It is certainly understandable that almost half of Americans are misinformed when it comes to life insurance. We live in a time where information is readily accessible and misinformation even more so. Who can you trust? Unfortunately, many individuals will resort to speaking with a friend who has some idea about life insurance or maybe talk about it with someone who has a policy but the information they provide and the experience they had may not apply to you. Every person has specific needs and circumstances and because buying life insurance is a major decision that will affect future financial security, it should be taken seriously. It’s important to take the time to do some research and plan but in the end it’s important to speak with a life insurance professional you trust and can explain the options available based on your needs. Here are a few steps you can take to prepare:

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Determine your needs

Before you purchase a life insurance policy it is vital you determine how much coverage you need. Consider the amount of debt you have, the number of dependents you have, and your current and future financial obligations. Relying on employer-sponsored life insurance can put your family at risk. According to the latest U.S. Bureau of Labor Statistics, the median life insurance coverage offered at the workplace is either a flat sum of $20,000 or one year’s salary. More than half of U.S. households rely on dual incomes (54%) and for many, losing one income could be devastating to the household. The latest Insurance Barometer study reveals that 42% of families would face financial hardship within six months, and a quarter of these would suffer financially within a month. A general rule of thumb is to purchase coverage that is equal to 10-12 times your annual income.

Speaking with a licensed life insurance professional will allow for a tailored, realistic, and more accurate quote from several companies.

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Research different types of life insurance

Life insurance is divided into two main types of coverage:  term life insurance and permanent life insurance. Term life insurance provides coverage for a specified period of time, usually between 10-30 years and is often the most affordable option and a good choice for those who need coverage for a specific period, such as until their children are grown or until their mortgage is paid off.

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Permanent life insurance provides coverage for your entire life and includes a cash value component that grows over time. It is more expensive than term life insurance but offers lifelong protection and can be used as a savings vehicle. Permanent life insurance is further subdivided into policies that can grow the cash component with interest based on increases in an equity index like the S&P or Barclays.

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Shop around for quotes

Once you have determined your needs and researched different types of life insurance, it's time to shop around for quotes. You can obtain quotes from insurance companies online or through a licensed insurance agent. It's important to get quotes from multiple companies to ensure that you're getting the best price for the coverage you need. Keep in mind that many online sites with built-in life insurance premium calculators will return premiums that can be unrealistic. Premiums are determined by underwriters based on risks associated with age, health, and medical history. Speaking with a licensed life insurance professional will allow for a tailored, realistic, and more accurate quote from several companies.

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Some life insurance carriers offer policies with Living Benefits. Typically, these are optional, no-additional cost riders that can allow you to access all or part of your death benefit, while living

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Review the policy details

When you receive quotes, review the policy details carefully. Not all policies offer the same coverage benefits. Some life insurance carriers offer policies with Living Benefits. Typically, these are optional, no-additional cost riders that can allow you to access all or part of your death benefit, while living, if you experience a qualifying terminal, chronic, or critical illness, and in some cases critical injury. Make sure that you understand the coverage amounts, premiums, and any exclusions or limitations of the policy. It's important to ask questions if anything is unclear.

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Choose the best policy for your needs

Once you've reviewed the policy details and compared quotes from multiple companies, it's time to choose the best policy for your needs. Consider the overall cost of the policy, the financial strength of the insurance company, and the level of customer service provided by the company.

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Complete the application process

After choosing a policy, you will need to complete the application process. This will involve answering health and lifestyle questions and possibly undergoing a medical exam. If you are intimidated by the process of medical exams or collection of fluids, many life insurance carriers today offer simplified underwriting which can eliminate the need for these invasive procedures. However, be honest in your answers and provide all required information to ensure that your policy is valid.

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Pay premiums and maintain the policy

Make sure you can pay the premium. It’s better to have something than to have nothing. With this in mind, get only as much life insurance as you can comfortably afford. Once your policy is in effect, you will need to pay premiums to maintain coverage. Make sure to pay your premiums on time to avoid a lapse in coverage. Also, review your policy periodically to ensure that it still meets your needs and make changes as necessary.

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Tips for getting the best coverage possible:

• Shop around for quotes from multiple companies to ensure that you're getting the best price for the coverage you need.

• Consider purchasing a policy when you are young and healthy as premiums are typically lower.

• If you are purchasing a Term policy, consider buying a policy with a longer term, such as 30 years, to lock in a lower premium.

• Consider purchasing a policy with a rider that allows you to increase your coverage in the future without undergoing additional medical underwriting.

• Avoid smoking or using tobacco products as it can significantly increase premiums.

• Maintain a healthy lifestyle, including regular exercise and a healthy diet, to keep premiums as low as possible.

 

Work with a licensed insurance agent who can help you navigate the process and find the best policy for your needs. The insurance agent you choose should help you understand anything that is not clear. Don’t be afraid to ask questions. Keep in mind that if you are not satisfied with your new policy, you can cancel and return it for a full refund within a certain period of time called a Free Look period. This review period is normally stated on the first page of the policy.