How and Where to Buy Life Insurance

Life insurance does not come in a single package. It is up to you to choose the type, length, and amount of coverage you require. You might choose to purchase a 20-year life insurance policy with a $500,000 death benefit.

You must also decide where you want to purchase it. There are generally four options for purchasing life insurance.

  1. Directly from a Life Insurance Company
  2. A life insurance agent
  3. A life insurance broker
  4. Online

Direct Purchase from a Life Insurance Company

A direct-term policy is usually available if you do not want to deal directly with an insurance company. This policy meets your insurance needs for a specified time period, such as 10, 20, or 30, years.

You can fill out an online form to purchase this type of policy. You may be able to purchase a guaranteed-issue policy without having to take a medical exam depending on which company you work for. For people with health problems, a guaranteed issue policy may be an option.

A direct-term policy can be a fast way to purchase coverage, especially if the type of coverage you desire is available. If you have any questions, need guidance or require more options, you might be better off contacting an agent or broker.

Buying through a Life Insurance Agent

Most life insurance policies are sold by agents and brokers. They act as intermediaries between insurance buyers and insurance companies. Both must be licensed to sell insurance products within the state they are operating in. Despite the fact that people commonly use these titles interchangeably, there is a difference.

What the agent represents is the most important difference. An insurance company appoints an agent to sell its products. A captive agent is an agent who represents one company, while an independent agency is one who represents multiple companies. Agents who represent life insurance companies are not buyers. Their goal is to sell coverage from the companies they represent, which may or not be exactly what your needs are.

Buying through a Life Insurance Broker

Brokers on the other side represent insurance buyers and not companies. They are independent and do not have any contracts with specific insurance companies. This means that they can make impartial recommendations to each customer and tailor their advice accordingly. Brokers work with many insurance companies so that customers can choose from a variety of plans and price quotes.

Online and in-person shopping

You have to decide if you want to work with an agent, a broker, or directly through an insurer.

If you need personalized advice, have complicated circumstances, or are looking for permanent insurance, a local broker or agent is an option. An agent or broker is a great choice for people who don’t have the technical skills to navigate online applications.

An online broker or agent may also be an option if you already have a rough idea of your coverage requirements, are looking for a term policy or want to shop on your own. You can also use a variety of quote comparison websites to compare prices from different insurance companies.

Common Life Insurance Credentials

Life insurance brokers and agents can obtain accreditations from industry groups like The American College of Financial Services or The Institutes (previously the Insurance Institute of America). You might be familiar with the following common designations :

  • CFP – Certified Financial Planner
  • ChFC – Chartered Financial Consultant
  • CLU – chartered life underwriter
  • FSCP – financial service certified professional (this replaces the LUTCF designation, which is “life underwriter training committee fellow”)

Ask any potential broker or agent if they have a designation (or multiple) that you don’t understand. Then ask them what acronym it stands for, who issued it, and how it was earned.

COVID-19: Buying life insurance

The COVID-19 epidemic has brought new challenges to life insurance. One, it is difficult to conduct in-person physical examinations for people who are socially distanced. Life insurance companies remain open to business and will accept applications. They also adapt their client onboarding processes to meet the changing landscape.

For example, some insurers now evaluate medical records and prescription history. This is in contrast to sending a paramedical specialist to your office or home to examine you. Some insurers have extended the time required to complete a traditional exam while offering temporary interim coverage. Agents can be reached via telephone or videoconference, and documents can be signed electronically.

You might be asked COVID-19 questions during your application. For example, “Have any members of your household been tested for COVID-19?” and “Have they been on a cruise in the past 60 days?”

Updated: December 25, 2022 — 6:57 am

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