Complete Life Insurance Buyers Guide
Buying life insurance doesn’t have to be complicated. This step-by-step guide walks you through everything you need to know to make an informed decision and get the right coverage at the best price.
Step 1: Determine How Much Coverage You Need
Before you start shopping, figure out how much coverage your family actually needs. Use one of these methods:
Quick Method: Income Multiplier
Multiply your annual income by 10-15.
Example: $75,000 salary × 10 = $750,000 coverage
Detailed Method: DIME Formula
Add up:
- Debt (mortgage, car loans, credit cards, funeral costs)
- Income replacement (annual income × years needed)
- Mortgage (if not already counted in debt)
- Education (college costs for kids)
Learn more in our coverage calculator guide.
Step 2: Choose Your Type of Insurance
Most people need to decide between term life and whole life:
Term Life Insurance (Most Popular)
Best for: Most working families who need affordable, high coverage
- Coverage for specific period (10, 20, 30 years)
- Lower premiums
- Simple and straightforward
- No cash value
Cost example: $500,000 for 20 years = $30-50/month (age 35)
Whole Life Insurance
Best for: Estate planning, guaranteed lifelong coverage, forced savings
- Coverage for entire life
- Builds cash value
- Higher premiums
- More complex
Cost example: $500,000 permanent = $400-600/month (age 35)
Our recommendation for most people: Start with term life. It provides maximum protection during the years your family depends on your income.
Read our detailed term vs whole life comparison.
Step 3: Choose Your Term Length
If you’re buying term life, pick a term that covers your peak financial responsibility years:
- 10-year term: Short-term debts, temporary needs, supplemental coverage
- 20-year term: Most popular – covers kids through college, covers 2/3 of typical mortgage
- 30-year term: Full mortgage term, very young children, maximum protection period
Tip: Match your term to your longest financial obligation. If you have 28 years left on your mortgage, get 30-year term.
Step 4: Understand What Affects Your Price
Your premium is based on these factors:
Age
The younger you are, the cheaper your premiums. Rates can double every decade.
| Age | $500k, 20-year term |
|---|---|
| 25 | $20-25/month |
| 35 | $30-40/month |
| 45 | $70-90/month |
| 55 | $180-230/month |
Health
You’ll be placed in a rating class:
- Preferred Plus: Excellent health – lowest rates
- Preferred: Very good health – slightly higher
- Standard Plus: Good health – moderate rates
- Standard: Average health – higher rates
- Rated/Table Rated: Health issues – significantly higher
Smoking
Smokers pay 2-3 times more than non-smokers. If you quit, you can usually get non-smoker rates after 12 months tobacco-free.
Gender
Women typically pay 20-30% less than men because they statistically live longer.
Family Medical History
Heart disease, cancer, or other serious conditions in immediate family members can affect your rates.
Lifestyle
Risky hobbies (skydiving, scuba diving, racing) or dangerous occupations may increase premiums or require additional underwriting.
Step 5: Gather Your Information
Before applying, collect:
- Personal information: SSN, driver’s license, date of birth
- Medical history: List of medications, conditions, surgeries, doctors’ names
- Family medical history: Serious illnesses in parents and siblings
- Financial information: Income, assets, existing insurance
- Beneficiary information: Full names, dates of birth, SSN of who you want to receive the money
- Lifestyle details: Hobbies, travel, occupation
Step 6: Shop and Compare
Don’t buy the first policy you see. Here’s how to shop smart:
Get Multiple Quotes
Rates can vary by 30-50% or more for the same coverage. Compare at least 3-5 companies.
Work with an Independent Agent
Independent agents represent multiple insurers and can shop for you. They can:
- Access rates from 20+ companies instantly
- Know which companies specialize in your situation (health conditions, age, etc.)
- Handle the paperwork
- Cost you nothing (insurers pay their commission)
Check Company Ratings
Only buy from financially strong insurers. Check ratings from:
- A.M. Best (look for A or higher)
- Moody’s (look for Aa or higher)
- Standard & Poor’s (look for AA or higher)
Compare More Than Just Price
Also consider:
- Conversion options (can you convert term to permanent later?)
- Renewal provisions (what happens when term ends?)
- Riders available (disability waiver, accelerated death benefit, etc.)
- Customer service reputation
Step 7: Apply for Coverage
Fill Out the Application
Be thorough and honest. Include:
- All medical conditions, even minor ones
- All medications, including supplements
- Accurate smoking/tobacco use history
- Complete family medical history
Important: Lying on your application can result in denied claims. If you’re unsure about something, disclose it and let the underwriters decide.
Schedule Your Medical Exam
For most policies, you’ll need a “paramedical exam”:
- Done at your home or office
- Free of charge
- Takes 20-30 minutes
- Includes height/weight, blood pressure, blood and urine samples
- Sometimes EKG for large policies or older applicants
Tips for a good exam:
- Fast for 8 hours beforehand
- Avoid alcohol for 24 hours prior
- Avoid caffeine day of exam
- Drink plenty of water
- Get good sleep the night before
- Schedule for morning if possible
No-Exam Options
Some policies don’t require medical exams:
- Simplified issue: Health questions but no exam (up to $250k-$500k)
- Guaranteed issue: No questions, no exam (usually $5k-$25k, higher premiums)
- Accelerated underwriting: Some companies use data instead of exams for healthy applicants
Step 8: Underwriting Process
After you apply, the insurance company evaluates your risk:
What Happens:
- Application review: Underwriters examine your application
- Medical exam review: They analyze your exam results
- Medical records request: They may request records from your doctors (you’ll sign a release)
- MIB check: They check Medical Information Bureau database
- Prescription check: They verify your prescription history
- Driving record: They check for DUIs or major violations
Timeline:
- Accelerated underwriting: 24-48 hours
- Simplified issue: 1-2 weeks
- Traditional underwriting: 4-8 weeks
Step 9: Review Your Offer
The insurance company will make an offer. You might receive:
Offer as Applied
You get the coverage and rate you applied for at the rating class expected. Accept it!
Rated Offer
You’re approved but at a higher premium due to health or lifestyle factors. You can:
- Accept the offer
- Negotiate (provide additional information or test results)
- Decline and apply elsewhere
- Accept now and reapply later if health improves
Postponement
They need more information or want you to address a health issue before approving. Follow their guidance and reapply when ready.
Decline
They won’t offer coverage. Ask why, then:
- Try other companies (one decline doesn’t mean all will decline)
- Look into guaranteed issue policies
- Consider group coverage through work
- Address health issues and reapply later
Step 10: Accept and Activate Your Policy
Pay Your First Premium
Coverage typically begins when you:
- Sign the policy delivery paperwork
- Pay your first premium
- Confirm no health changes since application
Review Your Policy Documents
Read your policy carefully. Check:
- Coverage amount is correct
- Beneficiaries are listed correctly
- Premium amount and frequency
- Coverage start and end dates
- Any riders or exclusions
Set Up Payment
Most companies offer:
- Monthly automatic bank draft (most common)
- Annual payment (may get discount)
- Quarterly or semi-annual payments
Tip: Set up automatic payments so you never miss a premium and risk lapse.
Step 11: Store Your Documents Safely
Keep your policy documents:
- In a fireproof safe or safety deposit box
- Tell your beneficiaries where to find them
- Give a copy to your executor or attorney
- Keep beneficiary information updated
Important Policy Features to Understand
Conversion Privilege
Most term policies let you convert to permanent insurance without a medical exam. Valuable if your health declines.
Renewal Provisions
What happens when your term ends? Can you renew? At what rate?
Grace Period
Usually 30-31 days to pay a missed premium before policy lapses.
Contestability Period
First 2 years of the policy, the insurer can investigate claims and deny if you lied on the application.
Suicide Clause
Most policies don’t pay for suicide within first 2 years (they refund premiums instead).
Valuable Policy Riders to Consider
Riders are add-ons that enhance your coverage:
Waiver of Premium
If you become disabled, the insurance company pays your premiums for you. Highly recommended.
Cost: Usually $50-100/year
Accelerated Death Benefit
If you’re diagnosed with terminal illness (6-12 months to live), you can access part of your death benefit early. Often included free.
Accidental Death Benefit
Pays double or triple if death is from accident. Generally not worth the cost.
Guaranteed Insurability
Lets you buy more coverage at specific life events without a medical exam. Good for young people planning families.
Child Rider
Adds coverage for your children (usually $10,000-25,000). Inexpensive and may be worth it.
Common Mistakes to Avoid
- Buying only through work: Group coverage is rarely enough and disappears when you leave the job
- Waiting until you need it: Buy while you’re young and healthy for best rates
- Not shopping around: Rates vary widely – always compare
- Buying from the first agent who contacts you: Shop with independent agents
- Lying on your application: Will result in denied claims
- Forgetting to update beneficiaries: Life changes (divorce, new children) require updates
- Letting policies lapse: You lose coverage and have to requalify at older age/price
- Buying unnecessary riders: Stick with waiver of premium and accelerated death benefit
Special Situations
If You Have Health Conditions
Don’t assume you can’t get coverage. Work with an experienced agent who knows which companies specialize in your condition. See our health conditions guide.
If You’re a Homeowner
Consider specialized mortgage protection insurance, especially if you’re within the first few years of homeownership. May offer guaranteed acceptance. Learn more in our mortgage protection guide.
If You’re Self-Employed
You need more coverage than employees because you don’t have group life insurance. Also consider disability insurance.
If You’re a Senior
Options exist even if you’re over 65. Look into guaranteed issue policies for final expenses or consider mortgage protection if you still have a home loan.
After You Buy: Ongoing Management
Review Your Coverage Every 3-5 Years
Life changes. Review when you:
- Get married or divorced
- Have children
- Buy a home
- Get a significant raise
- Start a business
- Inherit wealth
- Retire
Keep Premiums Current
Don’t let your policy lapse. If you’re struggling with payments:
- Reduce coverage amount instead of canceling
- Change to annual payments (often cheaper)
- Use policy loans (whole life only)
- Talk to your insurer about options
Update Beneficiaries
Review beneficiary designations regularly. Update after:
- Marriage
- Divorce
- Birth of children
- Death of a beneficiary
Get Professional Help
Life insurance doesn’t have to be confusing, but the buying process involves many decisions. Working with an experienced, independent insurance professional can help you:
- Determine the right coverage amount
- Find the best type of policy for your needs
- Compare rates from multiple top-rated companies
- Navigate the application process
- Understand policy features and riders
- Find coverage even with health conditions
MoProInsure.com offers free consultations and can help you compare options from multiple carriers, including traditional term life, whole life, and specialized mortgage protection coverage.
Bottom line: The best life insurance is the policy you actually buy and keep in force. Don’t let analysis paralysis prevent you from protecting your family. Start with term life for most situations – it’s affordable, straightforward, and provides the protection most families need.