Simple is always better when it comes to buying life insurance. Really, the only reason to buy life insurance is to replace your income for your family in the unfortunate situation that you or your spouse might die. I hate even thinking about that, but I know of a 38 year old father of 3 that this just happened to recently. Life insurance's purpose is to replace your income in the unlikely event of you passing early, that's it. Term Life Insurance is an easy to understand investment that simply provides a benefit to your beneficiaries if you pass away while the policy is still active.
The good thing with term, is that there is no overly complicated investment component or gradual cash value like with whole life or variable life insurance products. Sometimes Term Insurance is also referred to as Level Term Insurance, which means you buy insurance for a set number of years depending on your age and family size. The premium remains the same all throughout the life of the policy. Term Life Insurance is generally known for it's affordability.
Now that you understand a little more, there are a few steps to take before you purchase.
1. Decide how much Life Insurance you need and for how long.
How much insurance do I need? The general "rule of thumb" is to purchase 10 times your annual salary before taxes. (50K = 500K of insurance, 100K = 1,000,000 of insurance.) Term insurance is typically sold in increments of 10, 20 and 30 years.
2. Identify financially strong companies.
This is a very important choice to make. think about insurance companies that have withstood the tests of time and will be there down the road when it is needed.
3. Gather all your necessary medical history.
You may not need any paperwork at all when applying for insurance, however it is always good to be prepared. Eventually you will need to know your medical history and the results of your latest physical exam.
4. Get multiple quotes and compare them for your specific needs.
You can easily get quotes from AIGDirect, Quotacy, AccuQuote or PolicyGenius. You can also call your existing home and auto insurer to see if you can receive a bundling discount. Or you can work with an independent agent to shop the market for you.
5. Schedule a medical physical.
As a part of the underwriting process you will most likely have to provide records of your most recent medical exam. The insurance company will use your exam results to determine your level of health which will allow them to put you into a rate class which will determine your premium. There are companies that will i insure you without an exam, however, expect to pay a far higher premium. So unless you have something that you would like to hide, it's best to go through the process and submit to the exam. It's best to get a physical every year anyway.
6. Choose your provider and make your first payment.
When you've gone through the process and finished all the steps, hopefully you will have arrived at a price that fits your budget and your family. It is a very competitive market, there is a product out there for you.
If you are the income earner in your house and people depend on your income to live, you need insurance.