Your Complete Guide to Navigating Life Insurance Shopping

Last Updated: March 22, 2019

Last Updated: 10/2/2018

Life insurance is a crucial element to your financial well-being. However, it leaves many confused and frustrated. When it comes to protecting your family, you want to make sure you’re making the best decisions possible.

If you want to simplify life insurance shopping, here’s what you need to know to get started.

Quick Article Guide:

  1. Why You Need Life Insurance
  2. How Much Coverage Do You Need
  3. Life Insurance Options
  4. Tax Advantages of Life Insurance
  5. Ways to Purchase a Policy
  6. The Application Process


Understand why you need insurance

Before you venture out and search for the best life insurance policy, you want to be clear as to why you need life insurance in the first place. You don’t want to just purchase a policy because you think you should. You’ve probably heard many financial experts preach about how it’s a necessity, but why?

Life insurance provides families with financial security, and protects them from potential financial distress due to a provider’s absence. It can assist with the repayment of your mortgage, help fund your retirement, aid in college tuition payments, help with estate planning, and more.

If anyone relies on your income for support, it’s in your best interest to find a life insurance policy. Even if no one relies on your income at this time, you may want to entertain a policy. This is because the younger you are, the less expensive your policy may be.

Determine the amount of coverage you need

how much coverage do i needNow that you understand the importance of life insurance, you have to determine the amount of coverage you will need. The amount you will need is referred to as your death benefit. You can start by using an online calculator to help you identify the amount of coverage you may need.

If you want a more detailed estimate, you can add up all of your monthly expenses and any other expenses your family will accrue upon your death. These expenses could include education expenses, loan payments, or your mortgages. After you have a lump sum amount, divide it by 0.07. You want your lump sum earning about 7% each year to cover your ongoing expenses. This will account for inflation or any rising costs.

Combine your one-time expenses with the previous number and then you will have a rough estimate of your death benefit needs.

Even though calculators and estimates are helpful, they may not give you all the information you need. For additional information, may want to seek professional advice. An insurance expert may be able to help you evaluate all of your life insurance needs.

Understand your insurance options

Once you understand your insurance needs, you can begin looking at insurance comparisons. There is an abundance of policies ranging in prices, terms, and values. There is no “one-size-fits-all” policy for your life insurance needs.

There are several common life insurance policies you want to become familiar with. These policies include:

  • A) Term life insurance: This insurance policy may be the most popular policy for younger consumers. Most people tend to outlive their term life insurance policy because they are designed to only insure a portion of your life. Term life insurance tends to be less expensive, and you can purchase it for a 10, 15, 20, 25, or 30-year term. Keep in mind, it doesn’t have a cash value.
  • B) Whole life insurance: This insurance policy is the second most popular policy. This policy comes in all shapes and sizes. Typically, whole life insurance provides a death benefit of up to $50,000 up to age 100. Whole life insurance is very expensive since there is no medical exam requirement.
  • C) Guaranteed universal life insurance: This policy is a nice combination of term and whole life insurance. Guaranteed Universal life insurance issues a fixed rate up to a certain age instead of a certain number of years. This policy tends to be less expensive than whole insurance.

Keep in mind there are different variations of all the policies listed above. All explanations were a brief overview to give you a conceptional understanding of policies available. Understanding all policies available prior to beginning your insurance shopping process will help you make an educated decision.

Research tax advantages of life insurance

Another important component of your financial plan is your tax strategy. Many have no idea that life insurance and your tax strategy can go hand-in-hand.

For example, did you know that if your estate’s value exceeds the current state tax exceptions, life insurance can provide a tax-free inflow of money when you pass?

Furthermore, you can also receive tax-deferred growth on permanent life insurance policies. This applies to the growth on the cash value on the policy. Meaning you won’t have to pay taxes on the cash value until you go to take a distribution.

Life insurance may be able to provide additional financial security than just your death benefit alone. Get a more in-depth explanation of life insurance tax-advantages here.

Ways to buy life insurance

ways to buy life insuranceThere are three ways you can purchase insurance: you can buy life insurance directly from a company, through an independent insurance agency, or an independent online broker.

It’s important to note, you should steer clear of purchasing a policy directly with an agent that works directly with one firm. Insurance companies will be eager to sell you a policy, and it may not be the best fit for your financial needs.

Try working with an independent insurance agent you trust. They may have an abundance of policy offerings and can be a good resource for navigating the insurance shopping process. They may also help point you in the right direction with all insurance comparisons.

Completing the application process

Once you have found a policy that will fit your life insurance needs, you will need to complete the application process. What’s important to note is that depending on the policy you select, you may need to provide additional information. Most life insurance applications require five steps:

  • Complete the application: The majority of life insurance applications will require you to answer questions about your health, occupation, and hobbies. These applications will also require you to sign an authorization form to access to your medical information.
  • Finish a medical exam: Some life insurance policies do not require a medical exam, however, a medical exam could lower your rates based on your health. This exam should only take about 30 minutes. It can be completed in your home, office, or medical institution. Keep in mind, if you decide to cancel your application, you may still be able to use your prior exam.
  • Complete a phone interview: Most non-exam life insurance companies require you to speak with a licensed nurse or representative. They will ask you a variety of questions about your health and lifestyle. If you did complete an exam, this may not be necessary.
  • Wait for approval: Once you have completed the previous steps, it takes about 4 to 8 weeks to receive approval.
  • Sign the policy: After you’re approved, you will need to sign your policy – you can do this via mail or email. Once you sign your policy and pay your first monthly premium, your life insurance policy will go into effect. Be sure to get a copy of all of your documentations.

Once you have all of your documentations, share your policy with your dependents. If something were to happen, you want to make sure your family knows where to find your documentations and what amounts they should expect.

We Can Help!

We Can HelpShopping for life insurance can seem overwhelming and confusing, but it doesn’t have to be. By understanding your life insurance needs and comparing different life insurance policies, you can ensure you will find the right coverage for your family.

Remember a secure financial plan doesn’t just consist of savings strategies. A strong financial plan must prioritize protection for your family and assets. Take time today to identify your life insurance needs.

Term Life Advice is a no-fee brokerage that represents 63 top-rated life insurance companies. By working directly with dozens of companies, we’re able to save our client’s time and money by matching them with the best options available.

Give us a call, toll-free, at 855-906-6494, and one of our licensed agents will be able to provide you with your options and accurate rates in just a few minutes. You can also obtain a free quote by entering your information below.



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