The Step-by-Step Guide to Buying Term Life Insurance

If you are new to buying life insurance or just need a refresher course, we wrote this article for you.

Below is everything you need to know about buying term life insurance.

Step 1: How much do I need?

Before you decide anything else, you should determine how much life insurance you need.

Here are some questions to ask yourself.

  • What is your annual income?
  • How many years will your family need to replace your income to live comfortably?
  • What debt do you want to pay off (ex. mortgage, credit cards, car loan, student loans)?
  • How much money do you have in savings that could cover these expenses?
  • Will your spouse work if something happens to you?

There are a lot of tools available online to help you get an exact number. Here is our favorite.

Step 2: How long do I need it?

That is the question. Do you need it for 10 years, 20 years, 30 years, or your whole life?

Many people dream of retiring young and having enough money to live comfortably for the rest of their lives. In our experience, most people underestimate how many years it will take them to accomplish that. We recommend adding five years to the length of time you think you will need the coverage, and If it turns out that you don’t need the coverage, you can always cancel the policy at any time.

Tip: You can buy more than one policy to meet your needs. For example, a $500,000 20 year term and a $500,000 30 year term.

Step 3: Comparing Quotes

Now that you know how much coverage you need and for how long, you are ready to get a quote.

We recommend getting quotes from an Independent Agent, who works with several companies to compare your options. A life insurance company has as many as 16 different rates for one person based on their health but over 90% of people will qualify for one of the six most common rates.

  • Preferred Plus – The best life insurance rate you can qualify for. People who qualify for this rate are in great health, don’t participate in dangerous hobbies, have no medical problems, don’t smoke, and live an active lifestyle.
  • Preferred – The most common rate you will receive if you are in good health and don’t have any major medical problems but maybe a little overweight or have another minor health problem.
  • Standard Plus -This rate is common If you smoke cigars, chew tobacco, or use e-cigs.
  • Standard – This rate is for the person in average health. May have had cancer in the past or had another medical issue.
  • Preferred Tobacco – The best rate if you smoke cigarettes and are in good health. Many companies also include other smokers in this group.
  • Tobacco – If you smoke cigarettes and are in average health this will be your best possible rate.

You can easily compare quotes from the top companies on our website here.

Step 4: Applying for Life Insurance

A quote gives you a good idea of how much life insurance may cost. The next step is to apply for life insurance.

An agent will ask you questions about the following.

  • Tobacco Use
  • Health History
  • Criminal History
  • Driving History
  • Dangerous Hobbies
  • Financial Information
  • Occupation

This may be completed over the phone or in person. It takes between 20-30 minutes on average to complete the application.

Once your application is completed, you are ready to schedule your medical exam.

Step 5: The Medical Exam

Most life insurance companies require a medical exam to qualify for coverage. In many situations, the company will pay for your exam.

The exam can take between 20-40 minutes, and the examiner can come to your home or work at a time that is convenient for you.

The examiner may take your blood pressure, height, weight, blood, urine specimen, and ask you about your medical history.

Step 6: Wait to be Approved

Once you have finished your medical exam and your application is submitted to the company it will usually take 3-6 weeks to receive a decision from the company. Your agent will contact you during this period to let you know what is going on with your application and if the life insurance company has any other questions.

The person who reviews your application is called an underwriter. They have been trained to understand how your lifestyle and health affect your mortality.

Step 7: Sign on the Dotted Line

After an underwriter has reviewed your application and made a decision, your agent will notify you of the outcome. If you are approved, a policy will be mailed to your house, and you will need to accept the companies offer for coverage. This requires signing a form saying you want the coverage and sending a payment to the company to start your policy.

Get Started Today

There is no better time to buy life insurance than today. The older you get, the more you will pay, and more likely you won’t qualify for the best rates. Brown Insurance is here to help you through the process. Give us a call at 520-888-6900 or get started online here.