How to get life insurance—tips and advice for first-time buyers

Buying life insurance is about making sure the people who depend on you will be financially secure, even if you’re not around. But if you’ve never done it before, how do you get started? Where do you turn for the information and guidance you need?

Buying life insurance for the first time

Buying life insurance is one of the most financially responsible steps you can take for your loved ones. While the process may seem daunting at first, sometimes all you need is a little information and guidance to help you along the way.

Where to find coverage

If you’ve never purchased life insurance before, you may be surprised by the number of places you can get it. Here are just a few of the easiest places to start:

Financial professionals or agents: Whether they are independent agents or work for an insurance company like ours, financial professionals are often your best source of information. Armed with extensive product knowledge and sophisticated evaluation tools, financial professionals are uniquely qualified to assess your needs, review your options, and provide everything you need to make an educated decision. The personal guidance they provide makes the process go more smoothly and helps make sure that you end up with the right level of coverage.

Your employer: If you are working, there’s a good chance that you will be offered some life insurance coverage by your employer. In most cases, coverage is offered as part of a group plan so all you have to do is sign up. You may also be able to purchase extra coverage (supplemental life insurance) for an additional cost.

Professional and membership associations: Many not-for-profit organizations, such as AARP and the American Medical Association (AMA), offer group life insurance plans for their members.

Online brokers and marketplaces: These days, it’s easy to apply for life insurance online. Depending on the type of coverage you want, you may have to schedule a medical exam, take blood tests, or just answer a few simple health questions. Once your application is completed, your results will be submitted to multiple insurance companies and you may receive several proposals.

Direct from the insurer: Many insurance companies let you purchase coverage over the phone, through their website, or even by mail. Here again, you may have to schedule a medical exam, lab tests, or answer a few simple health questions to qualify.

Know what you would like your coverage to do

As you get started, it can be helpful to revisit the reasons why you are buying a life insurance policy. Is it to replace your income, pay off your mortgage, leave a gift to charity, or create an inheritance for your loved ones? Whatever the reasons, you’ll want to keep them in mind as you select your coverage.

Figure out how much protection you need

Now that you know what you want your coverage to do, the next step is to determine how much protection you need to accomplish these goals. For example, if you want to make sure your mortgage is paid off and that your children can afford to go to college, simply add up the total cost and use that figure.

Similarly, if income replacement is your primary goal, you could take your annual salary and multiply that by the number of years you have until retirement.

While either of these approaches will give you a rough idea of your life insurance needs, there may be a host of other factors you need to consider. That’s why we strongly recommend scheduling a financial review with one of our New York Life financial professionals. That way, you’ll be sure to have a thorough, complete understanding of your coverage needs.

Decide how much insurance you can afford

As with any major purchase, it’s important to make sure your life insurance premiums fit within your budget. Remember, some life insurance premiums increase over time, so it’s important to make sure you can afford them today and tomorrow.

Find the right policy

As you start to weigh your options, you’ll quickly discover that there are many different types of life insurance available. While this can be confusing at first, most policies fall under three basic categories: term, whole life, and universal life. Since each offers a unique set of benefits and features, it’s important to understand the differences before deciding on a policy:

Term Life Insurance

Term life insurance covers you for a set period, such as 10, 15, or 20 years. It’s often used by young parents who need financial protection until their children are grown, or by families who want to make sure they can pay off significant debts like a mortgage. Term policies tend to have lower premiums than whole life, making them a cost-effective choice. However, once the term ends, your coverage will expire.

Whole Life Insurance

Whole life insurance, on the other hand, offers permanent coverage for as long as you keep paying premiums. These policies come with a cash value component that grows over time and can be borrowed against or withdrawn under certain conditions. Whole life insurance is more expensive, but it may be better suited for those with higher incomes or more complex financial needs, such as estate planning or wealth-building goals.

Universal Life Insurance

In many ways, universal life insurance strikes a balance between term and whole life coverage. That’s because it can give you protection that lasts longer than most term policies and can be a budget-friendly alternative to whole life. But what makes this coverage truly unique is the flexibility it offers. With universal life, you can increase or decrease your premium payments (depending on the cash value that has built up) and adjust the amount of coverage if your protection needs change.

Check out the insurance provider

Since a life insurance policy is only as good as the company behind it, it’s important to evaluate the financial health and reputation of the insurance provider. This is especially critical if you need long-term protection—as you want to be sure that the company you select will be there for you when needed. A great place to start is by looking at the ratings the company receives from independent rating agencies like Standard & Poor’s, Moody’s, Fitch, and A.M. Best.

The quickest way to apply for life insurance

Whether you apply online, in person, or over the phone, most insurance companies will need to gather some basic information. To speed things up, it will help if you have the following ready:

• Medical information: Some applications require a medical exam, while others just ask some basic health questions. Be prepared to discuss your medical history and have a list of your physicians and current medications on hand.
• Employment details: If you are working, most insurance companies will need information about your occupation, job duties, potential job hazards, and salary.
• Beneficiaries and contacts: To pay the death benefit, insurers will need the names and contact information of any beneficiaries you would like named on the policy. You may also want to provide the name of your attorney, trust officer, or any other individuals you would like contacted upon your death.

How pricing and acceptance are determined

Acceptance for a life insurance policy, and its applicable premiums, are primarily determined by factors like your age, health, and lifestyle choices. Younger, healthier individuals often secure the lowest rates. However, habits like smoking or high-risk hobbies such as skydiving can result in higher premiums. Being aware of these risk factors helps you understand how insurers calculate your costs.

You don’t have to go it alone

If you’ve never done it before, figuring out how to purchase life insurance can be a challenge. That’s why we encourage first-time buyers to work with a New York Life agent. That way, you’ll have an experienced professional to guide you along the way and make sure you have all the information you need to make the best decision. 

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