7 Life Insurance Shopping Tips and Strategies for 2023
Buying life insurance is often frustrating and overwhelming, especially if you’re a first-time buyer.
There is a range of coverages out there and sifting through them all can be an intimidating task.
The pressure can be even more difficult if you’re looking to protect your loved ones financially.
Fortunately, you don’t have to go into this process blind. There are key ideas you can learn and steps you can take to simplify your search for the right policy. To help you navigate your life insurance journey, here are seven life insurance shopping tips to consider.
Quick Article Guide
Here’s what we'll cover in this post:
- Tip #1: Determine if You Need Life Insurance
- Tip #2: Decide the Amount and Type of Coverage You Need
- Tip #3: Select A Type of Coverage
- Tip #4: Work with an Independent Agent or Agency
- Tip #5: Compare Life Insurance Rates and Shop the Market
- Tip #6: Make Sure You Have a Conversion Option
- Tip #7: Explore Rider Options
- Finding Life Insurance That’s Right for You
Tip #1: Determine if You Need Life Insurance
Although many financial experts consider life insurance a pillar of a solid financial plan, you don’t want to purchase coverage just because you heard it was something you need to do. However, many situations throughout your life can or will warrant some form of life insurance protection.
Life insurance is worth considering if you:
- Have dependents that rely on your income for financial support. If your passing would put them in a sticky financial situation, life insurance can provide replacement income to help them pay for some of their financial obligations and responsibilities. So, whether you have a spouse, child, or parent who relies on your income for support, life insurance may provide the financial protection they need.
- Need assistance paying for final or burial expenses. Life insurance can help pay for any final or burial expenses such as settling debt, funeral costs, estate administration costs, and more.
- Want to leave a legacy to your heirs. Even if you haven’t set assets aside for your heirs, a life insurance policy can provide an inheritance by naming them the beneficiaries on your policy.
- Have estate taxes that need to be paid. For those who have large estates that require an estate tax, life insurance can pay the taxes so your heirs don’t have to. This way, they can receive all of the inheritance their entitled to without having a tax liability.
- Desire to give a significant charitable donation. If you’re passionate about a charity, making them a beneficiary on your life insurance policy may yield a higher donation than if you were to simply contribute the premium payments.
- Need an additional source of savings. Permanent life insurance policies offer a cash value element that allows the policyholder to withdraw from or use it for other purposes such as to pay premiums. Essentially, policyholders can use permanent life insurance as a forced savings plan.
This is because life insurance policies are less expensive the younger you are, so being proactive can benefit you in the long run. As you age, your health may impact the price of your policy in the future.
Tip #2: Decide the Amount and Type of Coverage You Need
Now that you have determined you need life insurance coverage, it’s essential to understand the amount and type that suits you. You don’t want to end up in a situation where you’re over-insured and paying for a policy you don’t need. Alternatively, you could be underinsured and left without adequate coverage in the event of the worst-case scenario.
As a rule of thumb, you can multiply your annual income by 5 to 10 to identify the sum of money your family will need upon your passing. It’s important to note your age may determine how much coverage you can receive. For example, someone in their thirties may qualify for 30 times their income, while someone in their sixties may only qualify for 5 to 10 times their income.
You can use the JRC Life Insurance Calculator to help determine your needs; however, keep in mind that calculators can only give you a hypothetical answer. You may have other factors to consider, such as debts you need to repay or college tuition costs for your children’s education.
Tip #3: Select A Type of Coverage
Once you have decided how much coverage you need, you’ll need to assess what type of policy may work best for your unique situation. Generally, you have two options: term life insurance or permanent life insurance.
Term life insurance covers policyholders for a fixed timespan and tends to be more affordable. Permanent life insurance, in contrast, provides coverage for the policyholder’s entire life and has a cash value element as well.
So, if you think you may only need coverage for a certain period, such as until your children leave the nest, term might be a suitable option. On the other hand, if you need protection for your entire life, for example, to take care of a child with a disability, permanent life insurance might be a more viable option.
Tip #4: Work with an Independent Agent or Agency
There are generally two types of agents: captive agents who work for a specific company and independent agents who have access to a wide variety of insurance carriers. Working with an independent agent is advantageous because they understand what different insurance companies offer and their underwriting processes.
By having access to many different insurance companies, independent agents can help you find the most suitable policies for the best price.
Our agency represents 63 top-rated life insurance providers, and we are here to help. By asking you a few questions about your health and coverage needs, we can quickly match you with the policy the suits your needs the best.
Give us a call today at 855-247-9555, or use our quote form below to instantly compare rates from dozens of life insurance providers before speaking to an agent. Our comparative shopping services are always free, and it doesn’t cost anything to apply for coverage.
Tip #5: Compare Life Insurance Rates and Shop the Market
All insurance companies are not one-in-the-same. Life insurance companies may offer a wide variety of products that vary in coverage and price. Some companies even cater their products to a specific group of people. For example, some life insurance companies may focus on life insurance coverage for policyholders with pre-existing conditions.
Therefore, doing your homework can help you ensure you’re working with a suitable company that can cater to your life insurance needs. So, to find the right policy at the best price, it’s wise to compare insurers. When comparing insurance companies, you may want to check out the following:
- The company’s financial strength. The financial strength of an insurance company demonstrates if the company will be able to pay future claims. Although most well-known insurance providers have strong financial ratings, it’s wise to check into them before purchasing a policy. To check the ratings, you can look at rating sites such as Standard & Poor’s and A.M. Best.
- Complaint ratios. Companies with high complaint ratios may not be worth considering since the company may not offer a high standard of customer service. To access complaint information, you can visit the National Association of Insurance Commissioners' Consumer Information Source.
- Life insurance policy options. Once you have narrowed down your search, you will want to compare the exact same coverage across multiple insurers. It’s also wise to take a look at the benefits and features the company offers. For example, they could provide discounts for policyholders who have multiple policies with the same insurance company.
Tip #6: Make Sure You Have a Conversion Option
Insurance companies often offer a conversion option on term life insurance policies. This opportunity gives policyholders a certain amount of time to convert their policy to permanent coverage. When you purchase a policy, your insurance company will give you your permanent option and as well as the policy’s price. Of course, the company determines the price based on your age.
The benefit to having a conversion option in your policy is that coverage costs won’t be based on the condition of your health. Therefore, if you were to develop a health condition in the future, the insurance company wouldn’t reflect that in the policy cost since you already passed a health exam. So, before you buy a policy, ask about conversion options if you think you will need permanent life insurance in the future.
Tip #7: Explore Rider Options
Usually, life insurance companies offer various riders, or additional benefits, that you can add to your policy to customize it. Adding riders to your policy can ensure that you have a policy that suits your exact needs. While some riders come with a standard policy, others can be added for an additional premium amount.
For example, you may want to consider an accelerated death benefit rider. With this rider, policyholders can access their death benefit if they are diagnosed with a terminal illness. Therefore, if you need money for medical bills or other emergency expenses, the accelerated death benefit gives you more flexibility to handle your financial matters. Typically, this rider comes with a standard policy.
You may also want to explore the waiver of premium rider. If you become disabled and can’t pay your life insurance premiums, this rider will delay payments for a set amount of time. You can usually add a waiver of premium rider to your policy for an additional cost.
Finding Life Insurance That’s Right for You
Finding the right life insurance coverage doesn’t have to be confusing and complicated. By understanding your unique needs and some life insurance lingo, you can find a policy that matches your budget and coverage needs.
To help you better navigate your life insurance shopping journey, one of our insurance specialists can walk you through the process and help you secure a policy. We work directly with 63 highly-rated life insurance providers and our comparative shopping services are completely free.
Give us a call today, toll-free at 855-247-9555, or request an instant quote online using the form below. Our quoting calculator will quickly compare your options to provide you with accurate rates based on your gender, age, overall health, and the amount of coverage you need.
Managing Partner and Co-founder
Cliff is a licensed life insurance agent and one of the owners of JRC Insurance Group. He has helped thousands of families of businesses with their life insurance needs since 2012 and specializes with applicants who are less than perfect health. In his spare time he enjoys spending time with family, traveling, and the great outdoors.