Items you will need
- Needs analysis (available online or through a life insurance agent)
- Employer-sponsored life insurance details
- Current life insurance policies or statements
- Application data (doctor's information, prescriptions, etc.)
If you think you might need more life insurance, you're probably right. Using a needs analysis and finding out what your options are through your employer or with your current life insurance coverage can give you some options. Consider the costs and what will be required to qualify for a new policy.
Use a needs analysis to determine how much more life insurance you need. A needs analysis, which is available from a life insurance agent or online, will take you through a number of categories and ask you to estimate costs to cover the needs upon your death. Once the categories are added up, you arrive at a total insurance need. Subtract out your current life insurance coverage and the remaining figure is the recommended amount of life insurance to add to your portfolio.
Add to your current policy if you have life insurance coverage through your employer. Typically, life insurance through an employer is inexpensive and does not require any underwriting. Some coverages also let you include family members. Contact your company's human resources department and ask how your company's life insurance program works.
Bump up the life insurance coverage you already have through a commercial carrier to match the amount recommended from your needs analysis. Contact the company or the person who sold you the policy and ask what steps are needed to add to your existing coverage. This may be more cost effective than adding an additional life insurance policy to your portfolio.
If you've decided to add another life insurance policy to your portfolio, remember that you do not have to use the same insurance company. Many people have multiple life insurance policies from different carriers. You will be asked to disclose other policies you own on any new life insurance application, but it's always wise to shop around. Do your research. Inquire online to see what rates are available. Contact an independent life insurance agent who can shop the amount of insurance you wish to purchase.
Research your options. Remember that there are many different types of life insurance--term life, whole life, universal life, indexed life, variable life, etc. What type is best for you? Learn about the different types of insurance and how they could possibly help you, or utilize the experience and expertise of a life insurance agent who can answer your questions. A life insurance agent can assist you with a needs analysis, explaining the different types of insurance, and will "shop" for you in the life insurance marketplace.
Consider your budget. Before increasing your life insurance premium or adding another life insurance policy to your portfolio, determine how much more you can afford. Life insurance premiums are an ongoing expense and you don't want to start paying for something that you may not be able to afford later. If your life insurance policy lapses later because of non-payment, you may not receive any premiums back.
Prepare to go through the underwriting process if you're adding life insurance coverage outside your employer's group insurance. Any time you are adding to current coverage or adding an additional life insurance policy to your portfolio, the insurance company will want to investigate you. This will consist of an application in which you will disclose personal information--financial, health, occupation, etc. You also may be required to provide a urine sample, a blood sample or results from a physical. Make sure you understand the underwriting requirements ahead of time.
Never lie on a life insurance application. Even the slightest misrepresentation may cause your beneficiaries to have their death claim denied. Typically, a life insurance policy comes with a two-year contestability period, which means that if you die within 24 months of purchasing the life insurance policy, the insurance company has a right to investigate to see if all data on the application was true. Each life insurance policy carries a two-year suicide clause. If the insured commits suicide within 24 months of purchasing the policy, the insurance company has a right to deny the death claim.