How to Buy a Life Insurance Policy in Seven Steps?

If you’ve never purchased life insurance before, the process could seem difficult. There are numerous varieties of life insurance policies, unlike those for homes or cars. Each has advantages and disadvantages as well as varying price tags.

Although some life insurance policies can be bought online, buying a life insurance policy through an agent is more typical. Even though you can begin a quote online, you will frequently need to interact with an agent to complete the transaction. Additionally, some steps in the life insurance purchasing procedure, including a medical examination, need to be taken in person.

Here are some suggestions for choosing the best life insurance if you’re shopping around for a policy.

How to Buy a Life Insurance Policy

1. Figure out how much coverage you need:

Choosing the appropriate level of coverage is the first step in buying life insurance. Based on your present lifestyle and financial status, you should generally think about purchasing enough coverage to support your financial dependents for a number of years following your death.

The DIME calculation, which accounts for your debt and final expenses owed, total income based on what could be required after your death, the amount left on your mortgage, and any ongoing or anticipated school-related fees, is a popular technique to determine a potential coverage limit. You can also get assistance from an online coverage calculator.

2. Choose a suitable life insurance policy type:

Term and permanent life insurance policies are both available. Permanent insurance comes in a variety of forms, but the ones we’ll concentrate on here are entire and universal. While permanent life insurance is normally more expensive and offers more benefits, term life insurance is typically less expensive and offers fewer advantages. Here is a more detailed explanation of the contents and operation of these policies:

Whole life insurance: With fixed premiums and a cash value, whole life is a type of permanent life insurance that typically offers lifetime protection. If you purchase insurance from a mutual business, the policy may also qualify for dividends based on the performance of the company’s finances. Some whole life insurance policies require premium payments to be made up until the policyholder passes away, while other policies only require payments to be made for a specific number of years.
Universal Life Insurance: Another form of permanent protection is universal life insurance. Cash value builds up, and the worth of the money increases at the pace of the current market or a fixed interest rate. Variable universal life insurance and indexed universal life insurance are two of the different types of universal life insurance.
Term life insurance: While you are still young, term life insurance is typically the most affordable option. It offers protection for a predetermined amount of time, typically between 10 and 30 years. Your chosen beneficiaries can receive financial support from your term life insurance policy. For instance, if you pass away during the term, the insurance company will pay out to your spouse or children. Unless the insurance is renewable or convertible, benefits stop once the period is finished.
3. Look up different insurance carriers:
Finding a few life insurance providers that appeal to you should come next. Keep in mind that no two businesses are the same. Look through the policy options on the internet before selecting a life insurance provider. The greatest life insurance provider for you might provide a mix of affordable premiums, insurance alternatives that meet your needs, and excellent customer support. Reviewing J.D. Power life insurance research might provide you an indication of a company’s degree of customer service. Examine a company’s ratings from AM Best, S&P, and Moody’s to determine its financial stability.
4. Request multiple life insurance quotes
After you’ve narrowed down your options to a few, request quotations from each business. Getting quotations will enable you to choose the provider that can offer you the most inexpensive rate since the majority of businesses do not list the cost of premiums on their websites. You can obtain an instant rate quote directly from the website of the majority of significant life insurance providers using their online quote generator. Contact an agent if necessary.
You will normally be asked for some personal information, such as your age, residence, and gender, when you want to acquire a quote. You’ll probably also need to provide some basic details about your medical background. Typically, questions regarding your lifestyle, history of smoking, previous surgeries, and drugs you take are asked. Official medical records are typically not required in order to obtain a quote. The insurance provider will next compute your life insurance quote based on the data you have provided.
5. Fill out the application
After deciding which provider best suits your needs, the following step is to complete an application. Your Social Security number, driver’s licence number, and certain fundamental personal data must be provided. It may also be necessary to submit an Attending Physician Statement (APS), which helps the insurance provider verify your medical background. The APS is used to calculate death benefits and makes sure you get the right kind of protection. Most life insurance applications can be filled out online, and the process is typically straightforward.
6. Prepare for your phone interview
The insurance provider may need a second phone interview after receiving an application. The purpose of the interview is primarily to verify the data you provided on your application, however there may be some additional questions. For instance, the interviewer will want to learn more about your way of life, your interests, your finances, your salary, and any other life insurance plans you may have. After submitting your physical application, you will receive a schedule for the interview, which is often brief.
7. Schedule a life insurance medical exam
Before they may be authorised for coverage, many life insurance companies require applicants to undergo a physical examination. The life insurance medical examination resembles a routine doctor’s visit, however the examiner will come to your house or place of business to see you. Your vitals, including height, weight, and blood pressure, will be taken, along with a blood sample. The exam can be scheduled during your phone interview and lasts approximately 30 minutes.
However, a medical checkup is not always necessary for life insurance coverage. You might be able to gain coverage approval without an in-person exam if you match specific criteria. No-medical-exam policies are typically more expensive since they are riskier for the insurance business, even if this can speed up the acceptance process.

It’s generally advised to take a medical exam because your rate will likely be significantly lower if you are in good enough health to pass one and don’t mind waiting a few weeks for approval. Your task is finished after the application process is finished. The underwriter for the insurance provider will use the data they collected from your application, phone interview, and medical examination to decide whether you qualify for coverage and, if so, what your premium will be. The approval procedure can take a few weeks or even up to a month because there is so much data to review.

You will receive the policy documents to sign and approve if you are accepted and are satisfied with the stated premium. Although this step is often accomplished with a physical copy, technology occasionally makes it possible to sign this paperwork digitally.

Additionally, you will choose whether you wish to pay your premiums monthly or yearly. You might be required to mail a physical copy of the signed policy documents to your insurance provider. Generally speaking, it is advised to retain a backup copy at home.