Updated: Jan 04, 2024

How to Buy Life Insurance: A Step-by-Step Guide

Follow this step-by-step guide to buying your first life insurance policy so that you ensure that loved ones are financially secure with the right coverage.
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With Americans more and more cautious about their health these days, mortality is something being considered more often.

As you age, having a life insurance policy provides financial peace of mind. It can replace income after retirement, help you pay outstanding debts, and support loved ones after death.

You can purchase a life insurance policy at almost any age, and many reliable providers are on the market.

However, purchasing life insurance is different from buying other types of insurance.

In this guide, we’ll explain the steps you need to take to get the right life insurance policy.

How to Buy a Life Insurance Policy

There are at least nine steps involved in buying life insurance, at least if you want to get the right policy at the right price and with the necessary provisions for your personal needs and circumstances.

1. Decide if you need life insurance coverage

For most people, there will be a need for life insurance coverage. Generally speaking, if you think you need life insurance, you almost certainly do.

There are calculations you can go through to make that determination.

Industry standards say you should have sufficient life insurance to cover at least ten years of your annual income if you earn $50,000 per year, a $500,000 policy is recommended.

But that’s just a starting point.

You may increase that amount if you have a substantial debt you’d like paid upon death.

Alternatively, you may choose less coverage if your spouse has sufficient income to reduce the needed coverage.

2. Pick a policy type – term or permanent

Aside from the decision to purchase life insurance, the next most important consideration is the type of policy you’ll choose.

The most basic choice is temporary or permanent coverage.

Term life insurance

Term life insurance is temporary coverage. Terms typically run in five-year increments, ranging from 10 to 30 years.

For many individuals, a 30-year policy will be sufficient to cover the time of greatest life insurance need.

For example, if you’re 30 and have a 30-year mortgage and young children, a 30-year term policy will cover your family until your children are emancipated and your house is paid for.

Term life insurance has another advantage in that it’s a lot less expensive than permanent insurance.

A typical term policy costs about 10% as much as the premium on an equivalent amount of whole life insurance. That means not only will you save money on the premium, but you can purchase a lot more coverage. When the term expires, you may be able to either extend your current policy or purchase a new one.

If you’re concerned that future health issues may make getting a new term policy difficult when your current term expires, you may want to consider permanent coverage.

Permanent life insurance

The most common type of permanent life insurance is a whole life insurance policy, but others, like universal life, also offer an investment provision.

Permanent life insurance is much more expensive than term life, but that’s because it’s a permanent policy, and it builds cash value.

That is:

Part of the premium goes toward paying your life insurance; the rest goes into your cash value.

As the cash value builds, you can take a loan against it or use the proceeds to pay future premiums. 

It’s possible to have enough cash value in a whole-life policy that a certain age will fully pay up your plan.

3. Research different life insurance carriers

There are hundreds of life insurance companies in America.

Some are large, well-established companies, like Prudential, Allstate, and MetLife.

These are best for providing permanent life insurance and coverage for older applicants and those with health conditions.

There are also many new life insurance providers, loosely called life insurance “fintechs.” Many of these companies have come up only in the last few years but specialize in limited policy types.

For example, most provide only term life insurance. They typically offer no medical exam policies to healthy young applicants at low premiums. However, they’re usually not the best place for older applicants or someone with significant health conditions to purchase life insurance.


If you’re unsure where to buy life insurance, consider working with a broker.

Brokers work with dozens of life insurance companies and can place your application with the most appropriate carrier.

Best of all, life insurance brokers won’t cost anything more than if you were to purchase a policy directly from an insurance company.

4. Request multiple quotes

Never pick one life insurance company. Instead, do some shopping.

You should get policy quotes from several providers to do a side-by-side comparison.

5. Fill out the application

A life insurance application is similar to completing a job application or even a loan application.

Of course:

It’ll ask for basic information, including your name, address, contact information, Social Security number, and financial information. That will mostly center on your occupation and current employment and income.

However, the vast majority of life insurance applications also ask a significant number of health-related questions.

When completing this section, do your best to fill it out accurately.

Be sure to include any significant health conditions, previous medical events, or high-risk activities, like smoking or dangerous hobbies.

Omitting this information could result in a decline of your application if the life insurance company finds out you’ve failed to be entirely truthful in providing the information.

They’ll verify your health information with various online data sources and even directly with healthcare providers.

6. Prepare for your phone interview

Some, but not all, life insurance companies also conduct a phone interview.

It will generally duplicate the information requested on your application.

However, the insurance company will do this to verify there have been no changes or omissions on the application.

Sometimes, they may even ask a few questions not asked in the application.

Once again, do your best to be truthful. The phone interview should only last a few minutes; more than anything, the person at the other end will be looking for additional information to support approving your request.

For that reason, it’s in your best interest to cooperate fully.

7. Schedule a medical exam

Most life insurance policies will require you to have a medical exam.

That will involve a nurse coming to your home or place of employment, checking your height, weight, and blood pressure, and taking urine and blood samples.

The insurance company is trying to determine the current state of your health through the exam.

You may want to consider a no-exam policy if you’re uncomfortable with exams in general. But understand you’ll typically pay at least a little more for a no-exam policy than you will for a fully medically underwritten one.

That’s because omitting the exam will give the insurance company less assurance of the exact state of your health.

Some applicants prefer a no-exam policy to hide a medical condition.

However, that usually doesn’t work.

Once again, the insurance company can verify your health information from third-party sources. In most cases, you’ll be better off – cost-wise – with a fully medically underwritten policy.

8. Wait for approval

Depending on the insurance company, this can take anywhere from a few days (if no medical exam is required) to a few weeks.

Online life insurance providers typically have a streamlined application process that does not require a medical exam.

They can typically provide approval within a few days. But that mainly applies to the term life insurance policies only.

If you’re taking permanent life insurance, or if you’re older or have health conditions, policy approval can take several weeks.

In each case, a medical exam is very likely.

Don’t worry that you won’t have coverage. Under the laws in most states, you’ll be retroactively covered under any policy once you submit the application and make the first premium payment.

That of course is contingent upon the policy ultimately being approved.

9. Exam policy details

Once you receive your policy, read every page and every paragraph.

Always remember that a life insurance policy is a legal contract. You’ll want to look for any exclusions the policy contains.

For example, the policy may not pay benefits if your death is caused by visiting certain countries determined to be dangerous or participating in certain activities, like social unrest or illegal behavior.

If you’re remotely concerned, have it reviewed by a trusted friend or – better yet – an attorney. You’ll have a certain amount of time to either accept the policy or decline it.

That’s why you should review the policy carefully as soon as it arrives.

Bottom Line

As you can see, applying for life insurance isn’t a single activity but a series of steps.

You’ll need to complete all nine to get the right policy at the right price and with the proper provisions.

Take your time, ask questions, and read everything that comes your way regarding the policy.

A life insurance contract is a long-term arrangement that can’t be changed after the fact.

That is why you’ll be vested in getting it right up front.