Life insurance is a financial product that insures your life so your family doesn't have to pay for your financial obligations after you die. You can choose from many different types of life insurance. But before you buy life insurance, you should have a checklist so you know what type of insurance to buy, and what you need when you apply for insurance.
Types
The type of life insurance you buy determines what the insurance will be used for in a general sense. For example, term life insurance is used for temporary insurance needs that do not extend beyond 30 years. A whole life insurance policy, on the other hand, will be held for your entire life. A universal life insurance policy is used for instances when you want permanent life insurance but want flexibility in the premiums you pay and the ability to alter the death benefit over time.
Size
The size of your life insurance policy determines the cost of the policy. Life insurance for replacing your income may be several hundred thousand dollars or in excess of a million dollars. However, insurance to cover your mortgage may be much less. Your insurance death benefit should at least equal the total of all your liabilities.
Application
You must file an application for life insurance. The application asks for basic information like your name, address and phone number. It also asks for your Social Security number. You'll need to provide your driver's license number. In addition to basic information, you must provide health information. This information includes your medical history, any drugs you are taking and any medical conditions in your immediate family has. You will also be asked who your doctor is, and how he can be reached.
Medical Exam
A medical exam verifies all the information you supply in your application. Blood and urine tests are done to determine your blood sugar levels (A1C test), your cholesterol levels and liver function, among others. The insurance company tests for the presence of any drugs, nicotine, and protein excreted in the urine as well as performing a test for HIV/AIDS. The results of the medical exam tell the insurer whether you are insurable and what risk you present to the company.
Considerations
You may want a permanent life insurance policy, like whole life and universal life insurance, but if you cannot afford the amount of insurance you need, then consider buying a term life policy that can be converted to a permanent policy later.
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