Life insurance is designed to finalize your financial strategy. While you help pay for all the things your family wants in life, after death life insurance helps you to continue to pay for the same things. The Life Insurance Death Benefit prevents your heirs from shouldering an undue financial responsibility. And this will pay for education, dependent care, and any debts you might have accrued while you are alive for which your family may be liable.
Yet purchasing life insurance can be very frustrating. Luckily we explained the eight steps you need to take to purchase life insurance.
1. Learn the life insurance vocabulary
Wading into the morass of know-how in life insurance means finding a lot of new words in the vocabulary. Learning what these words mean is half the fight. By this, you will be better prepared to choose the right life insurance policy that matches your needs. Below are a couple of the most important terms:
The sum of cash paid out when you die to your heirs, whether you have kept up with your premiums. It’s one of the most important things you make when you take out a policy, because you want it to be large enough to cover the costs of your family while you’re abroad.
The sum you pay for keeping your policy in place, monthly or annually. Some forms of life insurance accrue a cash benefit that can be used to pay the premiums. But certain life insurance plans with cash value typically have higher premiums first.
Your life insurance policy would last as long as you paid the premiums if you purchase a life insurance policy for a lifetime. Many life insurance plans, such as permanent and other cash-value life insurance, last your whole life, rather than just one term.
The person or persons that you mention on your life insurance policy to obtain the death benefit after you die, or any organization like a corporation, charity, or trust. In case the primary beneficiary is unable to claim the death benefit, you can list both a primary beneficiary as well as contingent beneficiaries.
The policy is the document you get from the life insurance provider that outlines the coverage specifics, including how much the death payout will be and what you will be paying in premiums. It will also list the requirements that must be met for the payment of the death benefit. And failure to meet those requirements may trigger a compensation delay or cancel it out entirely.
This is the amount of the death benefit paying out. Coverage can also involve other elements of interest. This include the cash value of certain life insurance plans that can be repaid or lent from before death.
In addition to learning the vocabulary, have a look at Life Insurance Terms You Need to Know to help you choose the policy you need.
2. Determine how much life insurance you need
Before you look around for a life insurance policy, take note of your potential costs and expect them to be incurred. Note, life insurance plans have the function of ensuring that your family is not left to pay for those costs on their own.
- If you’re married you want your partner to be left with a financial buffer. But you do want to make sure he or she will carry on paying off the loans you co-signed. If you have your spouse’s mortgage, your spouse may lose the house. This is if he or she can not keep up with the payments. So make sure that you are factoring in any debts your spouse will have to cover.
- If you have children take stock of what the cost of childcare right now is. The sum that you are actually putting to childcare should be taken into account as well. You’ll still want to plan for potential expenditures, though, including the college tuition for your kids. You’re going to want to make sure you leave behind enough to pay your partner and your children to go to a good school.
3. Get a free quote and pick a life insurance policy
It’s easy to get one quote. You can do this with a few pieces of personal information, such as your location, age, gender, and basic medical history.
It shouldn’t take you any more than 10 minutes to get a quote. You can use an independent insurance agent or broker, such as Health Plans in Oregon. With us, you can get rates from several different insurers right under one roof with only a few pieces of personal information. This includes your location, age, gender and basic medical history.
These quotes will include your premiums and the amount of coverage you’ll receive. And you can compare and pick the one you need. You can also change a few of the numbers in our calculator before you reach a premium-to-coverage ratio that suits your budget more closely.
Most people choose the cheapest policy that has the coverage they need. But it’s also important to compare certain options. This include benefits and riders a company provides, their customer support and other reviews, and whether or not they’re right for your particular health profile. Compare to find the best life insurance plans provider for you, beyond quality.
You can compare your different life insurance choices together with Health Plans in Oregon for free. If you’re unsure which insurance company you’re supposed to go with, be sure to check out our insurer reviews. This will help you know whether an insurer has strong customer service or allows you to make changes to your coverage online.
4. Collect the documents you need to get started
In getting all the documentation you need on hand before you apply, you will make the application process as smooth as possible. Including:
- Proof of identity, citizenship, and age – Proof of identity, citizenship, and age
- Proof of income – When your primary income is from interest or rent, you can use pay stubs, a letter of employment, a tax return, or your bank’s earnings statement. When you’re unemployed, there should be a letter about unemployment or monthly announcements explaining your unemployment benefits.
- Proof of residency – For renters, this could be your signed lease or a receipt for rent. Your mortgage bill or an estate tax statement will suffice for homeowners. Insurers can also consider your return address with a service bill or a postmarked envelope on it.
5. Complete the application and phone interview
Having a quote is an application, since you have to pass on basic information. Yet the actual specification is much more complex. This may include giving your Social Security number to insurers. This is to verify whether you have registered with other insurers to other plans. Moreover, it is to validate what you have recorded in your medical history against prescription drug databases, such as the Medical Information Bureau (MIB). The application can also request a driver’s license number to see if you were involved in any incidents.
You will be told to allow the doctor to share the health records with the life insurance firm. This is known as the medical statement (APS) that attends. The knowledge is important not only to get you the right policy, but may also come into play later when the death insurance is paid out by the insurer. If you have any medical problems that could have affected your premiums, the insurer could recalculate the amount that they owe to your beneficiaries. This is to compensate for the details they lost.
By arranging a phone interview certain life insurance companies will also want to hear from you. The aim of the telephone interview is to validate your application’s contents (the “quality check of the application”). And this may include additional questions about your hobbies and lifestyle. If you’re the kind of person trying to leap the Grand Canyon on a motorcycle, you should possibly expect your life insurance policy to cost a little bit extra.
*Be prepared for your financial health problems like your salary and net worth, as well as any life insurance plans that you have.
Your premium is only an estimation at this stage. All that comes next will measure the quality of the details that you have received to ensure that you pay the correct amount in premiums once the policy is in place.
6. Get a medical examination
The medical review on life insurance is intended to have an in-person look at your health. It’ll be just like going to the doctor’s office for a check-up, only you can ask the doctor’s inspector to come home or your office. The technician or nurse will take simple measurements. This include height and weight, blood pressure and pulse, and draw a sample of blood. You’ll even occasionally be asked to have samples.
The medical test of insurance is free for you, which will take about 30 minutes. You will have to arrange the consultation date with the life insurance provider. This is usually during the phone interview. And if they decide to reschedule or cancel, someone from the medical test provider will get in touch.
If you don’t actually go with your first choice of insurer, you can use the same results on other life insurance applications up to about six months later. You may also order a copy of the findings from the research firm or life insurance provider, potentially rewarding yourself a free medical review.
You can qualify for simpler term-life insurance if you are young and healthy, which does not require a medical test. If you’re comfortable with the limited amount of coverage (usually up to $250,000), then this type of no-medical-exam life insurance could save you a lot of money on premiums.
7. Wait for underwriting approval
The hard part is over. Now all you have to do is wait. But what’s happening behind the scenes is that someone called an underwriter. He/She works for the insurance carrier, calculates how risky you’re going to be to insure. The underwriter’s job is basically to confirm whether you actually get the rate you were originally quoted. This process can take up to six to eight weeks.
The underwriter would look at the findings of your medical test during the process and the data you submitted with your application. He or she will cross-reference what the insurer knows about your medical background with what’s in the MIB. This is to check back and see what drugs you’ve been taking for as long as seven years ago. The underwriter can also ask whether you have ever been convicted of a DUI / DWI driving or reckless driving and other traffic offenses.
Insurers use a health ranking to decide how much your premiums will cost. This would be influenced by the outcome of your medical test. High blood pressure, high cholesterol, and tobacco use represent certain medical problems that may cause a decrease in your health scores. Hence, a rise in the premiums you would have to pay.
8. Sign the documents and pay for your policy.
You legally own a life insurance policy after the underwriter has finished his or her job. Everything that remains is for you to obtain and sign the Order. It is your chance to clarify all of the aspects of the contract you negotiated during the approval process with the insurance provider. The most important of which is your premiums and cover. Although the death benefit will usually stay the same, depending on the underwriter’s appraisal the premiums may have gone up or down.
You must approve a form of payment in the relevant section apart from signing the agreement. You agree to pay either a monthly or an annual fee during the application process (with the latter generally giving a slight discount), and this should also be stated on the proposal. After the policy is in place you can still change the payment amount by calling the insurance provider.
When you sign the contract, you may have to return it to the insurer by mail. Yeah, you do need to use the post even in the era of artificial intelligence and driver-less automobiles. (Some insurers will let you make changes to your policy online, such as changing your personal information or recipients.)
Make sure you have a copy of the policy in a secure spot. And let your beneficiaries know exactly where that location is and how to get there. If your beneficiaries don’t know about the program, they won’t know how to claim the death benefit you’ve paid for this entire period. So, getting quick access to the program would help them claim the payment as soon as possible.