Ways to buy life insurance
Depending on where you live, you'll likely have three options when it comes to buying life insurance. You can shop for life insurance with an independent local insurance agent, through an independent online broker, or by going directly to an insurance company. You can even try all three methods of shopping for life insurance to compare quotes and determine which experience you're most comfortable with:
- Independent local insurance agents offer a personal touch to helping you find quotes that match your needs.
- Independent online brokers can present you with a wide variety of insurers and options while keeping your life insurance shopping experience completely digital — like Progressive's life insurance provider eFinancial does.
- Life insurance companies offer the advantage of being direct experts on all their policy offerings. Depending on the company, you may be able to obtain their life insurance quotes online, by phone, or with an agent.
A note on employer-provided life insurance
Your employer might offer you another option to purchase life insurance. Companies often provide a set amount of life insurance as part of their benefits package. If you decide to take the benefit offered at work, it's still a good idea to review your financial situation and make sure you don't need additional coverage. The coverage amount offered by your employer might not be enough to provide for your dependents long term or pay off debt if something happens to you.
What to look for when buying life insurance
Especially when shopping independently, be sure to research the life insurance companies behind the offers you're presented with. Key things to look for in an insurer before purchasing a life policy include:
- Knowledgeable customer service: Can they answer your questions?
- Trustworthy agents: If you're using a local agent, are they well known and recommended by someone you trust?
- Great consumer reviews: Does the insurance company have mostly positive reviews of their products and service?
- Financial stability: Is the underwriting insurer considered financially secure? Look up its financial security rating from a few independent agencies like A.M. Best and Fitch Ratings. The higher the ratings, the stronger an insurer's financials, which generally means you don't have to worry about the company going under while your policy is active.
The insurers known for having excellent customer service and strong reviews from their policyholders may be worth pursuing. Paying a few extra dollars for a policy can be worth it if it means you'll always have a knowledgeable resource available to answer your questions.
Another factor to consider when buying life insurance is the type of life policy. Ultimately, your two main choices will be term life or permanent life insurance, each of which is designed differently. A term life insurance policy will typically cover you for a set period, usually somewhere between 10 and 30 years, while permanent life insurance covers you for life, as long as the premiums are paid.
Determining how much of a death benefit you need
Regardless of which insurance type you select, consider the amount you want to provide your beneficiaries upon your passing. This is called your death benefit or coverage amount. Your first step in selecting a death benefit amount is to plan for your funeral and estate costs. You might opt for final expense insurance to cover those costs, but remember to consider other factors as well, including your:
- Existing debt
- Current expenses
- Future expenses
Once you determine how much life insurance coverage you need, selecting a plan that fully provides for your loved ones becomes easier. Keep in mind that your premium will depend on the type of coverage and benefit amount you choose. That's why it makes sense to get multiple quotes to determine the best life insurance for you and your budget.