Americans purchase life insurance to protect and provide for the economic needs of loved ones, as an additional investment or savings tool or to ensure payment of certain debts upon death. At the end of 2008, individual, group and credit whole and term life insurance coverage in the United States totaled $19.1 trillion dollars, according to numbers released by American Council of Life Insurers. While many still choose to purchase individual life insurance with the assistance of an in-person insurance agent, advances in technology increase purchase options and make it convenient to obtain life insurance online.
Determine Insurance Requirements
Step 1
Estimate the amount of life insurance you need by conducting a capital needs analysis. First, estimate funeral, final expenses and estate taxes to determine your costs at death.
Step 2
Add in "one-time" expenses that include the balance of your home mortgage and other outstanding debts, estimated college costs for your children, and any other items you want to provide funds for, such as to provide care for pets.
Step 3
Calculate ongoing living expenses to include current annual living expenses, and then subtract your spouse's projected annual income, if any, and estimated Social Security survivor benefits your spouse will receive. Multiply the number you get by the number of years you think your spouse or children will need this amount to arrive at a total funding amount.
Step 4
Look at the policy you have, as well as any income-producing assets you own such as rental property and subtract this amount from total funds required. The amount you arrive at is the amount of life insurance you need at his time.
Purchase Life Insurance Policy
Step 1
Get a minimum of three life insurance quotes for the type of policy you want. You can visit websites for individual life insurance agencies or choose a website such as SelectQuote, IntelliQuote or AccuQuote. Compare policy provisions to determine the right policy and company for you. Examples of things to look for include waiting periods, health examination requirements, customer service options and loan options against the policy if it will have a cash value.
Step 2
Fill out and submit an online application. You will need to provide personal and health-related information, name a beneficiary and choose a payment method. Depending on the insurance company, you may or may not need to submit the results of a health exam.
Step 3
Examine insurance documents and make sure you understand the policy. Documents may be available immediately online, or later by email or postal mail.
Tips and Warnings
- Average funeral and final expense costs currently range from $7,000 to $9,000, depending on location and services you contract for (See Resources 4). Estate taxes include the value of all your assets, such as real estate, bank accounts, retirement accounts, investments, personal property and any life insurance policies you own. You can get an estimate of Social Security Survivor benefits using one of the benefit calculators available on the Social Security website. Make sure to read and understand your life insurance policy. Many states require insurance companies to accept cancellations for at least ten days from the date of issuance with no penalties so contact your insurance company immediately if there is something in the policy that is incorrect or that you do not understand.
- Ensure you have adequate life insurance coverage by completing a Capital Needs Analysis whenever your life situation changes.
Things You'll Need
- List of financial assets
- Mortgage balance
- Health examination
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