Some purchases in life are simple, even obvious.
When you need food, you go to the grocery store.
When you need a new shirt, you have countless options, online and off.
Need terrible origami? It turns out there is 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 should the worst happen to you… the answer isn’t necessarily as obvious. You can’t just go to the life insurance store or pick up a policy on Amazon. Google “how to buy life insurance” and you’ll be met with a slew of results that may or may not be right for you.
So where to start shopping for life insurance? Well, this article is a good place to start. Below we describe how to buy life insurance, and why you should consider buying life insurance in the first place.
Why you should consider buying life insurance
Let̵7;s start by asking you a question: If you died tomorrow, how would it affect the people you love?
We don’t mean emotionally, although it obviously would. We mean financially — are there people who count on you to pay for things like food, bills, shelter? Or are there people who count on you to take care of things like keeping the house clean, feeding mouths, organized schedules, and more?
If either (or both) of these are true, who would pay for these things if you weren’t around?
If other people depend on your hard work and/or income to care for them, you should consider life insurance. In short, it’s a way to buy financial protection in case something happens to you. In exchange for regular payments (a “premium”), you receive a certain amount of cover, which your nominated beneficiaries would receive as a lump sum death benefit in the event of your death.
That money can be used for short-term expenses including your final expenses, plus long-term ones like rent, paying off debt, or anything else required for the financial situation you’re leaving behind.
Life insurance offers the peace of mind of knowing that your family – your spouse, your children, potentially your aging parents or dependent siblings – would have enough money to cover their expenses if and when you are not around to pay for them . If that sounds important to you, keep reading.
How to buy life insurance in four easy steps
Now that we’ve established who might need life insurance, the question remains of how to buy it. Here are the four steps you want to take.
1. Determine the type of coverage you need
There are countless 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 for a certain period of time (the “Term”).
Many people choose life insurance to cover the years when they are drawing a salary, paying off a mortgage or having children at home. In other words, they cover the years in which they earn money and use that money to pay for long-term financial commitments or other people’s expenses.
The advantage of whole life insurance is that it is often significantly cheaper than other types of insurance. That’s because it covers the years when you’re younger and likely healthier. (In actuarial terms, the period in which you are 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 maybe your kids will grow up themselves. Not a bad situation when you think about it.
All life insurance
Whole life insurance is exactly what it sounds like: An insurance that covers your entire life. That means you have coverage until you pass away, but it also means you pay premiums until then, too.
This means that whole life insurance policies are often more expensive than term life insurance policies. For example, a recent quote for a $500,000 whole life policy from State Farm for a 35-year-old man in excellent health was $562 per month. By comparison, the same 35-year-old man in excellent health can purchase a 30-year, $500,000 policy for $30 per month from Haven Life
If having coverage that lasts your entire life (sometimes known as permanent life insurance) is important to you, whole life insurance may be a good idea. For many people, however, whole life insurance is a more affordable option, with coverage options that last for 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 of how much coverage to get.
A common rule of thumb is to get 5 to 10 times your annual salary. The idea is that it should replace lost annual income for a few years while your family has time to get back on their feet. The lump sum can be used to cover mortgages, education, childcare 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 surprisingly affordable rates. For example, a 30-year-old woman in excellent health can purchase a 25-year, $500,000 Haven Term policy for $20.81 per month.
If you choose whole life insurance, you must also decide how long you want your term 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 children become financially independent
Again, you can either continue your policy (but 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 life insurance policies include tiered premiums, meaning they remain the same throughout your policy term.
You will 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 you’re getting the most affordable insurance you can find.
3. Shop around
You have options when it comes to life insurance. (So. Many. Options.) A few things to consider when choosing a provider:
1. This is a long-term relationship. Is your insurer and agency trustworthy?
For example, Haven Term policies are issued by MassMutual or its subsidiary, CM Life. MassMutual is more than 170 years old and has received high quality ratings from AM Best, Fitch, Moody’s and Standard & Poor’s (S&P). Haven Life has also received rave 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 that you can do completely online. Some applicants may even be eligible for an instant policy decision, meaning you may be no more than an hour or so and a few mouse clicks away from getting life insurance for you and your family.
3. You may have questions during the application process or during your coverage period. Does your agency have a top-notch customer success team?
Haven Life does. Simple.
4. Prices may vary. Are you getting the best price?
At Haven Life, you can get a free life insurance quote online, which you can then use to comparison shop. Thanks to technological advances, Haven Life offers some of the most competitive prices on the market.
Here are some life insurance price examples of what people in excellent health can pay per month for Haven Term.
|Age||Sex||Police length||Coverage amount||Monthly premium|
|35||Woman||20 year||600,000 USD||$19.75|
|45||Woman||15 years||1,000,000 USD||$49.40|
|Estimates based on pricing for qualified Haven Term applicants in excellent health. Price differences will vary depending on age, health status, coverage amount and term length. These rates do not reflect rates for applicants in DE, FL, ND, NY and SD.|
4. Apply for life insurance
Once you know what you want and where you can get it, there’s only one thing left to do: Apply.
As we mentioned above, at Haven Life you can apply completely online. You can expect to answer questions about your health and history – things like if you smoke, have any pre-existing conditions, etc. Some people will be offered a coverage decision right away. However, most applicants 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 suits you.
If, for some reason, you absolutely do not want to take a life insurance medical exam, you can also apply for Haven Simple, a 100% medical exam-free life insurance policy (also known as simplified life insurance). You’ll pay a little more for coverage, and you’ll be limited in how much you can buy (still up to $1 million), but if you’re approved, you’ll start coverage immediately.
Just remember to be truthful in your life insurance application (regardless of which policy you are applying for), as failure to do so may result in the policy not being issued or your death benefit not being paid. Nobody wants that.
Bonus step: Enjoy peace of mind
Life insurance isn’t just about protecting others if 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 can also enjoy Haven Life Plus, an available bonus rider that includes discounted or free services like a fitness app, estate planning and more – all designed to make life easier while you live it.
Start your journey with a free quote online today.