The Back-to-Basics series, presented by Barnum, is designed to answer those questions that are on everyone’s mind. This series of articles are geared toward people new to the world of personal finance, insurance coverage and more. In this blog post, we will walk you through the basics of how to obtain life insurance in simple step-by-step instructions.
We all hope to live a long and healthy life, but the unfortunate reality is that we don’t know when our time will come. That’s why it’s essential to have life insurance – so that your loved ones can be taken care of financially if something happens to you. Purchasing life insurance doesn’t have to be complicated, though.
Step 1: Have a Budget & Coverage Amount
Before shopping for life insurance, it’s important to determine your budget and the coverage you need.
It’s recommended to have a life insurance policy of 10-15 times your annual salary. However, this guideline may vary depending on your debt, any dependents, and your overall financial situation.
Engaging a financial advisor or other professionals to assist in this process can help you determine the right coverage amount.
Step 2: Compare Different Life Insurance Policies
The most common life insurance policies are term life and whole life. Term life insurance provides coverage for a set number of years, while whole life insurance offers coverage that lasts your entire lifetime. Various policies can have different features, so it’s essential to compare them to determine which one is right for you.
Step 3: Ask Your Preferred Provider Questions
Once you’ve narrowed down the policy type, you’ll need to decide which provider to go with. It’s important to ask questions and ensure that the company is reputable and has a good customer service record. Some questions you should be asking include:
- What is the premium for this policy?
- Are there any riders available?
- How long is the approval process?
Step 4: Fill in the Application Documents
After deciding on a provider and policy, it’s time to fill out the application documents. This typically includes personal information, medical history, and other details. Make sure to review all the paperwork carefully before signing anything.
Reading the terms and conditions is also important, as this will outline any limits or exclusions to the policy. Don’t hesitate to ask the provider questions if there is something you don’t understand.
Step 5: Phone Interview & Medical Examination
Most life insurance companies will require a phone interview and medical examination before issuing the policy. During this process, they will review your application and ask questions about your lifestyle and health history. They may also ask for additional tests such as blood pressure, cholesterol, or other screenings to ensure that you are fit enough to qualify for coverage.
Once all the paperwork is completed and the medical exams are passed, you will receive a confirmation letter or email with your policy details.
Obtaining life insurance doesn’t have to be complicated. By following these steps, you can get the right coverage for your needs at an affordable price. As always, it’s important to read the policy’s fine print and ensure you understand your coverage before signing anything. Once you’ve obtained life insurance, review your policy annually and adjust it as needed.