How to buy life insurance

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Buying life insurance is one of the most important steps you can take to protect your family’s financial future. It helps cover essential expenses, like mortgage payments, debts, and daily living costs, if something happens to you. Most experts recommend purchasing coverage equal to 10 to 15 times your annual income, but everyone’s needs are different. To find the right amount, it’s important to tally up your expenses, existing assets, and long-term financial goals before deciding on a policy type.

Once you have a sense of how much protection you need, get started by comparing life insurance quotes to explore your options and see which policy fits into your budget. Shopping around and comparing quotes is a smart move because insurers use different methods to assess risk, which means the same coverage can vary significantly in price from one company to another. Alongside finding the best rate, shopping around also gives you a clearer picture of the types of policies and features available.

Finding the right policy starts with quotes — but there’s more to the process. Here’s how to go from exploring your options to actually getting covered.

How to shop for a life insurance policy

Here’s what to do when you’re ready to choose and buy a life insurance policy:

Assess your needs. Determine how much coverage your family would need to cover expenses like debts, living costs, and future goals.
Choose the right policy type. Decide between term life for temporary coverage or permanent life for lifelong protection and savings options.
Compare quotes. Gather quotes from multiple insurers to find the best coverage at the most affordable rate for your budget.
Review insurer ratings. Check the financial stability and customer reviews of insurers to ensure you’re choosing a reliable provider.
Complete the application. Fill out an application, which may include a medical exam, to finalize your policy with the chosen insurer.
Sign the policy. Once you’re approved, you’ll need to sign the policy and pay your first premium for it to become active.

How to assess your life insurance needs

When you’re buying life insurance, you need to start by choosing between term and whole life insurance. Consider whether you need affordable, temporary coverage for a set period — term life — or lifelong protection with a cash value component that can grow over time — whole life. Term life is ideal for those seeking lower premiums, while whole life offers more comprehensive, long-term benefits but at a higher cost.

“Term insurance pays only if death occurs during the term of the policy, which is usually from one to 30 years,” says Mark Friedlander, director of Corporate Communications for the Insurance Information Institute in St. Johns, Florida.

After you determine the type of policy you need to buy, you should figure out how much coverage you need. John Buenger, senior financial manager and advisor at the Rice Agency, says a good rule of thumb is to aim for coverage that’s 10 to 15 times your annual income. You can tally up your financial obligations to get a more precise amount. Consider the following costs:

Mortgage payments
Future education costs
Loans
Everyday expenses
Child care
Funeral expenses

“An applicant earning $100,000 annually should probably purchase between $750,000 to $1 million in life insurance death benefits,” Buenger says. “This death benefit should be large enough to cover [all] of your final expenses and funeral costs, pay off debt that includes any outstanding mortgage balance, automobile loans, credit card debt, and student/education loans, and cover your loss of income for a significant number of years.”

How to compare life insurance companies

Even though your premium is based on personal factors like age, health, and lifestyle, rates can still vary widely from insurer to insurer because each company evaluates risk differently. Get at least three to five quotes from different life insurers so that you can make an apples-to-apples comparison.

Friedlander suggests keeping these key factors in mind as you compare policies and providers.

Policy fit. Choose a company that offers the policy and features that meet your needs.
Financial strength. “Life insurance is a long-term arrangement. There is no guarantee for life insurance policyholders similar to that provided for bank accounts by the Federal Deposit Insurance Corporation. Select a company that is likely to be financially sound for many years by using ratings from independent rating agencies, such as A.M. Best, Fitch, Moody’s, and Standard & Poor’s,” he says.
Market ethics. Find out if the company abides by the principles and codes of conduct of the Insurance Marketplace Standards Association.
Customer service. Prioritize a life insurance company with strong customer service and check third-party ratings from agencies like J.D. Power for customer satisfaction insights.
Claims process. Look for an insurer with a smooth claims process and check third-party ratings from agencies like the NAIC. “Your state insurance department will be able to tell you if the company you are considering doing business with has had many consumer complaints,” Friedlander adds.
Cost. Premiums can vary widely among companies. Compare quotes from multiple companies, ensuring you balance affordability with the right amount of coverage and benefits for your needs.

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How to prepare for the life insurance application

The application will ask for key information — be ready to share the following.

Name, address, phone number, and date of birth
State and country of birth
Citizenship, gender, and marital status
Occupational status, including details of your job responsibilities and salary
Net worth
Driver’s license number
Social Security number
Health history information and physician contact information
Credit card or bank information for payment (when you are ready to purchase)

“Be as honest as possible during the application process. Most insurance companies have ways of finding out medical backgrounds. If their search does not match up with what you indicated in the application, your policy may get denied,” recommends Voegele.

What to do after buying life insurance

Once your policy is in place, there are still a few important steps to take to make sure your coverage stays effective and continues to meet your needs over time:

1. Make your first payment.
Your policy only becomes active once your first premium is paid. Be sure to complete this step promptly to avoid delays in coverage.

2. Store your policy in a safe place.
Keep both digital and physical copies of your policy where your beneficiaries can easily find them, such as a safe or a secure cloud folder.

3. Inform your beneficiaries.
Make sure the people you’ve named as beneficiaries know about the policy, how much it’s worth, and how to file a claim if needed.

4. Set up premium reminders or autopay.
Missing payments can cause your policy to lapse. Consider setting up automatic payments or calendar alerts so your coverage stays active.

5. Review your policy annually.
Life changes — marriage, children, buying a home — can affect your coverage needs. Reassess your policy each year or after any major life event to ensure it still fits.

6. Contact your insurer if anything changes.
If you move, change banks, or update beneficiaries, notify your insurer right away to avoid any future issues with your policy.

Life insurance doesn’t have to be complicated—once you understand your needs and compare options, it’s easier to find the right coverage at a price that works for you.

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Erik Martin

Contributing Researcher

Erik J. Martin is a Chicago-based insurance expert and journalist with 27 years of experience covering insurance, personal finance and real estate. He helps consumers understand complex financial topics—from choosing the right car insurance policy to managing household budgets—through clear, practical guidance.