You’ve been thinking about it for quite some time. You know you need to purchase life insurance coverage, but aren’t sure of how to best move forward.
Don’t stress. You aren’t the only person to ever face this situation. In fact, it’s quite common to find yourself on the fence with no idea of what to do next.
As you ponder the future and consider your options, you may soon realize that whole life insurance deserves a second look. While this isn’t the only type of policy to consider, it’s definitely one of the best.
1. Learn About Whole Life
With all this in mind, you come to the first step in buying whole life insurance coverage: learning more about the finer details, including the benefits, the best companies, and how to make a purchase.
As you move through the learning process, there are three important questions to address:
Why is whole life insurance the right choice?
As you compare whole life and term life, you’ll do so with the idea of making a definitive decision as to which policy is best.
Despite the fact that whole life coverage typically costs more, many people move in this direction for one very important reason: a guaranteed death benefit.
With term life insurance, your policy expires after a predetermined number of years, such as 15 or 20.
With whole life insurance, you don’t have to concern yourself with this. As long as you continue to pay your premium, you can be rest assured that your beneficiary will receive a payout upon your death.
However, remember you do not to pick Term or Whole Life Insurance, you can do a mix of both. This way you can get the best of both worlds.
Which companies are known for being the best in the industry?
With hundreds of life insurance companies to consider, this can be a difficult question to address. However, since you’re only buying one policy (more than likely) you’ll need to make a firm decision.
The best thing you can do is compare the top rated whole life insurance companies, paying close attention to those that most closely match what you’re trying to accomplish.
For example, maybe you want to select a company with a high dividend payout. Or maybe you’re most interested in those that are known for offering the lowest monthly premium.
Once you define the word “best,” you can then find the company that most closely suits your personal and financial situation.
What’s the purchase process?
Once you compare companies and policies, it’s time to get down to business. You need to speak with your chosen provider to learn more about the purchase process.
Is a medical exam required? When is your first payment due? Can you pay online?
These are the types of questions you’ll discuss with your life insurance company. All of these, among others, will help you better understand the purchase process.
This is the first step in buying a whole life insurance policy. Once you make your way through this step, it’s time to move on.
Now, it’s time to move onto the second step:
2. Choosing The Right Company
There are hundreds upon hundreds of companies that sell whole life insurance. While some are better than others, each one will appear to have something unique to offer.
Your job is to cut through the clutter, make a short list of companies that you’re considering, and then compare the pros and cons to make a final decision.
As you compare whole life insurance companies with the idea of choosing one, you should focus on the following details:
Standing on Solid Ground
There are many details to consider when comparing companies, but you should never overlook the importance of their financial strength rating.
This is important for many reasons, including the fact that it shows where the company stands at the present time. Do you really want to purchase a policy from a company that could go under in the near future?
There are a variety of rating services, with A.M. Best and Standard & Poor’s among the best.
Not only are ratings important, but company size helps. You want to make sure that you company has leverage and will be there for a long time.
What You Get for Your Money
If you’re spending money on whole life insurance, it’s imperative to get something of value in return.
How much of a death benefit can you get for the money you’re willing to spend? What is the dividend payout? Does your policy accumulate a cash value?
These are the types of questions that can point you toward the best company.
You’ll soon find that every company is different. For instance, one may offer a larger death benefit for a lower price, however, its dividend payout is less than the competition.
Choosing a whole life insurance company is easier said than done. Not only do you have a lot on your mind, but your options are seemingly unlimited.
By following the tips above, you’ll find yourself making the right decision.
3. Ask Questions
It doesn’t matter if you’ve cut your list to a few companies or have made a final decision as to which one is best, the next step is important. This is when you ask any and every question that is rolling through your mind.
The last thing you want to do is purchase a whole life insurance policy when you’re uncertain of why you’re doing so or what you’re getting in return.
The questions you ask may not be the same as the next consumer. Even so, there are some that must be presented to the appropriate party before you move forward with the purchase process.
Here are 10 questions you should consider asking:
- What makes your company better than the competition?
- Can you explain your theory on customer service, including the ways that you provide top notch care to your customers?
- What types of whole life insurance policies do you offer?
- If you offer more than one type of policy, can you explain the finer details, pros, and cons of each one?
- What type of life insurance would you suggest to somebody in my position?
- Can you talk more about dividend earning potential and the ability for your policies to accumulate cash value over time?
- What is the best way to receive a quote for a policy?
- If I decide to move forward, what steps are required for doing so?
- How long does it take to complete the process, from the first step to an active policy?
- What are my payment options once a policy is in place?
Imagine if you would ask these 10 questions to three separate whole life insurance companies. Do you think you would receive the same answer to each one?
This is why it’s so important to compare your options and to ask the aforementioned questions, among any others that are weighing on your mind.
Don’t be shy about asking questions and wanting to receive detailed answers. Remember this: if a life insurance company doesn’t care enough to provide answers, you don’t want to purchase a policy from them anyway.
4. Share With Your Decision Makers
However, there’s an important step that you need to take in between all of the shopping: discussing your current and future situations with your loved ones.
For example, if you’re married, you need to sit down and speak with your spouse about your financial plan:
- Do you currently have life insurance?
- Are you buying your first policy?
- Do you have other money set aside for your family in the event of your death?
These are the types of questions you absolutely need to address with your family. If you neglect to do so, you could end up making a decision that doesn’t suit your many loved ones, which often includes both a spouse and children.
Points of Discussion
Rather than hope for the best as you discuss life insurance with your loved ones, here are three points of discussion:
Type of Coverage
This series is all about buying whole life insurance, but that doesn’t mean it’s your only option.
For example, you’ll also want to learn more about term life coverage. It may not be right for you, but it’s something to discuss with your family to ensure that everyone is on the same page.
Nobody wants to think about a day in which they’re no longer around, but this is what buying life insurance is all about.
You need to do the responsible thing and talk about how much of a death benefit is needed. This is based on many factors, including how much money you’ve saved, your monthly bills, and of course, your standard of living.
Who will you list as the beneficiary or beneficiaries of your life insurance policy?
You have many options, with most people opting for a spouse and/or child (or children). Since this is such a big decision, since you want to be as fair as possible, you should discuss this key point with your close family members.
Once you open the lines of communication with your family in regards to your life insurance needs, you can have a meaningful conversation about how to best move forward.
5. Get Illustrations
In step 5, we urge you lay out the final details of buying a policy with the company you’ve selected.
You don’t want this process to linger, so it’s a good idea to consult with the appropriate party without delay.
Here are the details that you need to discuss:
The Proposed Price
By now, you probably have all the quotes you need. Now, it’s time to decide which policy is best, based on your personal needs and budget.
For example, you may find that you need $1 million in coverage when you initially believed that $500,000 would be enough.
You know that the final price could change, based on things such as your medical exam, but you should at least have a basic idea of where things stand.
What comes next? When will the medical exam be scheduled? What is the timeline from this point on in regards to finalizing the purchase?
You can be rest assured that your life insurance company will show you the way, but you should have a clear idea of what you’re up against in the days and weeks to come.
Once everything is laid out on the table, you can take the right steps on your behalf to ensure that the process continues to move forward in a smooth and efficient manner.
You hope that you don’t run into any challenges along the way, but it’s always a good idea to know what can get in the way.
Ask your contact to provide you with a clear agenda on what will happen next. From there, review each step for potential roadblocks. For example, you may realize that a medical exam could turn up that you’re a tobacco user. As a result, your premium could be increased.
Don’t shy away from opening up the lines of communication with your life insurance agent. This person should be able to provide you with guidance throughout the buying process.
In this step, you need to lay out all the details of making a purchase. This will help you clear your mind. It will also guarantee that you’re comfortable with where things stand now and how things will play out down the road.
6. Medical Exam
In step 6, it’s time to prepare yourself for the medical exam. While this sounds tricky, it’s actually quite simple. As long as you are thorough, as long as you provide accurate information, everything will move forward in an efficient manner.
This all starts with the life insurance application. You should be 100 percent honest in regards to your health, as any inaccuracies will come to light once the medical exam is complete.
For example, if you’re a tobacco user, make note of this on your application. You may think you can hide this, but the medical exam will tell your company the truth.
Note: if you lie on your application, you risk your death benefit not being paid. This isn’t a risk that you want to take.
Here are a few additional steps you can take to prepare for the medical exam:
- Get ready for the basics. This isn’t the most advanced medical exam you’ve ever gone through, but it will include all the basics: height and weight, pulse, blood pressure, urine sample, blood sample, and blood pressure.
- Don’t drink alcohol in the weeks leading up to your medical exam. This may not sound like a big deal, but you don’t want alcohol to show on your blood test. A lack of alcohol in your system will look better to the underwriter reviewing your case.
- Find out if you need to fast. The insurance company should tell you if you need to fast. If they don’t, make sure you ask this question. Neglecting to fast when it’s required could lead to inaccurate results that work against you.
Generally speaking, a medical exam is meant to screen for these three major health concerns: cancer, cardiovascular disease, and diabetes. If you have or had any of these ailments, it’s safe to say that your premium will be higher than if you were 100 percent healthy.
Tip: since your health has a lot to do with the approval of your whole life insurance application, as well as the premium, it’s best to purchase a policy when you’re young. This is when you’re at your best in terms of your health, so it gives you the opportunity to lock in the lowest possible premium.
Preparing for a life insurance medical exam is not as challenging as it sounds. If you follow these tips, you’ll be ready for anything that comes your way.
7. The Results Of The Medical
In step 6, we discussed the details of a life insurance medical exam. This is far from the most exciting step of buying a policy, but it’s something that you’ll take on at some point.
Once the medical exam is out of the way, there’s only one thing you can do: sit back and wait to hear from your life insurance company.
In a perfect world, everything will check out with your exam. There won’t be any red flags that get in the way, thus slowing down the process and potentially increasing your premium.
However, in the real world, this often happens. This is particularly true among people who are buying a policy later in life.
In this step, we’ll discuss what you should do once you hear from your life insurance company after the medical exam has been completed. Generally speaking, there are three steps to take:
Ask About the Results
In short, you want to better understand the findings. Like most, you probably have a solid idea of where things stand in regards to your health. Even so, you need to ask about the results to ensure that you know what turned up.
If you have any reason to believe that a result is wrong, don’t hesitate to question the accuracy. In the event that this detail is causing an issue, you may need to request a follow up exam.
Will the Premium Change?
Now that the medical exam is complete, you’re almost to the end of the line. In fact, if everything checks out, you’ll find yourself in position to make a purchase.
This is why it’s so important to determine if the premium is different than what you were originally quoted. It’s not out of the question that something on the medical exam could impact your premium.
For example, if nicotine is found in your system and you didn’t tell your agent about this upfront, you can be rest assured that your premium will be higher.
Are you okay with the idea of paying the higher premium? Would you rather shop around for another policy? These are questions you need to answer if you find yourself in this position.
Ask How to Finalize the Purchase
At this point, there isn’t much left for you to do. As long as you’re okay with the policy details and the premium, you can ask for information on how to finalize the purchase.
Since you’re more or less at the end of the process, don’t be surprised to find that you can finish things off and have an active policy within a matter of days.
At this point, what matters most is that you understand what’s expected of you in order to finish things off.
Step 7 of buying a whole life insurance policy is relatively easy to understand. If you stay in touch with your primary point of contact, you can make your way through this step in a time efficient and effective manner.
All of the leg work is in the past. Now, all you have to do is finish off the process.
8. Activate Your Whole Life
Step 8 is all about taking the final steps in purchasing your policy and ensuring that your coverage is active.
To ensure that you don’t make any last minute mistakes, here are three things you need to do:
Review Your Policy One Last Time
Before you make a purchase, be sure that you receive the details of the policy one final time.
Look at things such as the coverage, including the death benefit, as well as the premium. Along with this, don’t move forward until you fully understand every detail outlined in the policy itself. If you have any questions, don’t hesitate to contact the company for clarification.
Make Your Payment
Once you’re comfortable with the policy and what it will offer, it’s time to make your first payment. This is typically the last step in the process.
Speak with your company about your options for making payment. Can you do so online via credit card? Over the phone? Via check?
Some companies offer many payment options, while others only have one. Regardless, you need to make your first payment if you want your policy to be activated.
Receive and Store Your Policy Documents
Now that you’ve made your first payment and your policy is active, it’s time to get organized.
Once you receive your policy documents by mail (or electronic format), put them in a safe place for future use. These documents will come in handy if you have questions about your policy, when it comes time to renew the coverage, or if a loved one needs to file a claim.
The final step of buying whole life insurance is not nearly as advanced as those that come before it.
We have walked you through all of the steps of buying a whole life insurance.
It may seem like a lengthy process, but it really isn’t.
Our agents can help you with all of these steps and make the process as easy as possible.
Please leave any questions in the comments section!