How to buy life insurance

Buying life insurance requires a few simple steps: determining if you need it and how you want to shop, identifying reputable life insurance companies, and then figuring out the policy type, coverage length, and coverage amount you need. And, if you have life insurance through your employer, you'll want to factor that in to how much coverage you get when you buy another life policy.

4 min to read

1. Determine if you need to buy life insurance

Before you start gathering quotes, you should make sure life insurance is necessary for you. For many policyholders, life insurance is a necessity because they have dependents, such as children or elderly parents that they provide for. Others purchase life insurance to ease the financial burden of their death on their surviving family members. If you're not sure if life insurance makes sense for you, consider some of the other reasons you may need life insurance.

2. Decide how you want 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 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.

  • 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.

Pro tip:

Buying life insurance online allows you to shop around. Look through different quotes to consider what you want in your policy, including benefits, term lengths, and premiums.

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 basic group life insurance as part of their benefits package, in addition to optional supplemental life insurance.

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.

3. Know 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.

4. Figure out which type of life insurance you need

Another factor to consider when buying life insurance is the type of life policy. Ultimately, your two main choices will be term life or whole 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 whole life insurance covers you for life, if the premiums are paid. Note that term life is generally more affordable than whole life insurance.

Learn more about the different types of life insurance:

  • Term life insurance (term): Lasts for a set number of years, a good fit for those who just want coverage while their kids are young and living at home.

  • Whole life insurance (permanent): Provides lifelong coverage and includes a fixed rate cash value component that you can use to take out life insurance loans and more.

  • Universal life insurance (permanent): Like whole life, except you can modify your premium schedule and payment amount. Also includes a cash value component that grows at a variable rate.

  • Final expense/burial insurance (permanent): A lifelong policy that provides a lower amount of coverage to pay for funeral services and other end-of-life expenses.

  • Short-term life insurance (term): A temporary, one-year term policy that can help fill coverage gaps, such as when you're in between jobs.

RIDERS CAN PROVIDE ADDITIONAL BENEFITS

Depending on the insurer and policy type, you may be able to add life insurance riders to your policy. Riders are policy modifications that offer additional benefits, such as allowing you to use your death benefit for a qualifying disability or terminal illness. Learn more about life insurance riders.

5. Determine 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:

  • Income
  • Age
  • 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.

FIND OUT HOW MUCH COVERAGE YOU NEED

Our life insurance calculator helps you estimate how much coverage you need based on your current income, debt, and short- and long-term expenses. Calculate how much life insurance you need to get started.

6. Fill out and submit your application

Once you've quoted and selected a policy, you'll need to apply for the life insurance policy with the insurer. Most applications ask about your health, including any past or current medical conditions. You'll also need to provide a detailed family medical history, which insurers use to assess your risk of inherited illnesses, such as cancer or heart disease. They'll also ask about your lifestyle and habits, such as whether you smoke, how often you drink and exercise, as well as any risky hobbies you enjoy, like skydiving or rock climbing.

You'll also name your beneficiary as part of the application process. This is the person who'll receive your policy's death benefit if you die while the policy is active. Most people choose a spouse or other close relative as their beneficiary, but you can generally name whoever you want, including a charity.

7. Prepare for your life insurance medical exam (if needed)

After applying, you may need to get a medical exam. Most traditional life insurance policies require one (some policies, such as simplified and guaranteed issue life insurance, don't require a medical exam). Your insurer will let you know during the quoting or application process if you need to schedule a medical exam. Typically, your insurer will arrange for a paramedical to come to your home or other preferred location to perform a basic physical and take specimen samples, such as blood and urine.

The exam is part of your life insurance company's underwriting process — the way it determines the risk of insuring you and your overall eligibility. Generally, the only medical issues that may disqualify you from traditional life insurance are life-threatening chronic conditions, such as cancer. Other serious, though not life-threatening, conditions typically won't disqualify you from coverage, though they may raise your premiums.

Learn more about preparing for a life insurance medical exam.

8. Review and buy your policy

Once your application and medical exam are complete, your insurer may take anywhere from a few days to a few weeks to review all your information. If approved, they'll send you a complete breakdown of your policy details, including the rate you'll pay if you decide to buy the policy. If everything looks good, you can sign on the dotted line and complete the purchase.

Ready to buy life insurance?

Compare life insurance quotes online, or call 1-866-912-2477 to speak with a licensed representative from Progressive Life by eFinancial.

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Learn more about life insurance policies.

Please note: The above is meant as general information to help you understand the different aspects of insurance. Read our editorial standards for Answers content. This information is not an insurance policy, does not refer to any specific insurance policy, and does not modify any provisions, limitations, or exclusions expressly stated in any insurance policy. Descriptions of all coverages and other features are necessarily brief; in order to fully understand the coverages and other features of a specific insurance policy, we encourage you to read the applicable policy and/or speak to an insurance representative. Coverages and other features vary between insurers, vary by state, and are not available in all states. Whether an accident or other loss is covered is subject to the terms and conditions of the actual insurance policy or policies involved in the claim. References to average or typical premiums, amounts of losses, deductibles, costs of coverages/repair, etc., are illustrative and may not apply to your situation. We are not responsible for the content of any third-party sites linked from this page.