How to Purchase Life Insurance

Life insurance deals between a life insurance company and the policy owner. In exchange for the premiums the policyholder pays during their lifetime, a life insurance contract says that when the insured person dies, the insurance company will pay a certain amount to one or more named beneficiaries. You also have to choose where you’ll purchase it. In general, you can purchase life insurance from four places:

From a Life Insurance Company Itself

You can buy a straight-term policy from an insurance company to deal with them directly. This kind of policy gives you the protection you need for a certain amount of time, like 10, 20, or 30 years. Usually, you fill out an online application, compare price quotes, choose a policy, and pay for this kind of policy. Depending on the company, you may be able to buy a “guaranteed issue” insurance that doesn’t require a medical exam. A guaranteed issue coverage can be a good choice for people with health problems who might not be able to get life insurance otherwise. Direct-term insurance is a quick way to get coverage, especially if you know exactly what kind of coverage you want and the company offers it. But if you need help, have questions, or want more choices, it’s usually best to work with an agent or broker.

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From a Life Insurance Agent

Most life insurance is sold through agents and brokers. Both act as middlemen between insurance companies and people who want to buy protection. Both must also have the right licenses to sell insurance in the places where they do business. People often use the two terms equally, but there are some apparent differences between them.

Who the person stands for is the most important difference. An insurance company hires someone to sell its goods. This person is called an agent. An insurance agent who only works for one company is called a bound agent. An agent who works for more than one company is called an independent agent. Life insurance agents serve companies, not buyers. Their goal is to sell you insurance from the companies they work for.

From Someone Who Sells Life Insurance (Brokers)

On the other hand, brokers work for insurance buyers, not insurance companies. They work on their own and don’t have any special contracts with insurance companies. That means they should be able to give fair recommendations that meet each customer’s wants. Most of the time, agents work with many insurance companies to give customers a choice of quotes and plans.

Online

If you choose to work with an agent or broker instead of getting straight to an insurance company, you’ll have to decide whether to shop in person or online. If you want personalized advice, permanent life insurance instead of term life insurance, or have a complicated case, a local insurance agent or broker is a good choice. 

Also, a dealer or broker can be a good choice for people who could be better with technology and would have trouble filling out an application online. On the other hand, an online agent or broker may be a good fit if you have a general idea of how much coverage you need, want term life insurance, or prefer to shop on your own. Many services let you compare prices from different insurance companies.

Hopefully, you understand how to purchase life insurance. Because Life insurance is essential to financial planning and can provide financial security for you and your loved ones, investing in life insurance is a wise decision that can help you protect your family in an unexpected event. Make sure to shop around and find the right policy for you. Follow Renwatt for more!