How to Buy Life Insurance

So we got past the “why buy” - it’s what we all end up doing to protect our family - and now we’re into the “how to” find affordable life insurance.

So what is it we’re buying? To be brutal, when you’re gone, the money that comes from the policy has to replace the money you would have earned. There should be enough to pay off your debts at death and leave enough over to cover those you leave behind until they can make some other arrangements - most people “guess” they need to leave about five years of wages/salary as a lump sum. There are calculators that help you total up and make a good guess.

Now you have a ballpark figure on how much cover you need, it’s time to get those online quotes. There are a growing number of sites like this which give you access to the main life insurance companies licensed to write policies in your state. These sites collect basic information about you and then send it out to the insurers. You get quotes back.

This personal information sets the basic cost. If you are young, healthy and have a good lifestyle, the cost will be quite low. But if you are older, your health is not so good (or your family history has close relatives dying young), you smoke, drink too much and compete in extreme sports events, the premium will frighten you. It’s all about statistics. Those insurance actuaries work out who’s likely to live longer and set the premium level accordingly.

But the issue you really need to get clear before you start is the type of policy to buy. If you want low-cost, very affordable premiums, look at term life insurance (but with the option to convert to a permanent policy later on). Pick a number of years and start getting those quotes. If you have a reasonably stable income and can afford to pay a higher premium, look at the different types of permanent policy and decide which one will suit your needs the best. Remember, all you are doing at this stage is get information. When you have collected as much as you can online, talk to some companies direct or to an agent. All of this is without obligation. It’s all about getting comparative information so you can make the best buy. When you find what fits your needs and represents the best value, then you buy.