If you are at the point where you are asking how to buy a life insurance policy, then you have already made the most important financial decision, which is taking steps to insure your family’s or loved one’s financial security. For many physicians, that is most likely a critical decision that has long been procrastinated. Even after the decision has been made, the process for buying life insurance can be somewhat intimidating to some physicians and the process can get bogged down if they are at all uncertain about the direction they should take. With a little bit of knowledge and research, physicians can prepare themselves to take the initial steps with confidence and ask the right questions so that they can buy life insurance that fits their needs.
Uncovering Your Need
Knowing how much life insurance you and your family needs is the first step to buying the right policy. While some people rely on the simple formula of a multiple of annual income, such as five times or ten times your income as amount, this can create uncertainty as to whether it will meet all of your family’s needs.
With your family’s security at stake, it’s best to take some time to determine, on a more accurate scale, the amount of capital your family will need to sustain meet their lifestyle needs. You can start by listing assets and debts, income and expenses, and then prioritize your family’s needs for now and in the future. The bottom line you want to determine is how much capital will be needed to pay immediate obligations and to provide an income stream that will allow your family to remain in their current lifestyle.
There are some life insurance needs calculators that can be accessed for free on line. Just remember that, the more certain you are of the amount of life insurance you need, the more confidence you will have in buying the right policy for you.
Additional Resource:
Determining the Right Product for You
Ideally, you will be able to find an experienced and objective life insurance specialist to work with you to find the life insurance policy match for your needs. Still, it is recommended that you equip yourself with some fundamental knowledge of how these products work so you ask the right questions when you are presented with a choice of products.
The different types of policies – term, whole life, universal life, variable life – all have many variations which make the selection of product very confusing. The Internet provides a wealth of product information that can get you up to speed on the advantages and disadvantages of the different types of policies. Once you have narrowed your choices down, you can go to one of several life insurance product comparison sites to learn more about the features and rates that are available.
Know the Process
Once you initiate the buying process with a life insurance provider, the process takes on a life of its own. It begins with the completion of an application, so it is helpful to have all of your financial and medical information at hand. The application will ask you about your current financial situation and it will inquire about your medical history. You will also need to agree to a release of your medical records.
The application is also where you will begin to piece together the different components of your policy, including the death benefit amount, your beneficiaries, policy riders, dividend options or investment selection, and you mode of payment.
The application is submitted for review by underwriters. If a medical exam is required (this will depend on your age, the amount of life insurance, and your medical history), it is scheduled. The exam is usually done by a paramedical professional who comes to your home or office. Your exam results are submitted to the underwriters for review. After all of the medical records and the exam have been reviewed, the policy is issued. From the time of application to the time of policy issue it can take from 30 to 60 days depending on how quickly your medical records are transferred.
After you receive the policy and pay the first months’ premium, you have free look period of 30 to 60 days to carefully review the contract and the policy provisions.
Additional Tips
Find a reliable life insurance specialist with whom to work. They will take on the responsibility of getting you from application to policy issue with the least amount of friction. They can also be invaluable during times when you need any sort of service on your policy.
Buy from the best. Make sure you submit your application with a company that is highly rated for their financial strength and claims paying ability. Check their ratings from A.M. Best (A rated or better) and Standard & Poor’s’ (AA rated or better).
If an agent or broker recommends more life insurance than you calculated for yourself, be sure to get a complete audit of their calculation and have them validate their reasoning. If a product other than what you were considering is recommended, ask for a detailed cost-benefit comparison of the two types of policy and a written explanation as to why it was recommended.
Summary
Buying a life insurance policy can be an intimidating experience, which is the main reason why people procrastinate. Armed with the fundamental knowledge about your own needs, the different types of policies and how the process works, you should be able to enter the process in control and with greater assurance that your life insurance needs will be met.
Ready to protect your future?
Get a personalized side-by-side policy comparison of the leading disability insurance companies from an independent insurance broker.
