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Life Insurance For Dummies: Basics You Need To Buy Smart

Ok, I apologize. You’re not really a dummy. After all, they didn’t teach us Life Insurance 101 in high school or college.It could have been more helpful than calculous, I’ve still never used that in real life. So if you’re buying insurance for the first time or even the 2nd time, this blog post will give you the basics, so you can go into the life insurance world like a boss.

3 Basics You Need to Know When Buying Life Insurance

Coverage Amount

The first step in buying life insurance is deciding how much life insurance you need. There are online calculators you can use to help you figure this out, but I find that most people intuitively have a number in their head.

Most people want their mortgage to be paid off should something happen to them, provide funds for their kids’ college education, and replace their income for a set amount of time. Another factor that will help you determine how much coverage to buy is budget. If you have a budget of $50 per month, or $100 per month, getting quotes and comparing rates will give you an idea of how much coverage you can buy based on your budget.

Step 1 is figuring out how much coverage you want to have. Once you know, move on to step 2.

Type of Life Insurance Policy To Buy

After you know how much coverage you want or need the next step is figuring out what type of policy to buy. This is where people get caught up in doing a lot of research, but i’ll try to break it down and make it simple. There are basically 2 types of life insurance policies – Term life, and Permanent Life (which includes Universal and Whole Life). For 95% of people term life is the right solution. Let’s discuss the main differences.

Term Life is a policy that you buy for a set amount of years. You buy coverage for 10,15,20,25 or 30 years at a fixed cost for each year. You have coverage during that time and once it expires the coverage is over.

Permanent coverage – as in Universal Life or Whole Life can be coverage that lasts your entire life.

These are the basic differences. So why not buy permanent coverage? Simple. Cost. Term life is significantly cheaper than permanent life insurance. If you need to have a $500,000 policy to protect your family during your working years, chances are you will be able to afford the term payments, but not permanent coverage. Most people buy term life because it is much cheaper and provides protection for their family during the years they need it most. If you do have a need for a permanent life insurance policy, I recommend buying a guaranteed no lapse universal life policy. Essentially these work like lifetime term policies – no cash value buildup, not complex, and one of the cheapest forms of permanent coverage you can buy.

Ok, now that you know how much coverage you want, and the type of policy you are going to buy, (which is probably term) let’s go to the final step, which is choosing a life insurance company.

Choosing a Life Insurance Company

The first step here is comparing rates among top life insurance companies. I don’t recommend going to Allstate or State Farm – not because they aren’t good companies, but because they only sell you their own company insurance, don’t offer choices, and they don’t have the best pricing for life insurance.

I recommend working with an independent life insurance agency like and comparing rates among high quality life insurance companies. When I say high quality companies, I mean life insurance companies that are rated A or A+ by A.M Best, and have been in business for over 50 years. These are the types of life insurance companies that we work with, and they you will find if you compare quotes using our instant online life insurance quotes calculator right below this blog post.


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Liran Hirschkorn

Liran Hirschkorn is the founder of His mission is to help individuals across the country in finding the best rates on life insurance as well as helping individuals with high risk life insurance.

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