Updated Dec. 13, 2019: Life insurance is a noble New Year's resolution, but if you're unfamiliar with the process, purchasing a policy may seem daunting. Fortunately, applying for coverage has gotten easier in recent years. Here's how to get life insurance in 2019 in eight simple steps.
1. Decide what type of life insurance
Term versus whole? That's the big question, but here's the skinny answer: Term life insurance, which lasts a set number of years, then expires, is the best choice for a majority of shoppers. It's much more affordable and less complicated than whole life insurance, which stays in effect for as long as you pay the premiums.
Whole life insurance is a good fit if you're subject to the estate tax, have special-needs dependents, or are maxing out all your retirement accounts. Otherwise, term life is the way to go. Learn more about term versus whole life insurance.
2. Calculate how much coverage to buy
We recommend a needs-based approach to determining the amount of life insurance to buy:
- Calculate your family's major expenses and your outstanding debts, like car payments.
- Consider future financial obligations, like college tuition, too.
- Next, subtract your current assets, like the value of any employer-provided life insurance.
- Tack on a little extra for expenses your loved ones might have to pay after you die, like funeral costs.
Add it all up and you've got a good estimate of how much life insurance you need. You can also learn more here.
3. Pick the length of your policy
Term life insurance is sold in five-year increments, with the most common policies lasting 10, 20, or 30 years. Your policy should last as long as you expect your family to rely on your income.
How can you estimate that timeframe? Pinpoint your biggest financial burden — usually a mortgage — and determine how long you'll be on the hook for that obligation. Consider how old your children are, too. Generally speaking, the younger they are, the longer the term you need.
Learn more on how long your life insurance policy should last.
4. Compare life insurance quotes
Life insurance rates are largely based on your age and health. But some companies are more forgiving when it comes to certain illnesses, conditions or habits, so it's important to shop around. We can help you quickly compare quotes across major life insurance companies.
5. Fill out an application
After you get quotes, you'll need to provide more in-depth financial information and authorize your doctor to share your health information with the life insurer. You can keep the application process pretty seamless by having your driver’s license, proof of income, proof of residency and Social Security number on hand.
6. Do your phone interview
Next, an agent will schedule a short phone call to confirm the contents of your application. They'll ask questions about your hobbies, lifestyle, and finances, including your income and net worth. They'll also schedule your medical exam. Here's a guide of what to expect.
7. Take the medical exam
The life insurance medical exam is essentially a physical: A technician comes to your house or workplace to take basic measurements (height, weight, pulse, blood pressure), some blood and possibly a urine sample. It'll take about 30 minutes.
8. Sit back & relax
Once your medical exam is complete, an underwriter will use its results, along with your health records and financial information, to approve or deny your policy and set your official premiums.
Underwriting usually takes anywhere from three to eight weeks. If you get approved and like what you see, all that’s left is for you to receive, review and sign your policy. It'll officially become effective when you pay your first premium. If you're unhappy with the final rates, your agent can help you determine whether to re-shop for a different policy.
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