Your Step-by-Step Guide to DIY Life Insurance

Life insurance provides vital financial protection for your loved ones, but the process of selecting the right policy can sometimes feel overwhelming.

At Quotacy, we aim to simplify the process with a DIY life insurance approach, offering transparency and confidence in your choices.

Explore the Quotacy blog for more expert advice on life insurance and so much more. 

Choose Your Life Insurance Type

There are two main types of life insurance: term life insurance and permanent life insurance.

• Term life insurance, an affordable and straightforward option designed to provide coverage for a specific time (10 to 40 years depending on age), is a suitable choice for most individuals.

• Permanent life insurance, offering lifetime coverage and cash value accumulation, is more expensive but might be an ideal choice for those with more complex financial needs or estate planning goals.

Here at Quotacy, our primary mission isn’t to sell but to assist. Our non-commissioned agents are always ready to help guide you through an insurance needs analysis if you’re unsure about the type best suited for your circumstances.

Want to research and decide for yourself? Learn the differences between term and whole life.

Determine Your Coverage Amount

Deciding the coverage amount, or the death benefit, is one of the most important steps in your life insurance journey. This is the amount of money your beneficiaries would receive upon your untimely death.

The amount of life insurance you need varies based on your personal finances and goals. Consider the following factors:

• Income: Your income significantly influences your coverage amount. Generally, it’s advisable to have coverage 10-15 times your annual income, ensuring your family’s living standards if you’re absent. However, this is a basic guideline, and your coverage may need adjustment based on your financial circumstances and dependents’ needs.
• Family Situation: Your family’s needs and lifestyle plays an important role. If you’re the sole breadwinner with young children and a spouse to support, you might need a larger policy compared to someone with grown-up children. Also, if you’re planning for more children, this could increase the required coverage.
• Mortgage and Debts: Life insurance can also serve as a safety net for paying off your debts so that they don’t fall onto your loved ones. Your total coverage should ideally account for mortgage balances, student loans, car loans, credit card debts, or any other outstanding liabilities. Ensuring that your coverage can handle these debts provides peace of mind for your loved ones.
• Future Expenses: Remember to consider future financial responsibilities. This could be your children’s college education, the anticipated costs of their weddings, or even your spouse’s retirement needs. The aim is to ensure your family can meet significant future expenses even if you’re no longer there to see them through.
• Funeral Wishes: The cost of a funeral can be considerable, often ranging from $7,000 to $10,000, sometimes even more. Your life insurance coverage should factor in these final expenses.

Whether you opt for term or permanent insurance, coverage can be flexible, starting from as low as $50,000 and going up into the millions.

Sometimes one policy won’t meet your needs in the most effective (or affordable) way. Laddering policies with different coverage amounts or term lengths can be the best way to make sure all your financial responsibilities are covered.

Unsure how much life insurance you need? Try our life insurance calculator.

Choose Your Term Length

The first step is to determine if you require lifelong coverage (permanent) or income replacement for a specific period (term). If term life insurance is the better choice, you then decide the term length, which can range between 10 and 40 years depending on your age. The premiums for this term length are fixed, providing predictable and manageable costs.

For example, consider George, a healthy non-smoker who buys a $500,000 term policy with a 30-year term at a monthly premium of $29. Regardless of age or health changes, his premium remains constant for 30 years.

If George dies prematurely during that 30-year term, his beneficiaries receive the $500,000 payout, distributed according to his wishes, tax-free.

Different term lengths might be suitable depending on your unique circumstances:

• 10-Year Term: Ideal for parents wanting to financially secure their children’s college years or for those nearing retirement seeking security for their partner.
• 20-Year Term: Suitable for young families looking to protect their children until they’re independent or couples wanting to guard against long-term personal business debts.
• 30-Year Term: Best for individuals planning for children or those with new mortgages that they would want paid off in case of their demise.
• 40-Year Term: Useful for young individuals seeking coverage until retirement, those considering permanent life insurance but find it too expensive, or people with long-term debts they don’t want to leave to family.

Our online term life insurance quoting tool lets you explore how term length and coverage amounts influence price. Once you find an affordable combination, you can apply online within minutes.

The Perks of Having a Guide

While online DIY life insurance is undeniably convenient, having a broker on your side is beneficial, especially when seeking the best price, given our experience and relationships with various insurance companies.

We work with over 25 of the nation’s top companies and know the ins and outs of their processes. Not all life insurance companies evaluate applicants in the same way. The process of determining the price of a life insurance policy, known as underwriting, involves the insurer reviewing your application and assessing risk factors like your health and lifestyle habits.

Every insurer weighs these factors differently, resulting in varying risk assessments. The higher the risk you pose, the higher your premiums. However, what one insurer perceives as high-risk, another might not. This is where our team of skilled agents shines.

If the insurer you initially choose through our quoting process doesn’t offer you the best price, your agent will inform you and present alternative options. We’re all about transparency and ensuring that you’re getting the best value for your money.

At Quotacy, we’re not just brokers; we’re matchmakers. We don’t work for any specific insurance company. We work for you. We’re committed to providing top-tier service tailored to your needs, guiding you towards a policy and insurer that best fits your unique situation.