Some purchases in life are simple, even obvious.
When you need food, you go to the grocery store.
When you need a new sweater, you have countless options, online and off.
Need terrible origami? It turns out there’s an Etsy shop called TerribleOrigami. (No, it’s not just a clever name.)
But when you need life insurance to offer your loved ones financial protection in case the worst should happen to you … the answer isn’t necessarily as obvious. You can’t just head to the life insurance store, or pick up a policy on Amazon. Google “how to purchase life insurance,” and you’ll be met with a slew of results that may or may not be right for you.
So where to begin shopping for life insurance? Well, this article is a great place to start. Below, we break down how to purchase life insurance, and why you should consider buying life insurance in the first place.
Why you should consider buying life insurance
Let’s start by asking you a question: If you died tomorrow, how would that affect the people you love?
We don’t mean emotionally, though obviously it would. We mean financially — are there people who count on you to pay for things like food, bills, a roof over their head? Or are there people who count on you to take care of things like keeping the house clean, mouths fed, schedules organized, and more?
If either (or both) of those is true, who would pay for those things if you weren’t around?
If other people depend on your hard work and/or income to take care of them, you should consider life insurance. In short, it’s a way of buying financial protection in case something happens to you. In exchange for regular payments (a “premium”), you’ll receive a set amount of coverage, which your designated beneficiaries would receive as a lump-sum death benefit in the event of your death.
That money can be used for near-term costs including your final expenses, plus long-term ones like rent, paying off debt, or anything else required for the financial situation you leave behind.
Life insurance offers the peace of mind from knowing that your family — your spouse, your kids, potentially your aging parents or dependent siblings — would receive enough money to cover their expenses if and when you’re not around to pay for them. If that sounds important to you, keep reading.
How to purchase life insurance in four easy steps
Now that we’ve established who might need life insurance, the question of how to buy it remains. Here are the four steps you’ll want to take.
1. Decide what type of coverage you need
There are myriad types of life insurance, with the two most common being term life insurance and whole life insurance. Here’s what each of them means:
Term life insurance
With term life insurance, you pay for coverage over a set period of time (the “term”).
Many people choose term life insurance to cover the years when they’re drawing a salary, paying off a mortgage, or have kids at home. In other words, they cover the years where they’re making money, and using that money to pay for long-term financial commitments or the expenses of others.
The advantage of term life insurance is that it’s often significantly more affordable than other types of coverage. That’s because it covers the years when you’re younger and likely more healthy. (In actuarial terms, the period when you’re least likely to die.)
If you outlive your policy, you can continue your policy (albeit at a higher premium) or apply for more coverage if needed. More importantly, you outlived your policy — meaning you’re still alive, and able to enjoy your retirement, the pleasures of a house that’s paid off, or perhaps your children becoming adults themselves. Not a bad situation when you think about it.
Whole life insurance
Whole life insurance is just what it sounds like: An insurance policy that covers your whole life. This means you have coverage until you pass away, but it also means you’ll pay premiums until then, too.
This means whole life insurance policies are often more expensive than term life policies. For example, a recent quote for a $500,000 whole life insurance policy from State Farm for a 35-year-old man in excellent health was $562 per month. By comparison, that same 35-year-old man in excellent health could buy a 30-year, $500,000 policy for $30 per month from Haven Life
If having coverage that lasts for your whole life (sometimes known as a permanent life insurance policy) is important to you, whole life insurance might be a good idea. For many people, however, term life insurance is a more affordable alternative, with coverage options that last during the years you need life insurance, and not a day longer.
2. Determine how much coverage you need
So now that you know what type of coverage you want, the question remains as to how much coverage you should get.
A common rule of thumb is to get 5 to 10 times your annual salary. The thinking is that it will replace lost annual income for a few years while your family has time to get back on their feet. The lump sum payment can be used to cover mortgage, education, child care, and can even be invested.
Still not sure how much coverage you need? Try a free online life insurance calculator, where you can get an estimate of how much coverage your family might need. At Haven Life, you can buy up to $3 million in coverage, or as little as $250,000, at rates that are surprisingly affordable. For example, a 30-year-old woman in excellent health can buy a 25-year, $500,000 Haven Term policy for $20.81 per month.
If you opt for term life insurance, you’ll also need to decide how long you want your term length to be. Again, many people choose to buy coverage until they expect to reach one or more of the following milestones:
- Paying off a mortgage
- Their kids becoming financially independent
Again, you can either continue your policy (although at a higher premium) or explore buying more coverage if you need it at the end of your policy. That said, you can lock in a low rate by buying coverage when you’re young and healthy. That’s because term life insurance policies include level term premiums, meaning they stay the same throughout the life of your policy.
You’ll never be younger than you are today, and most of us will never be healthier, either. Getting coverage while you’re young and healthy means getting the most affordable policy you’re likely to find.
3. Shop around
You have options when it comes to life insurance. (So. Many. Options.) A few things to consider when choosing your provider:
1. This is a long-term relationship. Is your insurer and agency dependable?
For example, Haven Term policies are issued by MassMutual or its subsidiary, C.M. Life. MassMutual is more than 170 years old, and has received high-quality ratings from A.M Best, Fitch, Moody’s and Standard & Poor’s (S&P). Haven Life has also received glowing reviews from the likes of Investopedia, Real Simple, The Wall Street Journal and more.
2. This can be a difficult process. How easy is it to apply for coverage?
Haven Life offers an application process you can do completely online. Some applicants might even be eligible for an instant coverage decision, meaning you might be no more than an hour or so and a few mouse clicks away from getting life insurance coverage for you and your family.
3. You might have questions during the application process, or during your coverage period. Does your agency have a best-in-class customer success team?
Haven Life does. Simple.
4. Prices can vary. Are you getting the best rate?
At Haven Life, you can get a free life insurance quote online, which you can then use to comparison shop. Thanks to advances in technology, Haven Life offers some of the most competitive rates on the market.
Here are some example life insurance rates of what people in excellent health might pay per month for Haven Term.
|Age||Gender||Policy length||Coverage amount||Monthly Premium|
|Estimates based on pricing for eligible Haven Term applicants in excellent health. Pricing differences will vary based on ages, health status, coverage amount and term length. These prices do not reflect the rates for applicants in DE, FL, ND, NY and SD.|
4. Apply for life insurance
Once you know what you want, and where to get it, there’s only one thing left to do: Apply.
As we mentioned above, at Haven Life, you can apply entirely online. You can expect to answer questions about your health status and history — things like whether you smoke, have any pre-existing conditions, etc. Some people will be offered a coverage decision right away. Most applicants, however, will need to take a life insurance medical exam.
Fortunately, scheduling an exam has never been easier — the examiner can even come to your home or office, at a time that’s convenient for you.
If, for whatever reason, you absolutely do not want to take a life insurance medical exam, you can also apply for Haven Simple, a 100% no-medical-exam-required life insurance policy (also known as simplified issue life insurance). You will pay a little more for coverage, and you’ll be limited on how much you can buy (still up to $1 million), but if approved, you’ll start coverage immediately.
Just remember to be truthful on your life insurance application (no matter what policy you’re applying for), as failure to do so might result in non-issuance of policy or a non-payment of your death benefit. No one wants that.
Bonus step: Enjoy peace of mind
Life insurance isn’t just about protecting others in case you die. It’s also about benefiting you while you’re still alive.
This includes the peace of mind that comes with having coverage. At Haven Life, eligible policyholders also enjoy Haven Life Plus, a bonus rider available that includes discounted or no-cost services like a fitness app, estate planning, and more — all designed to make life easier while you’re living it.
Start your journey with a free online quote today.