three main types of life insurance, and these are:
Term Life Insurance
As the name implies, this kind of life insurance policy covers you for a specific “term” or length of time. It is generally the most common and cheapest type of life insurance and works by offering coverage over a fixed term period, typically between 10 to 30 years.
If you pass away within that term, your loved ones will receive the amount of coverage or “benefit” indicated on the policy. Once the term is over, your beneficiaries will no longer receive coverage.
Whole Life Insurance
Whole life insurance is a form of permanent life insurance that has stable premiums and builds cash value over time. If you purchase insurance through a mutual firm, the policy is usually dividend-eligible. Certain whole life plans require policyholders to pay their premiums until they die, while others only need payment for a set number of years.
Universal Life Insurance
Universal life insurance is another permanent coverage in which the policy grows cash value through investment options. Whole life insurance has fixed premiums and assured cash value growth, whereas universal life insurance has flexible terms.
Two common types of universal life insurance are flexible premium policy and indexed universal life insurance. Consumers often choose index-based universal policies when they want to take advantage of market returns without sacrificing coverage or premiums.
Step 3: Find a Good Life Insurance Provider
Once you’ve decided on the type of policy, it is time to find a trustworthy life insurance company.
When choosing a life insurance provider, you first need to check if state insurance regulators license the company. Doing so will ensure that the company you are working with is reliable.
In addition, you should also consider companies that have been around for many years as they are more likely to be financially secure and trustworthy than those just starting out.
Reading online reviews and testimonials is another way to find out about a company’s reputation, giving you an idea of what you can expect from the firm.
Step 4: Compare Insurance Quotes
A great tip to ensure you get a good deal is to compare life insurance quotes from multiple providers. It is essential to compare quotes as premiums may vary even for the same coverage amount and term length.
Having a wide range of options will allow you to find the best insurance policy that suits your needs and budget.
Many life insurance companies feature an online quote generator on their website, allowing you to receive an instant rate quotation. But in case they don’t, you can always contact their insurance agent for a quote.
Step 5: Fill Out the Application and Wait for a Phone Interview
The last step in purchasing life insurance is to fill out an application and attend a phone interview. You will need to disclose personal information, such as your full name, occupation, birth date, and medical history.
Once you have submitted the online application, the company may call you for a phone interview within days or weeks. Insurance providers conduct a quick phone interview to make sure the applicant understands the provisions of a life insurance policy.
If you pass the phone interview, you will be asked to submit a medical examination report from a doctor or health care provider.
After this step is completed, all there’s left to do is wait for approval. Bear in mind that life insurance providers usually take up to weeks or months to process an application, so it’s best to talk to your agency now and then to check on the status of your application.
About Rodrian Insurance
Rodrian Insurance specializes in giving you insurance solutions that perfectly match your business and personal life. We provide insurance options that offer excellent coverage while remaining within your budget, based on a thorough understanding and assessment of your needs, circumstances, and financial capability. Find out more about how Rodrian Insurance can fulfill your insurance needs. Call or text us at (262) 781-4750 or email us at info@rodrian.com.
