What It’s Like to Buy Term Life Insurance
I’ve shared a little about my personal life in my articles here so far, and wanted to dive in a little deeper on my own life insurance and what I’ve done recently. I am recently married and just went through the process to get my own life insurance in the last month. Here’s what I learned along the way.
Pick an Agent
The first place to start when you’re looking for a life insurance policy is to find a trusted agent. I went to a friend who is a registered financial advisor and is licensed to write life insurance policies in my home state.
I chatted with my friend online and on the phone and used his company’s search tool to look for the best priced policy for my needs.
Of course, we are not always friends with financial advisors with nationwide life insurance licensing. If you fall in that boat, I highly suggest looking at the tools here at TermLifeInsurance.com. With the search tool you can see many options for your own life insurance coverage based on your age, basic risk categories, and location. And if you have any questions, you can pick up the phone and call in anytime.
Pick a Policy
The next step is figuring out how much coverage you need and picking a policy. A good reference point on the coverage level you’ll want is 10 times your annual income. So, for example, someone who makes $50,000 per year should get $500,000 in coverage. If you make $60,000 per year, you should get $600,000 in coverage. And so on.
When you enter your information in the TermLifeInsurance.com search tool and pick an amount, you’ll get a list of options and the estimated monthly cost for that policy. Remember that part of the cost is determined by your lifestyle and health, so the monthly cost may vary from what you see there.
Fill Out the Application
Once you pick a policy, the next step is filling out the application. Due to the nature of the product, the applications can be lengthy, but it is important to be honest and detailed. If you leave off materially important information or lie on your application, you are committing insurance fraud, which is a crime.
For your application, you’ll need pertinent health history, hospitalization and medication records, and possibly information on recent and planned international travel.
For my application, I was asked for medical information from the last 10 years, international travel information from the last two years, and about dangerous hobbies including rock climbing, bungee jumping, skydiving, and small plane piloting.
Get a Medical Exam
The next step in the process is a medical exam. In general, these are conducted by a medical professional chosen by the insurance company and you are not charged for the exam.
The insurance company I picked offered to send a medical examiner to my home or office for an exam any time that worked for my schedule. I had the appointment set for a Saturday morning at my home.
We went through much of the same information covered on the original application. We reviewed my medical history, medications, and lifestyle. The nurse then took a blood sample and urine sample to send to a lab for testing.
Get the Results
Next you get to wait for the results. The insurance company will review your application and medical results and place you into a risk category. Depending on where you fall on their rating system, you will be assigned a rate.
Once your policy is written and signed, it is yours for the entire term of the policy regardless of what happens in the future. If you decide in a few years to go to pilot school and take up skydiving, your policy will remain in place as long as you continue to make payments, even if your risk level changes.
The important thing is to be detailed and honest up front so you can get the right policy for you. Remember that the longer you wait, the more your policy will cost. One of the biggest factors in determining your rate is your age, so locking in a long-term policy while you’re young is going to save you a lot over the decades your policy is in place.
Based on my income, expenses, and plans for the future, I decided on a $1 million 30 year term life insurance policy. I am waiting the final results from my medical exam and signing the policy into place. Based on my situation, I am expecting a monthly cost around $60 per month.
Hopefully I will outlive the 30 years and live to an old, happy age. However, I know that if something bad happens to me, my wife, and future family, will be covered in a worst case scenario. I will go to bed every night for the next 30 years knowing that no matter what happens to me, my family will never worry about being comfortable, having food on the table, and having a roof over their head.
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