Follow these eight steps to find the right coverage at the best rate.
How to Buy Life Insurance: Complete Guide (2026)
Buying life insurance takes eight steps, from assessing your coverage needs to activating your policy. Most applicants finish underwriting in four to six weeks, though no-exam policies can be approved faster.
Find out if you're overpaying for life insurance below.
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Updated: September 4, 2026
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HOW TO BUY LIFE INSURANCE IN 8 STEPS
Key Takeaways
Life insurance premiums vary between insurers, even for the same coverage amount. Comparing quotes from at least three insurers is the most reliable way to find the lowest rate for your profile.
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.
Whole life insurance works 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.
Depending on the insurance company, no-exam policies can be approved the same day you apply. For fully underwritten policies, it takes an average of six to eight weeks from application to policy issuance.
1. Assess Your Coverage Needs
- Income multiple method: A common rule of thumb is to multiply your annual income by 10 to 12 to estimate your death benefit. Someone earning $75,000 a year would consider $750,000 to $900,000 in coverage under this method.
- DIME method: Add up four figures: your outstanding Debts, your annual Income multiplied by the years your dependents would need support, your remaining Mortgage balance and your children's future Education costs. The total gives a more detailed estimate than the income multiple method alone.
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. |
Get a personalized estimate with our life insurance calculator below.
Life Insurance Coverage Calculator
Use this simple calculator to find out how much life insurance you need in just a few minutes:
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Enter your total yearly income before taxes.
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2. Decide What Type of Life Insurance to Get
Term life insurance works for temporary needs like income replacement or a mortgage payoff. Whole life insurance provides lifelong coverage with a cash value component you can borrow against.
Coverage Duration | Specific period (10, 20 or 30 years) | Lifelong coverage |
Death Benefit | Paid only if death occurs during the term | Guaranteed payout regardless of when death occurs |
Cash Value Component | None | Yes, grows tax-deferred over time |
Policy Expiration | Expires without value if the term ends (unless converted) | Never expires |
Premium Cost | Low, affordable | Much higher (hundreds of dollars more monthly) |
Best For | People needing coverage for a specific period (e.g., raising family, paying mortgage, income replacement during working years) | High-income earners, long-term planners, wealth preservation, estate tax coverage, lifelong support for dependents with special needs |
Explore Companies |
IS WHOLE LIFE INSURANCE A BAD INVESTMENT?
Whole life insurance doesn't grow money the way stock market investments do, and critics are right that its cash value usually grows more slowly than a separate investment account would. The "buy term and invest the difference" strategy means buying a cheaper term policy and putting the money you save into your own investments instead, which can outperform whole life's guaranteed growth rate over time.
Permanent coverage solves a different problem, though. Whole life guarantees a death benefit no matter when you die, and the premium never increases. The cash value doesn't drop during a market downturn, either.
For estate planning or guaranteed lifelong coverage, that trade-off is often worth the higher cost. A term policy paired with your own investments usually builds more wealth over time.
Related Page: Term vs. Whole Life Insurance
3. Consider Riders and Additional Coverage
A life insurance rider adds a specific benefit to your base policy, such as a payout for accidental death or a waiver of premiums if you become disabled. Popular riders include:
- Accidental death benefit rider: Provides an additional death benefit if your death is due to an accident. It's worth adding for people in high-risk jobs or physically demanding hobbies; skip it if your base coverage already replaces your full income.
- Waiver of premium rider: Waives premiums if you become seriously ill or disabled. Primary earners without long-term disability insurance get the most value here, as it keeps your policy active if illness or disability stops you from working.
- Accelerated death benefit rider: Allows you to access a portion of your death benefit while still alive if diagnosed with a terminal illness. Most insurers include it at no extra cost, so add it to any policy.
- Child rider: Provides a death benefit if one of your children dies. The single flat fee covers all your children, so this rider suits parents of young kids who don't want to buy separate policies for each child.
- Guaranteed insurability rider: Allows you to buy additional coverage in the future without evidence of insurability. Young, healthy applicants benefit most. It gives them the right to buy more coverage later without a new medical exam, even if their health declines.
Start with the accelerated death benefit rider. Most insurers offer it at no extra cost. Primary earners without disability coverage should add the waiver-of-premium rider next. From there, add the child rider if you have young children, or the accidental death benefit rider if you work in a high-risk occupation. Add the guaranteed insurability rider when you're young and expect your coverage needs to increase over time.
4. Compare Life Insurance Companies and Get Quotes
Compare life insurance quotes from at least three insurers, since premiums vary widely for identical coverage. Healthy applicants get the lowest rates with a medical exam. No-exam life insurance is the faster option, but expect to pay more for skipping the exam.
The premium isn't the only number that matters. Financial strength ratings from AM Best, Moody's or Standard & Poor's tell you whether the company can pay your beneficiaries decades from now; look for A+ or higher. Third-party ratings from J.D. Power cover customer service and claims processing speed.
To make your research easier, explore our guides to the best life insurance companies based on different needs:
How Much Does Life Insurance Cost?
Life insurance premiums vary by age, gender and policy type. A 40-year-old man pays $59 a month on average for a 20-year term policy, compared to $362 for universal life and $574 for whole life at the same age, based on MoneyGeek's analysis of nonsmoker rates for a $500,000 policy.
20 | Female | $30 | $303 | $153 |
Male | $36 | $337 | $180 | |
40 | Female | $47 | $540 | $310 |
Male | $59 | $574 | $362 | |
60 | Female | $286 | $1,308 | $765 |
Male | $395 | $1,443 | $930 |
MoneyGeek analyzed rates for nonsmokers in average health to calculate these average monthly premiums for a $500,000 policy. Term life figures reflect a 20-year term length.
5. Choose Your Life Insurance Beneficiary
Name your life insurance beneficiaries who'd suffer a financial loss if you died. 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 make sure 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)
The application asks about your health history and lifestyle habits, and some insurers require a medical exam to confirm your final rate. As you complete life insurance applications, expect to include age, gender, occupation, income level, number of dependents and medical history. Your lifestyle habits (like smoking, drinking, exercise and risky hobbies) also affect your rates.
Most insurers send a licensed health professional to your home or office to check your height, weight and blood pressure. The blood test and urine lab work screen for diabetes, high cholesterol and smoking. If you're healthy, taking this exam lowers your premiums, though some companies offer policies that don't require a medical exam in exchange for higher premiums.
7. Review and Accept Your Policy
Check your policy documents against your original application before signing, since errors are easier to fix before you accept the offer.
- Name, address and Social Security number are correct
- Age and birth date match your records
- Occupation is listed accurately
- Death benefit matches what you applied for
- Premium amount and payment schedule are correct
- Policy start date and term length are accurate
- Beneficiary information is complete
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.
8. Activate and Maintain Your Coverage
Your policy takes effect only after you pay your first premium. A missed payment doesn't cancel your coverage right away. Most insurers give you a 30-day grace period before your policy lapses. Set up automatic payments now to reduce that risk. If the grace period passes and you still fail to make the payment, your policy will lapse and you'll lose coverage.
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?
If someone depends on your income, your death creates a financial gap your savings alone may not cover. Life insurance fills that gap, and depending on the policy type, it can do more.
Financial SecurityYour policy replaces your income so your family can maintain its standard of living, covering daily living expenses, mortgage payments and education costs.
Debt ProtectionOutstanding debts like personal loans and credit card balances don't disappear when you die. Life insurance pays them off so your family isn't left to manage them.
Estate PlanningDeath benefits pass to your heirs income tax-free and can cover estate taxes, preserving more of what you leave behind.
Investment OpportunitiesPermanent policies like whole life and universal life build cash value over time, which you can borrow against or withdraw while you're still alive.
Charitable ContributionsNaming a charitable organization as your beneficiary directs part of your death benefit to a cause you care about.
Where to Buy Life Insurance
You can buy life insurance directly through an insurer's website for speed, or through a licensed agent or independent broker for personalized guidance on policy type and riders. Online applications work well if you already know what coverage you want. An agent or broker is worth the extra step if you have complex needs, like estate planning or a pre-existing condition.
Insurance AgentsLicensed professionals who match policies to your financial goals and guide you through the application.
Online PlatformsMany insurers let you compare quotes, apply and buy coverage entirely online. This option works best if you already know what coverage you want and prefer to move quickly.
Employer-Sponsored PlansSome employers include group life insurance in their benefits package. Enrollment is straightforward and premiums are often lower, but coverage limits may not be enough on their own.
Financial AdvisorsA financial advisor can place your policy within a broader financial plan, which is useful if you're balancing life insurance with retirement savings or estate planning.
Membership OrganizationsSome professional groups and associations offer members access to group plans with negotiated rates or simplified underwriting.
What to Do After You Buy Life Insurance
After buying life insurance, keep your policy in a safe place. Share that location with your beneficiaries so they can find it quickly when they need to file a claim.
Set up automatic premium payments to avoid a policy lapse, which cancels your coverage after a missed payment. Most insurers offer a grace period of about 30 days after a missed premium before your policy lapses.
Review your life insurance coverage annually or after major life events, such as marriage, divorce, having a child, buying a home or a substantial income change. Update your coverage to match these changes so your beneficiaries receive enough financial protection.
How to Purchase Life Insurance: FAQ
Online applications are faster and work well if you already know what coverage you need. An agent is worth the extra step if you have a pre-existing condition, want estate planning guidance or are comparing permanent policy types.
No-exam policies may be approved in days, while full underwriting takes four to six weeks, depending on your health and insurer.
Some policies require a medical exam to finalize your rate. No-exam options exist but often cost more for older or less healthy applicants.
Insurers ask for your ID, income details, medical history and lifestyle habits. You'll need proof of identity, such as a driver's license or passport. Prepare proof of income, such as pay stubs or a tax return. Some insurers also ask for proof of residency, like a utility bill or mortgage statement. Exact requirements vary by company.
Life insurance isn't legally required, but it's highly recommended if you have dependents or financial obligations like mortgages, debts or education expenses that your loved ones would need to cover after your passing.
Life insurance death benefits are income tax-free to your beneficiaries. Two exceptions apply: policies transferred for payment to someone else, and certain employer-owned policies that don't qualify for an IRS exception. Talk to a tax professional if either situation applies to your policy.
Insurers can approve your application at three different rates: the same as your quote, better than your quote or higher than your quote based on your medical records. You'll get your final offer before your policy takes effect, and you can adjust your coverage amount if the new rate doesn't fit your budget.
Contact your insurer or agent to request a life insurance policy change. Then, tell them what changes you wish to make. Beneficiary designation updates are the most common request by policyholders. If you need additional financial protection, add riders or adjust your coverage amount.
Review your policy annually and after major life events, such as marriage, divorce, birth of a new child, buying a home or a big income change.
MoneyGeek gathered thousands of quotes from more than 30 life insurance companies across a range of demographics, varying smoking status, height, weight and health level to calculate average rates by policy type. We analyzed this quote data to identify pricing patterns across age and coverage levels for term, whole and universal life insurance.
To determine the best insurers, MoneyGeek scores life insurance companies out of 5 points using this rate data along with customer reviews, financial ratings and coverage details, weighted across three factors. Affordability carries the most weight at 50% of the score. Customer experience makes up 30%, based on claims handling, satisfaction and complaint trends. The remaining 20% covers coverage options such as policy variety, riders, conversion features and coverage limits.
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About Mark Fitzpatrick
Mark Fitzpatrick, a licensed Property and Casualty (P&C) Insurance Producer in Connecticut, is MoneyGeek's resident expert in insurance and economics. He has spent nearly a decade covering the insurance market at LendingTree and MoneyGeek, analyzing hundreds of carriers and millions of rates across auto, home, renters, health and life insurance.
His work has appeared in The Washington Post, The New York Times and NPR. He draws on independent cost and consumer experience data, and no insurance company partnerships affect his recommendations.
Mark studied at Boston College and later earned a master's in economics and international relations from Johns Hopkins University. He worked in financial risk management at State Street before joining MoneyGeek. He's also a five-time “Jeopardy!” champion.