Buying Life Insurance 101: Discovering The Best Life Insurance Policy For You Beyond What You See On TV
There are many things to consider when thinking about how and where to buy a life insurance policy. How much coverage you will need? When to buy? What term and what type of policy? It can seem overwhelming as you are just beginning to gather the information from which to make your decision. Here are some important things you should know as you begin your life insurance purchasing process.
10 Things to Know About Buying Life Insurance
1. There are essentially two types of policies.
You can consider purchasing either a term policy, otherwise known as pure insurance coverage, or you can go with one of many types of whole life policies which will combine an investment product with a pure term life insurance policy to build cash value. You will need to determine which of the two is right for you.
2. Insurance is something that is sold, not something that is bought.
Agents sell the vast majority of life insurance policies written in the U.S. because the life insurance industry has a vested interest in pushing high-commission (and high-profit) whole-life policies. Consider what is in it for you, not your agent, when you are looking at which policy to purchase.
3. Whole life policies can be more expensive.
A whole life insurance policy that has an investment component added in can cost many times more than a simple term policy. The risk with this is that many who purchase these types of policies often buy less coverage than what they need because of the cost. This can leave the purchaser underinsured.
4. Whole-life policies are built on assumptions.
Agents have to base the returns they quote you on guesses, not reality. In order to attract buyers, these guesses can error on the higher side. Remember that the quotes with whole life policies are not a guarantee of return.
5. You should keep your investing and insurance separate.
There are many other places to invest your money which will not cost you the high commission prices of whole life policies. You are better off focusing on a term policy and exploring completely separate ways of investing other income.
6. Make sure that you purchase enough coverage to suit your needs in the future.
Because low rates make life insurance very affordable, this is not the time to skimp on coverage. Assess how much you will need and don’t short change yourself.
7. Consider what the term of the policy should be.
Your policy should be sure to cover your dependents when they need it most- before they are on their own. Also consider when your retirement will be kicking in before you determine your term.
8. Buy when you are healthy.
An older person or one not in the best health will pay much higher rates than someone younger. Buy your policy as early as you can, but it is not necessary to buy until after you have dependents.
9. Be honest.
Lying on your application to try to get a lower rate is not a good idea. If a large claim is made, the insurance company will surely investigate the facts before paying. Better to be up front than to leave surprises to be discovered when it is too late.
10. The Internet is your friend.
Buying life insurance online couldn’t be easier or faster. You can shop at any time while reviewing dozens of life insurance quotes and polices all while avoiding dealing with the pressure of pushy salespeople.
Four Reasons People Buy Life Insurance
What turns a life insurance shopper into a life insurance buyer? In today’s blog post we focus on the top 4 reasons people go from shopping for life insurance to purchasing a policy for their family.
Let’s start with shopping process. Perhaps our readers can identify with one of these top reasons why people shop for life life insurance.
- 41% of life insurance shoppers said life events (getting married, having or adopting a child, or buying a home) prompted them to shop for life insurance.
- A quarter of life insurance shoppers considered life insurance because their financial advisor or sales rep initiated contact or suggested the need for life insurance.
- Twenty-five percent of life insurance shoppers looked at buying life insurance because they thought they might need more and wanted to review their coverage.
- One in eight life insurance shoppers said a friend or family member recommended a sales rep or financial advisor, prompting them to shop for life insurance.
So what turns a life insurance shopper into a buyer? These top 4 reasons are why people decide to purchase life insurance.
- 78% of shoppers with previous relationships with their sales rep bought life insurance – almost 10 percentage points higher than shoppers who had no prior relationship with their sales rep.
- Providing a needs-based analysis to customers helps them understand how life insurance can work for them and their families. Three-quarters of shoppers who received a needs analysis bought life insurance, as compared to less than half of those who didn’t have a needs analysis.
- Shoppers more likely to buy life insurance — and larger policies — after getting a recommendation from their sales rep.
- 35% of non-buyers said they were still shopping and the sales reps should have followed up with them; one-third were still making a decision.
Finding a reputable and honest life insurance agent can be hard at times. At True Blue Life Insurance we are focused on providing the best life insurance quotes for our customers. We don’t believe that purchasing life insurance should be a high pressure process.
Checklist for Buying Life Insurance
A good agent will cite the following information when assessing your need for life insurance:
- Financial Situation
At what level of daily expenses are you currently comfortable with? This makes a huge difference in how much money your life insurance policy should provide in the event of a payout.
- Long-term Goals
Do you want to gather wealth through your life insurance policy or do you have other retirement methods for the long-term? This is a major factor between permanent life insurance and term life insurance policies.
Do you currently have children and if so how many? Ultimately your dependents are the beneficiaries of your life insurance. If your children are grown then it might be your spouse or perhaps money to help cover your burial expenses.
There are many more questions that a life insurance agent ask you, but these are three very basic points that make a big difference in the type and volume of life insurance you purchase.
Preparing For Your Life Insurance Medical Exam
After you have applied for a life insurance policy that requires a medical exam you will be asked to schedule a medical exam. This medical exam can make a difference in your monthly premium so you’ll want to do everything you can to make sure this exam comes out as good as possible.
First of all, please know that there is no way to change your entire medical history or improve your health in just a few weeks. We do not condone partaking in any risky miracle diets or trying some crazy herbal remedies in order to improve your medical exam. Instead we’ve put together a short list of tips that can keep your medical exam from showing poor results that are not warranted. A nervous mind can cause increased blood pressure and effect your vitals in negative ways. So use these tips to keep yourself from bombing the medical exam.
- Don’t lie to the medical examiner. If you lie it could result in the loss of your policy, even after years of paying the premiums!
- Do the medical exam in your own home. This will help limit the amount of stress you experience because you will be more comfortable at home.
- Wear a short sleeve garment. This will make rolling your sleeves up much easier when the examiner needs to take your blood pressure.
- Avoid tobacco and alcohol. We’d really like for you not to smoke or drink at all, but we know some people will. So please try and avoid these for a least a few days.
- Schedule the exam in the morning. We say this because it is likely that you will have to fast for 8 hours.
- Avoid the holidays for the exam. The holiday seasons can be stressful for some people and the increased eating binge can be harmful to your blood pressure readings.
The Best Way To Buy Life Insurance
To many, the process of buying life insurance may seem like a daunting task; however, once you understand the basics of life insurance and understand your own personal goals, the process becomes simpler. Key things to keep in mind:
- If an agent is pushing a policy on you, walk away. Honest agents make recommendations and allow you to make the choice, unethical agents try to guilt you and push you into a policy they think is best.
- Determine the long term strategy. Are you looking to “own” a life insurance policy (permanent) and use it as an asset, or are you looking to “rent” a life insurance policy (term) and invest money in other areas?
- Stick with what you can afford. Most insurance polices either lapse or are surrendered because people don’t keep up with the payments. Choose a policy you can afford right now and down the road. You can always buy more life insurance later if needed.
- If you don’t want a medical exam done, apply for a no exam life insurance policy. This may cost slightly more, but you don’t have to be hassled with physicals and blood draws.
- Always use independent agents. Independent agents represent numerous companies and can find the policy that best suits your needs, unlike some of the “branded” insurance agents who only sell one company’s product and often have high quotas to meet. Going independent helps you make a better choice all around.
Buying life insurance doesn’t have to be hard. With the advancements in technology, one doesn’t even have to talk more than 10 minutes with an agent and policies can be instantly issued in some cases. The best way to prevent confusion and ensure transparency is to be informed first and discuss life insurance options with someone you trust.