"Life insurance, blah," says everyone who realizes they need some. And we get it: No one wants to talk – or even think — about financial protection in case they die. But you gotta: Life insurance isn't something you just pick up at Duane Reade. Finding the right policy is a lot easier than you think, though. (We can actually pull life insurance quotes for you in about two minutes.)
Feeling shaky on the application process? Here's a crib sheet for crossing "life insurance" off your 2018 money resolution list.
- Decide between term life or permanent life. Eyes glossing over already? No worries. You most likely need term life insurance (80% to 90% of people do.) Permanent life insurance, which doubles as an investment vehicle, is appropriate if you've got a complicated estate, like Warren Buffett. Are you Warren Buffett? Fair enough. You can learn about permanent life insurance options here.
- Figure out how much coverage you need. That means setting your death benefit, an untaxed lump sum of money your beneficiary gets if you die. The idea is to cover major financial liabilities (mortgage, end of life expenses, child care, etc.) for a time post-mortem. We've got a calculator that helps decipher how much coverage you need.
- Pick a term, assuming you've opted for term-life, of course, since permanent life is, by nature, permanent. A term policy pays out if you die while it's in force, so factor in how long your family will rely on your income. They're usually sold in 10-, 20-, or 30-year terms.
- Compare quotes. An important step all-too-many people gloss over. Insurers define risk differently — and some companies are cool(er) about certain health conditions (like sleep apnea) than others, so it pays to shop around.
- Consider riders, which are life insurance add-ons. Popular riders include the accelerated death benefit (which is an early payout due to terminal illness), a waiver of premiums (in case you're disabled) and term conversion (which lets you convert a term policy to a permanent policy when it's set to lapse.)
- Tweak, as needed. Yes, you want to provide big-time financial cover for your family. But you also need to make premium payments. If you dream coverage isn't looking affordable, consider lowering coverage, opting for a shorter term or dropping a rider. (Psst: Our agents can help you get into the goldilocks zone.)
- Submit your application. And be forthcoming about your health, family history, lifestyle (do you, say, mountain-climb on weekends?) and vices, because the insurer will look into that stuff before approving your policy and premium anyway. In fact ...
- Get ready for a paramedical exam. Also not as daunting as it sounds. A technician comes to you to take basic measurements, some blood and a urine sample. That way, the insurer can assess your health (or, more pointedly, the odds you'll die when the policy's active). We've got tips for surviving the paramedical exam here.
- Sit back and relax while your application goes through underwriting. The process usually takes three to four weeks. If you get approved and life what you see ...
- Sign the policy and pay your first premium. Guess what? You're covered.
- Review coverage, usually every three years or after a major life event, like the birth of a child, because coverage needs change over time. If you’re over-insured, shop around for a cheaper policy. If you’re underinsured, look into more coverage. We've got a primer on how to do that here.
Life insurance is a major decision — and we've got plenty of educational resources designed to help you make an informed purchase. Visit our life insurance learn center if you have questions about any our crib notes above!