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HOW TO GET LIFE INSURANCE—TIPS AND ADVICE

The following article appears on the New York Life Insurance website.

Buying life insurance is about making sure the people who depend on you will be cared for, even if you’re not around. But how do you know how much protection you need, or which type of coverage is right for you and your family?

First time buying life insurance? Let us walk you through it.

If you’ve never purchased life insurance before, there’s a good chance you have lots of questions. Fortunately, we’ve been doing this for a very long time, so we’ve put together a mini ”How-to Guide” to help you get started.

Know what you want your coverage to do.

As you get started, it can be helpful to revisit the reasons why you are buying a life insurance policy. Is it to replace your income, pay off your mortgage, or create an inheritance for your loved ones? Whatever the reasons, you’ll want to keep them in mind as you select your coverage.

Figure out how much protection you need.

There are plenty of formulas you can use to determine how much insurance you need. However, it often comes down to the reasons you need coverage in the first place. For example:

• If you need income replacement, you can add up your annual expenses and multiply that by the number of years you have until retirement.
• If you want to make sure your loved ones have enough money to pay for a wedding, go to college, take over your business, or fulfill any of your other long-term goals, you could calculate the total cost.

The number you come up with will give you a ballpark idea. But we strongly recommend reviewing your results with a New York Life agent before making any decision.

Decide how much insurance you can afford.

As with any major purchase, it’s important to make sure your life insurance premiums fit within your budget. Remember, some life insurance premiums increase over time, so it’s important to make sure you can afford them today—and tomorrow.

Find the right policy.

Once you figure out how much coverage you'll need, you’ll need to find the right coverage. Your main options are term life, which may better fit your current budget, or whole life, for permanent coverage that also builds cash value.

Learn the lingo.

With terms like "premium," "dividend," "beneficiary," and so on, understanding how life insurance works can be confusing. To help you understand this whole process, we have put together a glossary of insurance terms.

Check out the insurance provider.

An insurance policy is only as good as the company that backs it, so make sure you choose a company that has a proven history of keeping its promises and is financially strong and enough to be there for you and your loved ones when needed.

If you’ve never done it before, figuring out how to purchase life insurance can be a real challenge. That’s why we encourage first-time buyers to work with a New York Life agent. That way, you’ll have an experienced professional to guide you along the way and make sure you have all the information you need to make the best decision. 

Buying Life Insurance FAQs

Who buys life insurance?

How long does it take to get life insurance?

Where can I buy life insurance?

What should I do once I decide on a life insurance policy?

U.S. LIFE INSURANCE NEED GAP GROWS IN 2024

Following is a summary of the results of the annual Insurance Barometer Study. This study reveals that the largest opportunity for life insurance sales lies in the middle market.

While the day-to-day impact of COVID-19 has diminished for most Americans, the heightened awareness about mortality and the importance of life insurance remains.

U.S. life insurance ownership has remained relatively steady since 2021, with about half of adults reporting having coverage. The latest study, now in its 14^th year, finds a record-high number of American adults (42%) — representing 102 million adults — saying they need (or need more) life insurance. Importantly, 37% of consumers say they intend to purchase coverage within the next 12 months.

The 2024 Insurance Barometer Study, conducted jointly by nonprofit industry trade associations  Life Happens and LIMRA, reveals middle-income Americans (those with a household income of $50,000 – $149,999) represent the largest market opportunity for the industry. Four in 10 middle-income Americans, or 50 million adults, acknowledge they live with a life insurance coverage gap. This group also expressed a greater intent to buy life insurance (54%) than the general population.

“Engaging the middle market continues to be a high priority for life insurers. These households are more likely to own life insurance (55%) and more likely to recognize the important role life insurance plays in their family’s financial security,” said John Carroll, senior vice president, head of Life & Annuities, LIMRA and LOMA. “Yet, like other consumers, they have little understanding about what and how much life insurance they should buy or how much it actually costs. This leads to indecision and inaction.”

Many Just Taking a “Wild Guess” at Life Insurance Cost

The number one reason consumers give for not purchasing life insurance — or more of it — is that it’s too expensive. Yet, since the first annual study was conducted in 2011, consumers have consistently overestimated the cost of life insurance. The most recent study shows about three-quarters (72%) of Americans overestimate the true cost of a basic term life insurance policy.

Younger Americans are likely to think it is three times its actual cost. There are few other products on the market today that consumers overestimate the cost by such a wide margin.

When asked how people come up with their life insurance cost estimate, more than half (54%) said it was based on “gut instinct” or a “wild guess.”

“With the need-gap for life insurance, is a knowledge gap — 44% of people admit being only somewhat or not knowledgeable at all about life insurance. And we know people aren’t going to buy what they don’t understand or think they can’t afford,” says Life Happens Executive Director Brian Steiner. “The good news is that 6 in 10 people are using social media for financial and insurance information. And a key commitment for Life Happens has been meeting consumers where they’re at — on social media.”

Bridging the Gender Gap

In 2024, women were less likely than men (46% versus 57%) to report having life insurance. This 11-point difference is the largest it has ever been over the 14 years of the study. This is not due to lack of awareness about their need for life insurance. Forty-five percent, or 54 million women, say they live with a coverage gap and more than a third (36%) — and nearly half of younger women — say they plan to purchase life insurance in 2024.

However, half of the women surveyed (50%) noted cost as a deterrent to purchasing life insurance and were less likely to say they are knowledgeable about life insurance (21%).

Moving these individuals from intent to action will require the industry to show how affordable and accessible life insurance can be while demonstrating how life insurance can address many of their financial concerns — from having enough money saved for retirement or building an emergency fund to protecting their dependents from financial hardship or the burden of paying final expenses.

“Year after year, our studies suggest consumers recognize the value of life insurance and — since the pandemic — more people have expressed greater interest in getting coverage,” noted Carroll. “Our industry needs to continue its efforts to leverage digital tools and platforms to make it easier for people to learn about and buy life insurance so they can achieve financial security for themselves and their loved ones.”

For additional findings from the 2024 Insurance Barometer Study, visit the Barometer Research Page and the Securing the Future Infographic.

Methodology



The Insurance Barometer is an annual study that tracks the perceptions, attitudes, and behaviors of adults aged 18 – 75 in the United States who are at least partly responsible for financial decision making in their households.

In January 2024, LIMRA and Life Happens surveyed nearly 5,000 adult consumers who are financial decision makers in their households.

HOW TO SAVE MONEY WITH THE LIFE INSURANCE LADDER STRATEGY

This article by Kathering Murbach and Tory Crowley appeared in the Policygenius blog,

Putting multiple policies in place through a strategy called laddering can help you get the exact amount of coverage you need at different points of your life while minimizing the cost.

The ladder strategy allows you to pay just for the amount of life insurance coverage you need at each stage of your life. You’ll set up multiple term life insurance policies with different coverage amounts and term lengths that will expire as your financial obligations decrease.

Your life insurance needs change as you get older and have fewer financial responsibilities — for example, you pay off your mortgage or your children graduate college — so the amount of life insurance coverage you need might change over time. And because we all become more expensive to insure as we age, laddering multiple life policies early on allows you to secure the right financial protection for your family while locking in the lowest rates.

Read the entire article here.