How to Buy Permanent Life Insurance

World - Finance - Insurance - Life

How to Buy Permanent Life Insurance (aka Whole Life, Universal Life, Variable Life)

So you’ve decided permanent life insurance is right for you (If you haven’t, please see How to Choose the Right Type of Life Insurance). Permanent life insurance can be an integral part of your overall financial planning. It can be used to help achieve your financial goals, provide security as well as take care of dependents upon your death.

Choosing permanent life insurance is not only a complicated decision, but it will likely be one of the largest purchases of your life. For example, a $200K whole life policy for a 40-year-old male might have a premium of $4,000/year. If he lives to be 80 years old, he will have paid in $160K. This is an important decision that likely merits a bit of research and planning.

Step 1. Educate yourself on the types of permanent insurance and the terms. Buy a book. Do some internet-based research.
- understand insurance terms
- understand the types of agents

Step 2. Research the companies offering permanent life insurance in your state. Choosing the right company makes all the different. Compare their credit ratings, past returns on policies and the number of complaints. Most of this information is available on the state insurance websites. Companies with mutual or exchange in their names are likely mutual insurance companies (owned by their policy holders) and will typically pay higher returns (i.e. have lower premiums for the same amount of benefits)

Step 3. Find an agent. Permanent life insurance is typically not sold directly over the internet, an agent is involved. To find an agent, call the insurance companies you identified in Step 2, they can refer you to an agent in your area. Talk to friends, family and co-workers. Do they have an agent they like? Are they happy with their policies? Be sure to verify that your agent is registered with the state before meeting with them (state insurance websites)

Step 4. Talk to a few agents. Evaluate agents on how well they answer your questions, how personable they are, how long they have been in the business and how trustworthy you feel they are.

Step 5. Choose the right policy by comparing company credit ratings, premiums and your evaluation of the agents.


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