How to Evaluate Life Insurance Policies and Find the Best Quote for Your Needs: Step-by-Step Guide

Author:Shelden SmollanChief Experience Officer
Shawn Redford
Reviewed by:Shawn RedfordChief Business Development Officer
December 15, 2023
23 Minute Read

Use this step-by-step guide to evaluate your life insurance needs, explore different types of policies, and get the best quote on life insurance.

A family sitting on the floor in front of their couch while the parents raise their arms to form a roof over the children

How to Evaluate and Quote the Best Life Insurance Policies

Insurance protects you and your belongings from unplanned events like theft, accidents, illnesses, lawsuits, or natural disasters. If you get hurt and have to pay for medical bills, court fees, property damage, or lost wages, insurance can help. Insurance can also give you and your family peace of mind, safety, and steadiness.

Still, not every insurance policy is the same. There are different amounts of coverage, benefits, and costs for each type of insurance. Your insurance needs may also change based on your personal and financial situation, as well as the risks you may face. Before you buy or renew an insurance policy, it is important to get a good idea of what kind of coverage you need.

Your Life Insurance Needs

In this blog post, we’ll show you how to figure out what kind of insurance you need in six easy steps:

If you follow these steps, you’ll be able to find the right type, amount, and length of insurance for your wants and goals.

Step 1: Understanding Your Life Situation

The first step in assessing your insurance needs is to understand your life situation. Your life situation refers to your personal and financial circumstances, such as your age, marital status, number of dependents, income, expenses, debts, assets, and future plans. Your life situation influences your insurance needs because it affects your ability to pay for and cope with unexpected events.

What Type of Life Insurance is Best for You?

For example, if you are young, single, and healthy, you may not need life insurance as much as someone who is older, married, and has children. If you have a high income, low expenses, and no debts, you may not need as much insurance as someone who has a low income, high expenses, and a lot of debts. If you own a home, a car, and other valuable assets, you may need more insurance than someone who rents and has few possessions.

To help you understand your life situation, you can use the following questionnaire or checklist. Answer the questions or check the boxes that apply to you, and keep track of your answers.

Personal Circumstances

  • What is your age?
  • What is your marital status?
  • Do you have any dependents, such as children, a spouse, parents, or siblings?
  • Do you have any health conditions or disabilities?
  • Do you have any hobbies or activities that involve high risks, such as skiing, skydiving, or motorcycling?
Personal Circumstances☑ or ☐
What is your age?
What is your marital status?
Do you have any dependents, such as children, spouse, parents, or siblings?
Do you have any health conditions or disabilities?
Do you have any hobbies or activities that involve high risks, such as skiing, skydiving, or motorcycling?

Situations with money

  • How much do you make a year?
  • How much do you spend each month on things like rent, mortgage, bills, food, transportation, school, fun, etc.?
  • Do you owe money such as credit cards, personal loans, school loans, or car loans?
  • Do you own anything, like savings, stocks, retirement accounts, real estate, cars, jewellery, art, etc.?
  • Do you want to buy a house, start a business, save for retirement, or leave a legacy with your money?
Situations with money☑ or ☐
How much do you make a year?
How much do you spend each month on things like rent, mortgage, bills, food, transportation, school, fun, etc.?
Do you owe money such as card cards, personal loans, school loans, or car loans?
Do you own anything, like savings, stocks, retirement accounts, real estate, cars, jewellery, art, etc.?
Do you want to buy a house, start a business, save for retirement, or leave a legacy with your money?

Plans for the future

  • Do you want to change jobs, start a business, or stop working soon?
  • In the next few months, do you want to get married, split, or have kids?
  • Do you plan to buy, sell, or renovate a home or a car in the near future?
  • Do you have any plans to travel, move, or study abroad soon?
Plans for the future☑ or ☐
Do you want to change jobs, start a business, or stop working soon?
In the next few months, do you want to get married, split, or have kids?
Do you plan to buy, sell, or renovate a home or a car in the near future?
Do you have any plans to travel, move, or study abroad soon?

You will have a better idea of what’s going on in your life after you finish the checklist. You’ll also have a better idea of how much you can pay for insurance premiums, deductibles, and co-payments. You’ll also know how much you need to meet your financial responsibilities and goals in case something bad happens.

A laptop displaying a screen about insurance plan while a person writes notes

Types of Life insurance Plans

These are the types of life insurance policies that can help you protect your family and your assets in case of your death. Each type has its features, benefits, and drawbacks, depending on your needs and goals. Some of the most common types are:

Permanent Life Insurance Policy: Life Insurance as an Investment

Permanent life insurance is a type of life insurance that covers you as a policyholder for your whole life, if you keep paying the money. It gives a tax-free amount of money to your family when you die, no matter when that happens. Term life insurance only covers you for a certain time, like 10 or 20 years, and then it ends or renews at a much higher cost.

There are different types of permanent life insurance coverage, like whole life, universal life, and participating life. They have different coverage and benefits, but they usually have a cash value as a component. This means that some of the money you pay goes into a savings account that grows over time. You can use this money during your life, but this will make the amount of money your family will get when you die smaller.

Permanent life insurance costs more than a term policy, but it can give you more value and choices. It can help you with different financial goals, like saving for retirement, paying for education, or leaving a legacy. But it is not good for everyone, and you should think about your needs, budget, and goals before buying it.

Whole Life Insurance

  • Whole life insurance: You pay for your whole life insurance policy and save money. It is a more expensive insurance product and pays your family as a life insurance beneficiary, whenever you die. You can also use the money in your policy, but this will lower the payment and may have tax issues.
  • Universal life insurance: You pay for your whole life the cost of insurance and invest money in your universal life policy. It is more flexible and lets you consider how much you pay and get. You can also use the money in your policy, but this will change the payment and may have tax issues.
  • Indexed universal life insurance (IUL): is a type of life insurance policy that includes cash value and provides whole life coverage. The cash value component may generate revenue by using an index of the stock market selected by the insurer. Additionally, you can choose how much to put in each portion and have a fixed-rate part. The policy has a minimum interest rate to safeguard you, even though the stock market index portion is subject to fluctuate. It can also restrict your profits. Because you don’t invest in the stock market, these policies carry a higher risk than fixed ones but a lower risk than variable ones.
  • Variable life insurance: You pay for your whole life and invest money in your policy in different funds. It is riskier and can give you more or less money. You can also use the money in your policy, but this will change the payment, the benefit and may have tax issues.
  • Variable universal life insurance: Another kind of universal life insurance is variable universal life insurance, which lets you invest the cash value portion in other subaccounts including mutual funds, equities, and bonds. Reminiscent of mutual funds, the cash value component might increase or decrease based on how well the subaccounts perform. The most flexibility and control over your cash value component is provided by variable universal life insurance, but there is also the greatest risk and volatility involved.
  • Final expense insurance: You pay for a small amount of coverage to cover your funeral and other costs. It is more expensive and does not need a medical exam. It pays your family when you die.

Term Life Insurance Policy

  • Term life insurance: You pay for a certain time, like 10 or 20 years. Term life insurance policies are usually cheaper and pays your family if you die in that time. When the policies matures, you may be eligible to renew or convert it to a permanent insurance product, both of which will be at higher premiums than the original contract.
small wooden figures in the shape of people underneath a miniature wooden umbrella on a table

Step 2: Identifying Potential Risks

The second step in assessing your insurance needs is to identify the potential risks you might face. Risks are the events or situations that can cause you financial loss or harm, such as accidents, illnesses, lawsuits, natural disasters, or theft. Risks can affect you as an individual or as a business owner. Risks can also vary depending on your lifestyle or industry.

For example, if you drive a car, you face the risk of getting into a car accident, injuring yourself or others, or damaging your car or someone else’s property. If you own a home, you face the risk of fire, flood, earthquake, or burglary. If you run a business, you face the risk of liability, property damage, business interruption, or employee injury.

To help you identify the potential risks you might face, you can use the following table. For each category of risk, list the specific risks that apply to you, and rate them from 1 to 5, where 1 is low risk and 5 is high risk. You can also add any other risks that are not listed in the table.

Category of RiskSpecific RisksRating
AutoCar accident, theft, vandalism, etc.
HomeFire, flood, earthquake, burglary, etc.
HealthIllness, injury, disability, etc.
LifeDeath, terminal illness, etc.
LiabilityLawsuit, negligence, defamation, etc.
BusinessProperty damage, business interruption, employee injury, etc.
OtherTravel, identity theft, cyberattack, etc.

You will know more about the potential risks that you may encounter after completing the table. Additionally, you will have a clearer understanding of the likelihood, seriousness, and potential costs of these risks should they materialize.

You can determine your insurance needs with accuracy by following these steps. The kind, scope, and length of insurance coverage that best meets your objectives and requirements will be up to you to choose. Additionally, you will be able to evaluate several insurance plans and choose the most affordable insurance rates.

However, assessing your insurance needs is not a one-time process. Your life situation and potential risks will likely change over time, and so should your insurance coverage. Therefore, it is important to review your insurance needs regularly, at least once a year, or whenever you experience a major life event, such as marriage, divorce, birth, death, or retirement.

You can speak with a financial advisor, use an online tool, or an independent insurance agent for assistance in determining your insurance needs. They can assist you in weighing your alternatives and the effects of selecting a particular course of action. They can also assist you in determining how much life insurance coverage best suits your objectives and needs.

Step 3: Setting Priorities

Prioritizing is the third step in determining your insurance needs. Establishing priorities entails selecting the risks that must be addressed first and the insurance plans that must be purchased or renewed. You may distribute your funds and resources more skillfully and economically by prioritizing them.

Setting priorities is not always simple, though. As you weigh the prices, benefits, and types of insurance coverage, you may have to make trade-offs and decisions. Additionally, you can have competing or conflicting demands and objectives that call for various insurance options. As such, it’s critical to establish priorities that take into account your financial and personal circumstances as well as any possible hazards.

You can use the following advice to assist you in setting priorities:

  • Firstly, the fundamentals: Health, life, and car insurance are the three most fundamental and necessary forms of insurance. Having health insurance can help you avoid suffering significant financial losses from illness or injury, as well as help cover medical costs. In the event of your death, life insurance can assist you in supporting your dependents and paying for your last bills. Liabilities and losses brought on by auto accidents may be covered by auto insurance. These insurance policies can shield you from the most frequent and expensive risks, and they are typically mandated by law or lenders. As a result, you ought to give priority to certain insurance policies and ensure that you have sufficient coverage for them.
  • Think about your obligations: Your liabilities are a crucial consideration when establishing priorities. Your financial and legal responsibilities to other people, including your parents, siblings, spouse, creditors, and business associates, are known as liabilities. You run the danger of facing significant financial losses or fines as a result of lawsuits, carelessness, or default when you have liabilities. As a result, you want to give top priority to getting insurance policies like liability, umbrella, or business that will shield your assets and income from obligations.
  • Assess your assets: Taking into account your assets is crucial when determining your priorities. Your valued possessions, including your house, vehicle, jewellery, artwork, and business, are your assets. The possibility of theft, damage, or loss can lower the value or usefulness of assets. Consequently, you want to give top priority to the insurance policies that, in the event of an unforeseen circumstance, will enable you to replace or restore your assets, such as business, renters, or property insurance.
  • Evaluate your goals: Your goals are a crucial component to take into account when determining your priorities. The desired results you wish to accomplish in your personal or professional life, including owning a home, launching a business, putting money down for retirement, or leaving a legacy, are called goals. Objectives run the possibility of being postponed, disrupted, or unsuccessful, all of which might lower your level of contentment or happiness. Consequently, you want to give top priority to the insurance policies that will enable you to accomplish your objectives or lessen the effects of any setbacks. Examples of these policies are annuities, long-term care, critical illness and disability insurance.

Step 4: Estimating Coverage Amounts

How to Calculate How Much Life Insurance You Need to Cover

The fourth step in figuring out what kind of insurance you need is to determine how much coverage you need. The coverage amount tells you how much the insurance company will pay you or your beneficiary if you make a claim. The amount of coverage can change how much the insurance costs and how much it’s worth. It can also change how much money you’ll get if something bad happens.

As a result, it is essential to make an estimate of the coverage amount that best meets your requirements and objectives. You want to have enough coverage to satisfy your financial commitments and goals, but you also don’t want to have too much coverage so that you pay more than you need to or can afford to for that coverage. In addition, you want to ensure that you have sufficient protection to prevent under-insurance or over-insurance, either of which can lead to financial losses or penalties.

How to Manually Calculate How Much Life Insurance You Need

You can use the following approaches and calculations to assist you in estimating the quantity of coverage you will need:

You can determine an estimate of the coverage amount for your life insurance policy by looking at your income, expenses, debts, assets, and ambitions. You may get an idea of the amount of life insurance you need by using online tools, such as the one found on the Forbes Advisor website. These tools allow you to enter your information and generate a quote. In addition to that, you might use the formula below:

  • Amount of coverage equals financial commitments minus financial holdings.

Take for instance that you had funeral cost totaling $50,000, a mortgage of $200,000, college loans totaling $100,000, credit card debt totaling $50,000, and income replacement coverage totaling $500,000 in your budget. Your entire financial commitments amount to $900,000. Let’s say you have an existing life insurance policy for $100,000, savings worth $100,000, investments worth $200,000, retirement funds worth $300,000, and savings worth $100,000. The sum of all of your assets is 700,000. The minimum amount of coverage required (assuming you deplete all of your assets) would be as follows:

  • The amount of coverage equals $900,000 minus $700,000
  • The amount covered is equal to $200,000

The following are some situations and examples that illustrate how to calculate an approximate coverage amount for the multiple types of insurance plans. You are free to make any adjustments or changes to these strategies and equations that you see fit after using them as a foundation. You may also find it helpful to speak with an insurance agent, a financial advisor, or use a tool that is available online for more direction and precision.

Life Insurance Calculator

Make financial plans for the future with our user-friendly calculators. We have the ideal tool for you, whether your objective is to compare possibilities, evaluate your current status, or make a plan for the future.

Please do not hesitate to get in touch with one of our helpful professionals if you need additional assistance or if you have any queries. Our goal is to assist you in realizing your financial goals.

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Step 5: Researching Insurance Options

The fifth step in assessing your insurance needs is to research and compare different insurance options. Researching and comparing life insurance policies from different providers can help you find the best policy that matches your needs, goals, and budget. Researching and comparing insurance options can also help you avoid scams, frauds, or misleading offers.

How to Compare Life Insurance Quotes from Different Life Insurance Companies

Here are some ways to compare insurance options:

  • Online tools: Websites that show you different policies and plans from various insurers based on your details. You get quotes and ratings instantly. 
  • Insurance agents: People who work for insurers and sell their products and services. You can ask them for quotes and policy terms for policies and plans that match your goals. They can also tell you the good and bad of each option and answer your questions. Insurance agents can help you find the best deal and value and give you personal and expert advice.
  • Insurance websites: Websites of companies that advertise their insurance products and services. Here you may find information about the coverage, benefits, costs of life insurance, and exclusions of each policy and plan. You can also find information about the rating, reputation, and customer service of each insurer. You can also request a quote or apply for a policy online. Insurance websites can help you learn more about the insurers and their offerings and give you easy and direct access.
  • Insurance reviews: Opinions and experiences of customers who have bought or used policies and plans. You can read them on online platforms, like blogs, forums, social media, or review sites. You can also ask for referrals from your friends, family, or colleagues who have similar insurance needs and goals as you. Insurance reviews can help you get feedback and insights from real and verified users and give you the pros and cons of each option.

To compare insurance options, look at these factors:

  • Coverage amount: How much money the policy or plan pays you if something happens. It should match your needs and goals. Think about the help your family would need, inflation or the future value of money, as the coverage amount may lose value over time.
  • Premium: How much money you pay for the policy or plan. It should fit your budget and income. Think about how often and how you pay, such as monthly, quarterly, or annually, and online, offline, or automatic. Think about discounts and incentives that may lower your premium, such as bundling, loyalty, or safety.
  • Deductible: How much money you pay before the policy or plan pays you. It should be affordable and reasonable. The higher the deductible, the lower the premium, but the higher the risk. Not all policies have a deductible.
  • Co-payment: How much money you pay after the deductible. It should be fair and manageable. The higher the co-payment, the lower the premium, but the higher the risk. Not all policies have a co-payment.
  • Exclusions: What the policy or plan may not cover or protect against. They should be clear and acceptable. The more exclusions, the lower the premium, but the lower the value.
  • Features and riders: What the policy or plan pays you extra for. They should be useful and valuable. The more features and riders, the higher the premium, but the higher the value.
A young couple consulting with an insurance agent

Step 6: Consultation with an Agent

The sixth and final step in assessing your insurance needs is to consult with an agent. Consulting with an agent can help you finalize your decision and purchase the best policy that matches your needs, goals, and budget. Consulting with an agent can also help you review your current life insurance policy and update your coverage as your life situation and potential risks change over time.

The benefits of consulting with an agent are:

  • Expertise: An agent has the knowledge and experience to help you understand and compare different insurance policies and plans before you buy life insurance. An agent can explain the features, benefits, and drawbacks of each policy and plan, as well as answer any questions or concerns you may have. An agent can also provide you with financial advice, tips and tricks to save money and get the best value for your money.
  • Personalization: An agent can tailor the policy and plan to your specific needs and goals. An agent can adjust the coverage amount, premium, deductible, co-payment, exclusions, features, and riders of the policy and plan according to your preferences and criteria. An agent can also recommend the best policy with the highest coverage and plan for your personal and financial situation, as well as the potential risks you might face.
  • Convenience: An agent can make the process of buying and renewing the policy and plan easier and faster. An agent can handle the paperwork and documentation, such as the application, the medical exam, the contract, and the claim. An agent can also communicate and negotiate with the insurance company on your behalf, and resolve any issues or disputes that may arise. An agent can also provide you with ongoing support and service, such as reminders, updates, and reviews.

To consult with an agent, you can use the following steps:

  • Find an agent: You can find an agent online, by phone, or by referral. You can use online tools to search and compare different agents based on their location, rating, and specialization. You can also call or visit the local offices of different insurance companies and ask for an agent. You can also ask for a referral from your friends, family, or colleagues who have similar insurance needs and goals as you.
  • Meet an agent: You can meet an agent in person, by phone, or by video. You can schedule an appointment with the agent at a convenient time and place. You can also request a free consultation or a quote from the agent. You should prepare your information, such as your age, health, location, and coverage amount, and your questions, such as the premium, deductible, co-payment, exclusions, features, and riders of the policy and plan.
  • Buy a policy: You can buy a policy from the agent after you have compared and evaluated different insurance options. You should review the policy terms and conditions carefully, and make sure you understand and agree with them. You should also sign the contract and pay the premium. You should also keep a copy of the contract and the receipt for your records.
  • Renew a policy: To renew a policy from the agent, you need to do the following before it expires or lapses:
    1. Review your policy and update your coverage to match your current life situation and risks.
    2. Check the renewal terms and conditions, and make sure they are still suitable and agreeable.
    3. Sign the contract and pay the premium.
    4. Keep a copy of the contract and the receipt for your records.
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Assessing your life insurance needs is a crucial step in finding the best policy that matches your needs, goals, and budget. By following the six steps outlined in this blog post, you will be able to:

  • Understand your life situation and how it influences your insurance needs.
  • Identify the potential risks you might face and how they affect your insurance needs.
  • Set priorities and decide which risks are most important to address and which insurance policies are most essential to buy or renew.
  • Estimate the coverage amount and make sure it matches your estimated coverage amount based on your needs and goals.
  • Research and compare policies for different insurance options and find the best policy that offers the best value and quality for your money.
  • Consult with an agent and finalize your decision and purchase the best policy that suits your needs, goals, and budget.

We hope this blog post has helped you assess your insurance needs and find the best policy for you. If you have any questions or comments, please feel free to contact us. Thank you for reading and happy insuring!

Learn More About Life Insurance

Life insurance is a contract between you and an insurance provider that guarantees your beneficiaries will receive a certain amount of money in the event that you pass away while the policy is in force. Your loved ones’ living expenses, education, debts, mortgages, and your burial fees can all be paid for when you pass away with the assistance of life insurance.

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FAQ: Frequently Asked Questions About Life Insurance Needs

What’s the point of this blog post?

The goal of this blog article is to assist you in evaluating life insurance policies and locating the best price for your specific needs. It walks you through the process of understanding your life situation, identifying potential hazards, setting priorities, estimating coverage levels, researching insurance options, and consulting with an agent.

What are the advantages of having life insurance?

When you die, your beneficiaries receive a tax-free sum of money from your life insurance policy. It can assist you in protecting your family from financial hardship, paying off debts, covering funeral expenses, leaving a legacy, and achieving other goals. Life insurance can also offer you security, stability, and peace of mind.

What kinds of life insurance are there?

Life insurance is classified into two types: term life insurance and permanent life insurance. Term life insurance covers you for a set length of time, such as ten or twenty years, and provides a death benefit if you die during that time. Permanent life insurance covers you for the rest of your life and has a cash value component that typically increases over time. Permanent life insurance policies come in several varieties, including whole life, universal life, and variable life.

How do I choose the best life insurance policy for my needs?

To choose the best life insurance policy for your needs, you need to follow the six steps in this blog post. First, you need to understand your life situation, such as your age, health, income, expenses, assets, liabilities, dependents, and goals. Second, you need to identify potential risks, such as premature death, disability, illness, or injury. Third, you need to set priorities, such as protecting your family, paying off debts, saving for retirement, or leaving a legacy. Fourth, you need to estimate coverage amounts, such as how much money your beneficiaries will need, how long they will need it, and how much you can afford. Fifth, you need to research insurance options, such as the types, amounts, and durations of coverage, benefits, costs, and exclusions of each policy and plan. Sixth, you need to consult with an agent, who can help you compare quotes, policy terms, and features, and answer your questions.

How do I get a quote for life insurance?

You can evaluate various policies and plans from different insurers by using online tools to obtain a quote for life insurance. You can get fast quotes and ratings by entering your information, including your location, age, health, and amount of coverage. You can also get in touch with an agent, who can offer you prices and policy terms for various plans and policies that meet your objectives.

How can I pay for a life insurance policy?

A premium is the sum of money you must pay for the policy or plan in order to purchase life insurance. Depending on the policy or plan, the premium may be paid on a monthly, quarterly, annual, or lump sum basis. Depending on the insurer, you may pay the premium automatically, offline, or online. Incentives or discounts related to safety, loyalty, or bundling could also help you get a cheaper premium.

How do I use the cash value of my life insurance policy?

To use the cash value of your life insurance policy, you can access it through loans or withdrawals, depending on the policy or plan. Loans are borrowed from the cash value and have to be repaid with interest. Sometimes this is done after you pass away with the proceeds of the insurance benefit. Withdrawals are taken from the cash value and do not have to be repaid. However, both loans and withdrawals will reduce the death benefit and may have tax implications. You should consult with your agent or tax advisor before using the cash value of your policy.

How do I change or cancel my life insurance policy?

To change or cancel your life insurance policy, you need to contact your insurer or agent and follow their instructions. You may be able to change your policy or plan by adding or removing features or riders, adjusting your premium or coverage amount, or converting your policy or plan to a different type. You may also be able to cancel your policy or plan by surrendering it or letting it lapse. However, changing or canceling your policy or plan may have consequences, such as fees, charges, penalties, or taxes. You should read your policy or plan carefully and understand the terms and conditions before making any changes or cancellations.

What are the steps involved in filing a claim under my life insurance policy?

You or your beneficiaries must contact your insurer or agent and provide them with the required information and documents, including the death certificate, policy number, and claim form, in order to file a claim on your life insurance policy. Additionally, contingent upon the policy or plan, you or your beneficiaries might be required to respond to inquiries or furnish supplementary documentation. The insurer will then make a determination regarding the claim’s approval or denial. The insurer will pay the death benefit to your beneficiaries in accordance with the policy or plan if the claim is approved. The insurer will provide an explanation for the denial of the claim, and you or your beneficiaries may have the opportunity to appeal the decision.

Shelden Smollan
Shelden Smollan, Experior Financial Group's Chief Experience Officer, has spent more than 45 years working in the fields of Life Insurance and finance. He is an excellent insurance sales and management executive with exceptional strategic thinking, marketing, and leadership abilities. He has been Experior Financial Group Inc.'s Chief Experience Officer for the past six years, and his vision and expertise have been instrumental in the company's growth and development. By arranging meetings between agents and carriers so that our team of associates can learn from them and draw inspiration from them, he has assisted our IMO in expanding.