Life Insurance: Where To Purchase And What To Consider

Life insurance is a contract between you and an insurance company. In exchange for regular payments, the insurer pays out a sum of money to your chosen beneficiaries when you die. This can be used to cover funeral expenses, income loss, debts, and more. There are two main types of life insurance: term life insurance, which covers a specific time period, and permanent life insurance, which lasts your entire lifetime and typically includes a cash value component. When purchasing life insurance, you can either buy it online, through an agent or broker, or directly from the insurer. It's important to compare quotes and coverage options from multiple insurers to find the best policy for your needs and budget.

Online

The internet has made it easier than ever to purchase life insurance. Many insurers and brokerages allow you to apply for and buy a policy online, with some offering coverage on the same day. This is known as instant life insurance.

When applying for life insurance online, you will usually need to fill out a form with your basic information, such as name, phone number, email, etc. You will also need to specify the type of policy you plan to purchase and provide the following information:

• Social Security number
• Driver's license number
• Financial information (e.g. salary, net worth)
• Health and medical information (e.g. height, weight, medical conditions, prescriptions)
• Nicotine or tobacco usage

You will also need to designate your beneficiary or beneficiaries. This is the individual or entity that will receive the policy's death benefit once you die. You can choose one or more people and specify how much of the coverage amount will go to each individual.

Some online life insurance policies require a medical exam, which can often be completed at a time and place of your choosing. However, there are also no-exam life insurance policies available online, which don't require a medical exam to get coverage. These policies tend to be more expensive as the insurer assumes more risk.

When purchasing life insurance online, you can either go through an agent or broker, or directly through the insurer. It's important to compare quotes from several companies to ensure you're getting the best possible coverage at the lowest possible price.

Some popular options for purchasing life insurance online include:

• AAA Life Insurance Company
• Aflac
• GEICO
• Progressive Life Insurance by eFinancial

Through an agent or broker

If you're a high-risk applicant or you simply want some help navigating the buying process, you can purchase life insurance through an agent or broker. Captive agents sell policies from one company, such as State Farm, while independent agents typically offer policies from multiple companies.

An insurance agent is a licensed professional who sells insurance products, such as life, auto, or home insurance, to consumers. They can be a captive agent, representing a single insurance company, or an independent agent, representing multiple companies. Agents can help you find a policy that suits your needs and budget, and they can also assist you with the application process.

When choosing an agent, it's important to select a licensed professional who can provide this information. You can also check with your state's department of insurance, department of finance, or a similar governing body that oversees insurers in your state. Reviews and referrals from friends, family, and trusted financial professionals can also help guide your decision.

Insurance brokers work with individual consumers to help them find, review, and compare insurance policies from multiple companies. They do not, however, underwrite, bind, or otherwise oversee policy sales. Brokers can be a good option if you want to shop around and compare policies from different companies. When choosing a broker, consider their experience and expertise in the industry, as well as their track record in helping clients find the best policies for their needs.

Directly from the insurer

Purchasing a life insurance policy directly from an insurer is a straightforward process. Most insurance companies allow you to buy a policy through their website, over the phone, or in person. Before committing to a specific insurer, it is essential to compare quotes and coverages from multiple companies to ensure you get the best coverage at the most competitive price.

When buying directly from an insurer, you typically need to provide specific information to get a quote and purchase a policy. This includes personal details such as your name, contact information, Social Security number, and driver's license number. Additionally, financial information, such as your income, net worth, and any outstanding debts, is also necessary. The insurer will also ask for health-related details, including your medical history, height, weight, and any medications you take. Be prepared to answer questions about your family's medical history as well.

The application process may also involve undergoing a medical exam or screening, where a professional will record your vital signs, take samples, and assess your overall health. However, some insurers offer no-exam life insurance policies, which are ideal if you prefer not to undergo a health screening. These policies tend to have a faster application process but may have higher premiums due to the increased risk for the insurer.

When purchasing directly from an insurer, you can choose between different types of life insurance policies, including term life and permanent life insurance. Term life insurance covers you for a specific period, such as 10, 15, or 20 years, and is generally more affordable. On the other hand, permanent life insurance covers you for your entire life and often includes a cash value component that grows over time.

It is worth noting that buying directly from an insurer gives you control over the entire process. You can compare policies, coverages, and rates from multiple insurers and make an informed decision without relying on an agent or broker. However, working directly with an insurer means you may need to put in more time and effort to understand the different policy options and find the best coverage for your needs.

Term life insurance

When taking out a term life insurance policy, you select the duration of your coverage and the amount you want your beneficiaries to receive. The monthly cost will depend on your specific situation, including your age, gender, and health. The younger and healthier you are, the lower your premium is likely to be.

There are two main types of term life insurance: fixed term and decreasing term. Fixed term life insurance has a fixed coverage amount and premium payment, while decreasing term life insurance has a coverage amount and premium that decreases over time and is meant for those who anticipate needing less coverage toward the end of their policy.

You can also add riders (add-ons) to your policy for additional coverage. For example, an accelerated death benefit rider allows you to access your policy's payout if you become terminally ill, and a waiver of premium rider pauses your premiums if you become disabled and unable to work.

When choosing a term life insurance company, consider the coverage amounts, term lengths, age restrictions, and whether you can convert the policy to permanent coverage. Some companies also offer the option to apply for and purchase policies entirely online.

Permanent life insurance

There are several types of permanent life insurance policies, including:

Whole Life Insurance

Whole life insurance offers fixed and guaranteed premiums, a fixed rate of return on cash value, and a fixed death benefit. The cash value component increases over time based on the interest rate, and policyholders can withdraw funds or take out loans against the cash value. Whole life insurance tends to be the most expensive type of permanent life insurance and does not offer the same flexibility as universal life insurance policies.

Universal Life Insurance

Universal life insurance policies offer more flexibility than whole life insurance. Policyholders may be able to adjust their premium payments and death benefits within certain parameters. There are several types of universal life insurance policies, including guaranteed universal life insurance, indexed universal life insurance, and variable universal life insurance, which differ in terms of investment risk and cash value growth. Universal life insurance tends to be less expensive than whole life insurance but is still more costly than term life insurance.

Survivorship Life Insurance

Survivorship life insurance, also known as joint life insurance or second-to-die life insurance, insures two people, usually a married couple. The policy pays out the death benefit to the beneficiaries after both spouses have passed away. This type of policy is often used to fund a trust to pay estate taxes and other expenses. Survivorship life insurance is generally less expensive than purchasing two separate policies and may be easier to qualify for if one of the individuals has medical problems.

Burial and Final Expense Insurance

Burial insurance, also known as funeral insurance or final expense insurance, is a small whole life insurance policy that covers funeral and burial costs. These policies typically provide a death benefit between $5,000 and $25,000 and are sold without a medical exam. They are designed specifically to cover funeral costs and other miscellaneous expenses and are not intended to help beneficiaries with other financial priorities.

When purchasing permanent life insurance, it is important to consider your budget and your reasons for getting life insurance. Permanent life insurance is generally more expensive than term life insurance and may not be the best choice if you only need coverage for a specific period. However, it can be a good option if you want lifelong coverage, desire the cash value feature, or want to leave a financial legacy to your heirs.

Frequently asked questions