Presented By: Kenna M. Ulbinsky-Yakal

Practically everyone wants to provide financial security for their loved ones. But absolutely no one wants to get caught up in a complicated, time-consuming process for purchasing that protection.
If you’ve put off acquiring life insurance protection because you think it will be a long and tedious undertaking, think again. Buying life insurance can be a quick, easy way to protect your family—and if you know what to look for, you can get valuable coverage at an affordable price.

Ask yourself: Do you need life insurance?

The primary purpose for buying life insurance is the financial protection it offers. If you’re young, single and have no one depending upon you—such as a spouse or child—then you may not need life insurance. But if you have a family to look after, an insurance policy may be just the thing to help en-sure their financial future.

The proceeds—or death benefit—from a life insurance policy can help re-place the income your family will lose should you pass away. This means your beneficiaries can continue living the lifestyle they enjoyed prior to your death, without having financial uncertainties hanging over their heads. What’s more, many people purchase life insurance as a way to pay off debts and other expenditures (via the death benefit or loans or withdrawals), as well as to cover funeral and estate costs. Of course, the primary reason to purchase life insurance is for the death benefit.

What type of coverage is best for you?

There are two fundamental types of life insurance—term and permanent—and before buying a policy, you should determine which is right for you.

As the name implies, term insurance provides coverage for a specific period of time, and once that “term” is over, your coverage ends. Over the course of the term you pay a specified premium, and if you die during that term, your beneficiaries receive the death benefit—or face amount—of the policy.

Permanent life insurance, on the other hand, combines lifetime protection with a cash value component. A portion of the premiums you pay toward a permanent policy go into cash value, which can in-crease over time and—in many instances—be cashed in prior to your death. Loans and withdrawals will reduce the policy cash values and the death benefit and may have tax consequences.

Some permanent policies—known as variable life—allow you to choose how the cash value is invested. Generally speaking, permanent policies are more expensive than their term counterparts, especially in the early years of the coverage. But the lifetime protection and potential for cash value these policies offer make them attractive to many individuals.

How much coverage is enough?

An important step in purchasing life insurance is determining how much coverage you require. To do this, you must calculate how much money your beneficiaries will need to live on—and for how long. All expenses your family incurs should be considered, including costly expenditures like the home mortgage and college funding.

You should also consider the amount of money you think your family will generate through salaries and investments after you die. By subtracting estimated expenses from the projected income your family will earn, you can arrive at a close approximation of how much life insurance coverage you will need. A convenient way to do this is by using a life insurance needs calculator, which are available on most insurance companies’ web sites, or by contacting a life insurance professional.

How much will coverage cost?

Your age, health and hobbies are just some of the factors that determine how much you will pay for life insurance coverage. For instance, a young, healthy non-smoker will have lower premiums than an older smoker who is 50 pounds overweight.

The premiums you pay are determined by the underwriting category you fit into. Insurance companies categorize applicants based on height, weight, tobacco use and a number of other health factors. Clearly, the younger and healthier you are, the lower your premiums will be. But even if you’re not in the greatest of health, you may still achieve affordable premiums, as some insurers offer competitive rates for conditions like diabetes, heart disease and even cancer.

Compare costs … and companies

Always remember this important rule of thumb when purchasing life insurance: The policy you buy is only as good as the company that issues it. A $1 million permanent life insurance policy won’t do you much good if the company you bought it from goes belly up.

To determine an insurance company’s financial strength, check its rankings by the major ratings services, such as A.M. Best, Standard & Poor’s and Moody’s Investor Services. These well-regarded ratings agencies assess insurers’ claims-paying abilities and financial conditions, and assign them rankings accordingly. You can also contact your state department of insurance for this information, or go to the insurance company’s web site.

Time to ‘apply’ your life insurance knowledge

You’ve done your homework. You know what type of coverage you want, you have a close approximation of the amount of coverage you need, and you’ve got a ballpark idea of how much it is going to cost. Now it’s time to complete an application for life insurance.

When completing the “app,” you’ll find questions about your existing health and past medical history, as well as your lifestyle. In most instances you’ll be required to take a physical examination, which is scheduled and paid for by the insurance company. Your answers to these questions—combined with the exam results and your past health history—will enable the insurer to decide whether or not to offer you a policy, at what underwriting category, and — perhaps most importantly to you—at what price.

Reading is fundamental

While reading a life insurance contract may not be the most thrilling experience ever, you should review it anyway. All the important information about your new life insurance policy will be contained in the contract, including policy provisions, benefit amounts, premium costs, beneficiary names and guarantee periods, just to name a few. Be sure to also read the prospectus for any variable policy that you are considering for important information you need to know before investing.

Make sure you understand everything about your new insurance policy. And don’t forget: In most states you are entitled to a “free look” period, during which time you can cancel your policy without incurring a penalty. And of course, a financial professional from the insurance company you’ve chosen can help you with any questions. In the end, you will find purchasing life insurance to be a relatively quick, easy and painless process.

Kenna M. Ulbinsky-Yakal is a Financial Services Associate, with The Prudential Insurance Company of America, located at 200 Continental Drive, Suite 104, Newark, DE 19713 and can be reached at 302-894-1689 x2247 or kenna.ulbinsky-yakal@prudential.com