SOURCE: SelectQuote


January 07, 2010 12:23 ET

Everything You Ever Needed to Know About Life Insurance, but Were Afraid to Ask

Leading Insurance Experts From SelectQuote Answer Common Questions About Life Insurance

SAN FRANCISCO, CA--(Marketwire - January 7, 2010) - Every month almost one million Americans consider and purchase a new life insurance policy. Life insurance experts note that consumers typically have some basic, and frequently asked, questions about life insurance and the life insurance buying process. These questions include:

--  Why do I need life insurance?
--  What type of life insurance is best?
--  How much coverage do I need -- and what are the costs?
--  What is the process and time required to purchase a policy?

A team of experts from SelectQuote provided their answers to these common questions. SelectQuote ( is the nation's number one term life insurance sales agency, and offers consumers quotes and comparisons from more than a dozen of the country's leading insurance carriers.

"A million Americans a month evaluate and purchase life insurance. Whether it's a baby on the way, a new home or a new marriage, as life progresses there are certain life triggers that remind people of the importance of protecting their families and loved ones with the financial foundation of life insurance," said Ed Shapiro, a life insurance sales agent with SelectQuote ( Shapiro has personally helped hundreds of consumers with the life insurance evaluation and purchase process.

Why do you need life insurance? "Whether you are your family's primary income producer or its primary caregiver, your dependents need the security and help that life insurance provides. Life insurance is the foundation of a smart financial plan, all other financial planning can be for naught without the foundation of life insurance in place. Life insurance can help ensure that everyday living expenses are covered, from the mortgage to car loans, credit card bills and outstanding debts, to future costs such as tuition. And generally, your beneficiaries won't have to pay federal income taxes on the insurance benefits they receive," said Shapiro.

What type of life insurance is best? There are two basic categories of life insurance: term insurance and permanent. The primary difference is that term insurance is pure insurance. It pays only if death or other defined event occurs during the specified term of the policy, typically 10, 15, 20, or 30 years. Permanent insurance policies, such as whole life, are just that -- permanent. They accrue cash value over the insured's whole life and perform more as investment instruments than as pure insurance. This generally makes them more expensive then term insurance.

"Going with a term insurance policy is one of the best ways to save when considering life insurance options. Term insurance is pure insurance and thus typically provides the most coverage for the dollar, the best value," said Paul Richard, a life insurance sales agent with SelectQuote.

Parents with young children and a limited budget might start with a term policy of 15 years -- long enough to keep their children safe until they are independent -- or until greater family wealth is built up over time. If the family still needs life insurance at end of that term, when the family income is likely to be higher, they can convert to a larger term policy or one of the higher-priced permanent or whole life insurance products. A term policy is also often used to cover specific financial obligations that will reduce over time, such as a mortgage or college expenses.

How much life insurance do I need? Of course, everyone's financial needs and situation varies, so there is no definitive answer. A financial advisor or life insurance agent can help a person determine their needs and the appropriate level of insurance coverage. That said, some experts recommend that a life insurance policy should have a value equal to seven to ten times a person's annual income -- that would be adjusted based on the age of the insured with experts recommending more coverage for younger persons and less coverage as one gets older and builds a financial "nest egg."

"Always ask yourself: Will the value of the policy cover my loved ones long term financial needs? Are the policy premiums affordable for the term of the policy?" said Paul Richard, a life insurance sales agent with SelectQuote. For further information on how much life insurance an individual needs, visit the FAQ Section of

What is the process and time involved in purchasing a policy? Of course, the processes vary by insurance company and based on a consumer's specific situation, but typically the process will include the following steps:

--  Insurance Needs Analysis:  The insurance agent will have a discussion
    with the individual seeking insurance and perhaps walk them through a
    questionnaire to determine their individual insurance needs.  This will
    address the basic questions of: What do you need?  And why do you need it?
    In this process, the individual and the agent will determine the optimum
    type, term and value of an insurance policy.  Most agents will then ask
    their client to think about what they've learned in the process and take
    time to consider the type, term and value of the policy.
--  Life Insurance Application:  As a next step, the agent will help
    determine what insurance policies, terms and premiums the individual
    qualifies for.  Life insurance applications may vary, but are fairly
    standardized across the industry.  Typically, an application might have 30+
    questions, including questions about health, weight, medications, and
    family medical history, as well as behavioral questions such as driving,
    travel and outdoor activities habits.  The application will also include
    financial questions.
--  Health Screening:  One of the final steps is to take a free, but
    required health screening.  Typically the insurer will send a nurse or
    health professional to the individual's home or office to take their blood
    pressure and a blood sample, as well as measure their height and weight.
    This process usually takes less than 20 to 30 minutes.  Typically, the
    prospective insured will be asked to formally sign and submit the insurance
    application during this visit.  Some insurance companies will ask for the
    right to order health records from the individual's physician.  In most
    cases, the insured is covered from this point forward.
--  Insurance Declaration:  Approximately two to four weeks after the
    health screening, the insurance company will issue a formal policy
    declaration that indicates the extent and value of the coverage, and the
    final agreed monthly premium.

Tips on Researching and Buying Life Insurance

"Of course, to ensure that you are getting the best value when purchasing a life insurance policy, conduct research online and compare prices for different policies," suggests Shapiro. "Life insurance costs can vary widely depending on variables such as age, health, and whether or not a person smokes."

SelectQuote ( is the nation's number one term life insurance sales agency, and offers consumers quotes and comparisons from more than a dozen of the country's leading insurance carriers. There are a number of additional online resources that a consumer can consult when considering life insurance, including the American Council of Life Insurance website (, which has a range of information on the topic, and SmartMoney (, which has a good online insurance calculator. The Education Center on also has further information on life insurance and the life insurance buying process.

Contact Information

  • For further information, contact:

    Dan Cahill
    (917) 617-0106
    Email Contact