How to Buy Life Insurance


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Key Takeaways

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Life insurance premiums vary widely between insurers, even for the same coverage amount. Comparing quotes can save you hundreds over your policy's lifetime.

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Term life insurance costs less than other types and works well when you need coverage for a specific reason, like replacing your income or covering your mortgage until it's paid off.

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Whole life insurance is better for complex financial planning situations. It lasts your entire life and builds cash value you can borrow against, but you'll pay more for these features.

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You may need to complete a medical exam when applying. But no-exam policies are available (often at a higher cost) for those who qualify.

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How to Purchase Life Insurance

Buying life insurance doesn't have to feel overwhelming. With the right approach, you can secure meaningful financial protection in six to eight weeks by following a structured process.

We've broken down the life insurance buying journey into eight clear steps, from determining coverage needs to activating your policy. This approach helps you avoid costly mistakes while ensuring proper family protection.

1. Assess Your Coverage Needs

Before you apply, determine how much coverage you’ll need. This depends on your income, debts, dependents and long-term financial goals. Knowing the amount upfront will help you choose the right policy and avoid being underinsured.

A common starting point is 10 to 12 times your annual salary, but your exact number will vary. Here are the key factors to consider when calculating your coverage:

Factor
Description

Income replacement

Make sure your family can maintain their lifestyle if you’re no longer around.

Debt payoff

Cover major debts like mortgages, student loans and credit cards.

Future expenses

Factor in expenses like college tuition or childcare for young kids.

Dependents

Having more dependents requires more coverage.

Savings and investments

Existing assets can offset how much life insurance you need.

End-of-life costs

You may want your policy to cover funeral and burial expenses.

This helps you choose a policy that provides the right level of financial protection without overpaying for unnecessary coverage. You can use our life insurance calculator below to get a personalized estimate.

How Much Life Insurance Do You Need?

Answer three simple questions to get your recommended coverage amount.

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UNDERSTAND YOUR FINANCIAL NEEDS

The best way to buy life insurance is to understand your financial needs and how long you need coverage. Consider consulting with a financial advisor to choose the right policy type. Read the fine print to understand the policy terms.

2. Figure Out What Type of Life Insurance to Get

Life insurance policies come in several types to meet various needs. Choosing the right life insurance means understanding how each policy works, what it covers and how it fits your financial priorities. The most common types are term life and whole life insurance, each with specific features, benefits and drawbacks.

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    Term Life Insurance

    This insurance provides coverage for a specific period (the "term"), typically 10, 20 or 30 years. Your beneficiaries receive a death benefit if you pass away within this term.

    If you outlive the term, the policy expires without value (unless it includes conversion options or return-of-premium features). This straightforward, cost-effective solution allows you to secure substantial coverage at a relatively low premium, making it practical for first-time buyers.

    Who Should Choose Term Life?

    Term life insurance is ideal for people who want straightforward, affordable coverage for a specific period, like while raising a family, paying off a mortgage or covering income replacement during working years. Its simple structure, lower premiums and ease of comparison make it a great choice for first-time buyers.

    The application process is also simpler. You can often get quotes online by providing some basic personal information, and a medical exam may or may not be required, depending on the insurer. Many platforms let you compare rates side by side. If you're looking for coverage without complexity, term life is a practical solution.

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    Whole Life Insurance

    Whole life insurance provides lifelong coverage and a guaranteed death benefit. Policies also include a cash value component that grows over time. The guaranteed payout and cash value accumulation come with much higher premiums than term life insurance (often hundreds of dollars more). Unlike health insurance, life insurance policies don't have deductibles. The full death benefit is paid to beneficiaries

    Who Should Choose Whole Life?

    Whole life insurance works well for high-income earners, long-term planners or people with unique financial responsibilities. It can help preserve wealth for heirs, cover estate taxes or provide lifelong support for dependents with special needs.

    For those in this category, whole life provides predictability, stability and grows in value over time.

Term vs. Whole Life: How Their Costs Compare

Term life insurance is much cheaper than whole life, making it a popular choice for budget-conscious buyers. Premiums only cover the cost of insurance, not any cash value, which keeps rates low for healthy applicants.

  • Our analysis found that a 20-year term policy with a $500,000 death benefit costs an average of $46 per month for women and $55 per month for men.
  • The average monthly cost for a smoker of the same age (with average health) is $143 for women and $170 for men.
  • A 40-year-old woman in poor health pays an average of $55 monthly, while a man in poor health pays an average of $67. Rates depend on the condition.
Average Term Life Insurance Cost
Data filtered by:Results filtered by:
Select
Smoking Status:No
Select
Health Level:Average
Female$46$551
Male$55$657

*Rates shown are estimates based on our survey methodology and may not reflect your actual premium. Individual rates vary based on health, location, and insurer underwriting guidelines.

In contrast, whole life insurance includes both coverage and a built-in savings component that grows over time. That extra benefit comes with a much higher price tag, often hundreds of dollars more per month for the same coverage amount.

Average Whole Life Insurance Cost
Data filtered by:Results filtered by:
Select
Smoking Status:No
Select
Health Level:Average
Female$605$7,257
Male$667$8,009

*Rates shown are estimates based on our survey methodology and may not reflect your actual premium. Individual rates vary based on health, location, and insurer underwriting guidelines.

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WHICH IS THE RIGHT POLICY FOR YOU?

While the decision between term and whole life insurance ultimately depends on personal circumstances, term insurance is often the more practical and affordable choice. Its simplicity, cost-effectiveness and flexibility make it appealing to most buyers.

Term life insurance isn't right for everyone. For those with significant financial resources or lifelong dependent care responsibilities, the benefits of whole life insurance can outweigh its higher costs.

3. Consider Riders and Additional Coverage

A life insurance rider is an optional addition that provides additional benefits or coverage. Some popular riders include:

  • Accidental death benefit rider: Provides an additional death benefit if your death is due to an accident
  • Waiver of premium rider: Waives premiums if you become seriously ill or disabled
  • Accelerated death benefit rider: Allows you to access a portion of your death benefit while still alive if diagnosed with a terminal illness
  • Child rider: Provides a death benefit if one of your children dies
  • Guaranteed insurability rider: Allows you to buy additional coverage in the future without evidence of insurability

Knowing the function and benefits of these riders helps you add an extra layer of security to your policy.

4. Get Personalized Quotes

You can request quotes online, through an agent or via employer-sponsored plans. Most platforms require basic personal information to generate estimates. Comparing policies on an apples-to-apples basis helps you find the best value beyond just cost, including strong customer service, financial stability and flexible coverage.

If you're in good health, consider quotes that include a medical exam to maximize savings. If speed or convenience is more valuable, no-exam life insurance might work better.

The Importance of Getting Multiple Quotes

Life insurance rates vary widely for the same coverage based on an insurer’s underwriting standards, pricing models and risk appetite. Gather quotes from multiple reputable providers. In addition to comparing prices, evaluate differences in policy features, customer service and financial strength.

Looking beyond the lowest premium can help you find better long-term value, especially with policies that fit your unique needs. Comparing multiple offers could save you hundreds or even thousands of dollars over the life of your policy.

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MONEYGEEK EXPERT TIP

Don’t stop at the first quote. Comparing policies side by side is the most effective way to find the right balance between cost, coverage and reliability.

5. Choose Your Life Insurance Beneficiary

Selecting a beneficiary for your life insurance policy affects your family's financial future. Here are the factors to consider:

Factor
Consideration

Primary vs. Contingent

Designate a primary beneficiary who will receive the death benefit and a contingent or secondary beneficiary as a backup. The secondary beneficiary gets the benefit if the primary beneficiary passes away before you.

Multiple Beneficiaries

You can name more than one person and decide how the benefit is divided among them. Consider the distribution method that suits your wishes.

Legal Considerations

Your choice must comply with state laws, especially if considering a minor as a beneficiary. In such cases, set up a custodial account or designate a trusted guardian to manage the benefit until the minor reaches adulthood.

Regular Updates

Life situations change, and so should your beneficiary designations. Review and update them regularly to ensure your named beneficiaries know when and where to file a claim.

Trusts and Legal Entities

If you have specific requirements for how the funds should be used, creating a trust and naming it as your beneficiary helps control how funds are used.

6. Complete the Application and Medical Exam (If Required)

Insurance companies want to know more about your background and lifestyle. You'll need to provide your age, gender, occupation, income level and number of dependents. They'll also consider your medical history (including any diagnoses, medications or surgeries) and your family's health background. Lifestyle habits (like smoking, drinking and exercise) and risky hobbies (like skydiving or racing) can affect your rates.

Most insurers will send a licensed health professional to your home or office for a medical exam. They'll check your height, weight and blood pressure, plus take blood and urine samples. The lab work screens for conditions like diabetes, high cholesterol and whether you smoke.

If you're healthy (and especially if you don't smoke), this exam can lower your premiums.

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EXPLORE NO-EXAM POLICY OPTIONS

No-exam policies offer quick coverage with approvals in just a few days. These work well for younger applicants in good health or those who don't want to wait for medical underwriting. Premiums can be higher for older buyers or people with health conditions, since insurers are taking on more risk.

7. Review and Accept Your Policy

Once your application is approved, you'll receive your policy documents. Don't rush to sign. Review the details thoroughly to catch any errors before your coverage becomes official.

Policy Review Checklist

Start with these essential verification steps:

  • Personal Information
  • Confirm that your name, address and Social Security number are correct
  • Verify your age and birth date match your records
  • Check that your occupation is listed accurately

Coverage Details

  • Ensure the death benefit amount matches what you applied for
  • Confirm the policy type (term or whole life) is correct
  • Review the premium amount and payment schedule
  • Check the policy start date and term length

Beneficiary Information

  • Verify all beneficiary names are spelled correctly
  • Confirm Social Security numbers and relationships are accurate
  • Review contingent beneficiaries if you named any
  • Check that percentage allocations add up to 100%

What to Do If You Find Errors

Contact your agent or the insurance company immediately. Most issues can be resolved quickly with a policy amendment. Don't accept the policy until all corrections are made. Fixing errors after acceptance takes much longer.

Checkpoint: All policy details should match your application before you sign and return the acceptance forms.

8. Activate and Maintain Your Coverage

You've made it through the buying process, so your family now has the financial protection they deserve. The final step is activating your coverage and keeping it current as your life evolves.

Make Your First Premium Payment

Your policy doesn't protect anyone until you pay that first premium. You have 30 days, but pay right away to eliminate any risk of a coverage gap. One missed premium can void your entire policy, leaving your family vulnerable when they need protection most.

Consider setting up automatic payments now. It's one less thing to worry about, and it ensures your coverage never lapses because of a forgotten due date.

Keep Your Documents Safe and Accessible

Your policy documents need to be secure but findable when your family needs them. Store original documents in a fireproof safe or safety deposit box. Scan everything and keep digital copies in secure cloud storage. Most importantly, make sure your spouse or a trusted family member knows exactly where to find your policy information.

Review Your Coverage Annually

Your life isn't static, and neither should your life insurance be. Set a yearly reminder to review your policy, especially after major changes like getting married, having children, buying a home, or changing jobs.

Why Should You Buy Life Insurance?

Life insurance protects your family financially when you're gone. It ensures that your dependents will be supported even if you can no longer provide for them. Here are ways life insurance can support your long-term financial plan:

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    Financial security

    Life insurance helps ensure your family maintains their standard of living, even in your absence. It can cover daily living expenses, mortgage payments, educational costs and more, providing financial stability to those you leave behind.

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    Debt protection

    If you pass away with outstanding debts, such as personal loans or credit card balances, life insurance helps pay them off, relieving your family from the burden and securing their financial future.

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    Estate planning

    Life insurance plays an important role in estate planning, providing a tax-free inheritance to your heirs. It can be structured to cover estate taxes, protecting your assets' value and ensuring that your legacy is passed on according to your wishes.

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    Investment opportunities

    Some life insurance policies, such as whole life or universal life, offer investment opportunities. These policies allow for growth in cash value over time, which you can borrow against or withdraw for financial needs.

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    Charitable contributions

    Life insurance allows you to leave a lasting legacy by contributing to a charity through your policy. By naming a charitable organization as a beneficiary, you can support a cause close to your heart, making a meaningful impact even after your lifetime.

Where to Buy Life Insurance

You have several ways to purchase life insurance, depending on how much guidance or convenience you prefer:

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    Insurance agents

    Licensed professionals who can recommend policies tailored to your financial goals and walk you through the process.

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    Online platforms

    Many insurers let you compare quotes, apply and buy coverage entirely online. This is ideal if you want speed and control.

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    Employer-sponsored plans

    Some employers include group life insurance in their benefits package. It's easy to enroll and often comes at a lower cost, but coverage may be limited.

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    Financial advisors

    These professionals can help you choose a policy that fits within your broader financial strategy, especially if you're juggling multiple goals.

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    Membership organizations

    Certain groups or associations provide access to exclusive plans with negotiated rates or simplified underwriting.

Buying Life Insurance: Other Policy Types to Consider

If term or whole life insurance doesn’t fit your situation, other types are worth considering. These options are easier to qualify for and often offer quicker approval, especially for those with health concerns or smaller coverage needs.

  • Guaranteed acceptance life insurance, also called guaranteed issue life insurance, doesn't require a medical exam or health questionnaire. It benefits people with severe health conditions who may not qualify for other types of life insurance. Coverage amounts are lower, and premiums are higher than those of other types.
  • Final expense and burial insurance is a small whole life insurance policy that covers funeral and burial costs. Coverage amounts are between $5,000 and $25,000. While this insurance type doesn't require a medical exam, it includes a health questionnaire. It's best for seniors who want to ensure their funeral and burial costs won't burden their families.
  • Simplified issue life insurance doesn't require a medical exam but involves a health questionnaire. Coverage amounts are lower, and premiums are higher than fully underwritten policies. These policies are ideal for those who want to skip the medical exam but are in decent health, as the health questionnaire could disqualify policyholders with serious health issues.

More Complex Life Insurance Policy Types

Some life insurance policies are less common but offer specialized benefits. Let's break down these more complex options:

  • Universal life insurance provides flexibility in premium payments and death benefits, allowing you to adjust these factors over time. It works well for those who anticipate income fluctuations and want the ability to modify their coverage or premium payments.
  • Variable life insurance lets you invest the policy's cash value, providing growth potential while posing investment risk. It works well for those with investment knowledge and some risk tolerance who want potentially higher returns.
  • Variable universal life insurance combines the flexible features of universal life insurance with the investment options of variable life insurance. This product works well for those who want the flexibility to adjust premiums and death benefits and are comfortable with investment risks.

Shop for Life Insurance: Understanding Life Insurance Cost

Life insurance rates vary based on your age, health, lifestyle and coverage needs. Price alone shouldn't drive your decision. The cheapest policy isn't always the best if it lacks the coverage or reliability you need.

Compare multiple quotes from several insurers and review each policy's terms, features and eligibility requirements carefully. A solid provider with strong customer service and claims handling is important. To help you get started, we've analyzed the cheapest life insurance policies for different profiles below.

Variables Impacting Life Insurance Cost

Your life insurance premium depends on several personal factors. Knowing what insurers look at helps you understand your quotes and find coverage that fits your budget.

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    Age

    Premiums generally increase as you age due to a higher risk of health issues and mortality.

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    Health status

    Current or past health conditions can increase premiums.

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    Gender

    Women tend to live longer than men, which often results in lower premiums.

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    Occupation

    Higher-risk jobs (like construction work or commercial fishing) can increase premiums.

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    Lifestyle habits

    Smoking, excessive drinking or participating in high-risk hobbies can lead to higher premiums.

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    Family medical history

    If your family has a history of certain medical conditions, your premiums can be higher.

Strategies to Minimize Life Insurance Costs

Reduce your life insurance premiums with smart planning. Try these proven approaches:

  1. Maintain a healthy lifestyle: Regular exercise, a balanced diet and regular check-ups can improve your health classification.
  2. Quit smoking: Nonsmokers often pay less than half the premiums of smokers.
  3. Manage chronic conditions: Controlling conditions like hypertension or diabetes can improve rates.
  4. Avoid high-risk activities: Engaging in hazardous hobbies like skydiving or motor racing can increase your premiums.

Insurers set premiums based on risk assessment. Improving your health, quitting smoking or avoiding high-risk activities can lower your risk profile and reduce premiums.

How to Find the Best Provider When Shopping for Life Insurance

Your next decision is which insurance company to trust with your family's future. Look at financial strength ratings first, showing whether the company has the money to pay your beneficiaries decades from now. You'll also want to review their customer service reputation, claims experience and third-party ratings or consumer reviews.

Comparing multiple insurers side by side reveals differences in service quality, policy flexibility and long-term value. The right company offers competitive rates and the confidence that it will pay your family when the time comes. We've ranked the best life insurance companies based on different needs to help you get started.

Mistakes to Avoid When Buying Life Insurance

Buying life insurance without proper research can leave families unprotected. Here are the most expensive mistakes to avoid:

  1. 1

    Waiting Too Long to Buy

    The younger and healthier you are, the lower your premiums. Delaying coverage means paying higher rates as you age and develop health issues.

  2. 2

    Not Shopping Around

    Premiums vary widely between insurers. We found substantial price differences for identical coverage. Get quotes from at least three companies before choosing.

  3. 3

    Buying Too Little Coverage

    Many people underestimate their coverage needs. Calculate 10 to 12 times your annual income, then add debt and future expenses like college tuition. Consider your family's long-term financial needs.

  4. 4

    Mixing Insurance with Investments

    Whole life insurance costs more than term coverage. Unless you have specific estate planning needs, consider buying term life insurance and investing the difference in a retirement account.

  5. 5

    Not Disclosing Health Issues

    Lying on applications voids your policy. Insurance companies can deny claims during the first two years if they discover undisclosed health problems. Honesty protects your beneficiaries.

  6. 6

    Choosing Company Based on Price Alone

    Choose a provider that won't struggle to pay claims. Check AM Best ratings and choose companies with A- or higher ratings for financial strength.

How to Shop for Life Insurance: Bottom Line

Buying life insurance means choosing the right policy based on your needs, goals and budget. Term life insurance is usually the most affordable and flexible option, while whole life offers permanent protection and long-term value for those with more complex financial plans.

Before applying, make sure you've estimated how much coverage you need, compared quotes from multiple insurers and understood the trade-offs between policy types. Researching your options now helps you secure coverage that protects your loved ones and fits your budget.

Compare Life Insurance Rates

Ensure you are getting the best rate for your insurance. Compare quotes from the top insurance companies.

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Life Insurance Shopping: FAQ

Buying life insurance can raise many questions, especially for beginners. Here are answers to common questions.

How does a life insurance policy work?

How can I get life insurance?

What options are there when choosing life insurance?

What are the requirements for life insurance?

What should I consider before buying life insurance?

What should I look for when buying life insurance?

Where can I buy life insurance?

How do I determine how much life insurance coverage I need?

What information will I need to apply for life insurance?

How long does the life insurance application and approval process take?

What can I expect during a life insurance medical exam, and why is it important?

Do you have to pay for life insurance?

What is a life insurance quote, and why should I get multiple quotes?

How can I choose life insurance?

What is no-exam life insurance, and how does the application process differ?

What are life insurance riders, and should I consider adding them to my policy during the buying process?

Is life insurance required?

How to Get Life Insurance: Our Review Methodology

Choosing life insurance can be challenging with so many companies claiming to offer the "best" coverage. That's why we built a research system that cuts through marketing claims to show you which insurers deliver value, stability and fair treatment when it matters most.

How We Analyzed Companies

We gathered 248,399 life insurance quotes and scored insurers on what matters most to buyers: cost, reliability, customer treatment, product options and ease of purchase. Each company earned up to five points per category, creating scores on a 100-point scale.

Our standard scoring weights:

  • Affordability: 50%
  • Customer Experience: 30%
  • Coverage Options: 20%

Our Sample Profile

We used a 40-year-old male, nonsmoker, 5'9", 160 pounds, with average health as our baseline profile. This represents the most common life insurance buyer demographic.

We also gathered quotes across ages, genders, tobacco use, health conditions and locations to capture real-world pricing variations. Quotes covered multiple term lengths and coverage amounts, helping us identify which insurers consistently offer competitive rates.

What We Measured

  • Cost data: Online quote tools from major insurers
  • Financial strength: AM Best ratings and years in business
  • Customer treatment: The National Association of Insurance Commissioners (NAIC) complaint data. J.D. Power customer satisfaction index rating and other online customer reviews
  • Digital experience: Online application tools and ease of use
  • Coverage variety: Policy types and available riders
  • This approach gives you confidence that our rankings reflect actual value, not just marketing promises.

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About Mark Fitzpatrick


Mark Fitzpatrick headshot

Mark Fitzpatrick, a Licensed Property and Casualty Insurance Producer, is MoneyGeek's resident Personal Finance Expert. With over five years of experience analyzing the insurance market, he conducts original research and creates tailored content for all types of buyers. His insights have been featured in publications like CNBC, NBC News and Mashable.

Fitzpatrick holds a master’s degree in economics and international relations from Johns Hopkins University and a bachelor’s degree from Boston College. He's also a five-time Jeopardy champion!

Passionate about economics and insurance, he aims to promote transparency in financial topics and empower others to make confident money decisions.


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