How to Buy a Life Insurance Policy
- Know the reason why you are looking to purchasing a life insurance policy. Are you looking to pay off debt when your significant other passes away? Do you need income to replace the primary wage earner? Are you looking for a policy to cover final expenses (aka burial costs) only? Knowing the reason for the policy will help determine the direction to take next.
- How much coverage you need? The answer to this question will depend on the answer to the 1st question. If you are looking to pay off debt, you’ll need to know how much debt you currently have. If you are looking to cover final expenses, you’ll need to have an idea of the type of burial you want (cremation or in-ground).
- Educate yourself on the different types of policies available (term life, whole life, universal life). Each provides coverage for a separate need. Term life provides coverage for paying off debt, whole life provides coverage for final expenses/burial costs, and universal life provides a combination of the two. It is important that you understand how each policy works, especially Universal Life.
- Obtain a quote. Many financial advisors and insurance agents offer life insurance policies. I suggest obtaining a quote from a company with a strong financial background and good customer service. You want to be able to talk to someone that has knowledge in the products they are offering and is there when you need them.
- Fill out the application. Provide honest answers, without being too honest. Remember, the carrier only needs to know the health conditions you’ve been diagnosed with, not the conditions you think you may have.
- Prepare for the phone interview. Once an application has been submitted, the carrier will reach out to ask you additional questions. This is to verify the information on the application is correct and to obtain additional information that may not have been asked originally. Have a list of your doctors available along with medications and dosages.
- Schedule a life insurance medical exam. The carrier will contact you to schedule an exam based on your schedule and at your preferred location (work or home). The medical exam typically consists of height, weight, mouth swab (to check tobacco use), urine sample, and blood. *NOTE: Not all plans will require a medical exam. *
- Wait for approval. The whole process takes about 1-2 weeks depending on your medical history. If the carrier needs additional information from your doctor, it can take longer.
While the process may seem overwhelming to some, working with a good agent that can answer your questions and provide updates along the way is important. If you are unsure on how to begin, don’t over think it, something is better than nothing!