How to shop for life insurance

Step one: size the obligation, not the premium

Work out what would actually need covering — debts that don't disappear, income that would stop, costs that would start. Then subtract what already exists: savings, existing policies, coverage through work, and your partner's earning capacity.

What's left is the gap. That number, not a multiple of your salary, is what you're shopping for.

Step two: match the shape to the obligation

Now decide the structure, because it follows from the obligation rather than from preference.

• A need with an end date — a mortgage, children at home — points to term
• A need with no end date — final expenses, a lifelong dependent — points to permanent
• A need that steps down in stages may suit two terms of different lengths
• If health is a concern, ask about conversion privileges before anything else

Step three: get quotes on identical terms

Only now does price become meaningful. Give every quoter the same face amount, the same term, and the same honest health picture.

Watch for the assumed health class in particular. A quote assuming the best available class will always undercut one assuming a standard class, and that difference is an assumption rather than a better deal.

Step four: apply, then wait properly

Answer the application accurately — it's the contract, and the contestability period means an error found later can cost your family the claim.

Do not cancel any existing coverage until the new policy is issued and in force. Not when you apply, not when you're told it looks good.

Step five: put it where it can be found

Confirm the beneficiaries, tell at least one person the policy exists and which insurer holds it, and store the documents somewhere findable.

A policy nobody knows about doesn't get claimed. This step costs five minutes and determines whether the previous four mattered.

Where quotes come from, and why they differ

Two quotes for the same benefit can differ substantially, and the reasons are rarely about one insurer being better value than another.

An online quote generally assumes the best health class you might qualify for. An agent's quote may assume something more realistic. A comparison site may be showing an estimate rather than a quote at all, and in several cases is selling your details onward rather than placing the policy.

The only comparison that means anything is like-for-like: same benefit, same term, same assumed health class, same rider set. Ask what class each quote assumes, because that single variable moves the price more than the choice of insurer usually does.

Captive, independent, and direct

Who you buy through shapes what you are shown, and none of the three routes is wrong - they are just different.

A captive agent represents one insurer and knows that insurer's products and underwriting appetite well. An independent agent or brokerage can place business with several, which matters most where there is any health history, because appetite for the same condition varies enormously between carriers. A direct-to-consumer route cuts out the intermediary and works best on straightforward cases.

Ask two questions of anyone selling to you: which insurers can you place this with, and how are you paid. Both are routine and both are answered by anyone reputable.

What the application actually involves

Knowing the sequence removes most of the anxiety, because the slow parts are slow for reasons that have nothing to do with you.

• An application and a health questionnaire, usually by phone or online
• Authorisation for the insurer to obtain medical records and a prescription history
• Sometimes a paramedical exam - height, weight, blood pressure, blood and urine samples - typically at your home or workplace
• A review of motor vehicle records, and for larger amounts a financial justification for the benefit sought
• Underwriting, which may come back with questions or request records from a physician
• An offer, which may be at the class quoted or at a different one

How long it takes, and what makes it slower

Fully underwritten applications commonly take a number of weeks rather than days. Accelerated and simplified paths are considerably faster and are increasingly offered, particularly at lower benefit amounts.

The usual cause of delay is not the insurer. It is waiting on records from a physician's office, which is outside everyone's control and can take longer than the rest of the process combined.

A pending investigation is the other common cause. Underwriters generally will not assess an unresolved question, so an application submitted while something is being looked into is likely to be postponed rather than declined - which is a different and much better outcome than it sounds.

What to be sceptical of

Most of the market is straightforward. A few patterns are worth treating as warnings rather than as sales technique.

• Pressure to decide today, or a rate described as expiring
• A recommendation made before anyone asked what you owe, what you earn, or who depends on you
• A permanent policy proposed as an investment, with the insurance framed as incidental
• Reluctance to show the guaranteed columns of an illustration rather than the projected ones
• Any suggestion that you cancel an existing policy before the new one is confirmed in force
• An unwillingness to say which insurer will actually carry the policy

After it is issued

The policy arrives and most people file it unread. Two things are worth doing in the first fortnight, while the free look period is still open.

Read the schedule against what you were told - benefit, term, premium, riders, and the exact names of the beneficiaries. Errors at issue are common and trivially fixable at this stage.

Then put the policy number, the insurer and the agent's details somewhere a beneficiary would actually look, and tell one person it exists. A policy nobody knows about is the most common reason benefits go unclaimed.

If you have a health history

This is where shopping actually matters, and where the difference between routes is largest.

Carrier appetite for the same condition varies enormously. One insurer may decline where another offers standard rates on identical facts, because each maintains its own underwriting guidelines built on its own claims experience. A decline is one insurer's opinion, not a verdict on your insurability.

The practical implication is to avoid applying repeatedly on your own. Each application generates a record. Work with someone who can pre-assess the case informally with several carriers before a formal application goes anywhere, and gather the supporting documentation - dates, treatment, current control, recent test results - before starting.

Sizing it properly before you shop at all

Every step after this one is wasted if the amount is wrong, and the amount is the part most people guess at.

Two lists settle it. What would be needed: debts that survive you, the income your household relies on and for how many more years, childcare, education, final expenses. What would arrive: existing policies, employer cover, savings, survivor benefits. The difference is the gap.

It takes about ten minutes and it is the only part of the process nobody else can do for you. A policy sized by rule of thumb is a policy sized by someone who has never met your household.

The order that avoids the common mistakes

Most of what goes wrong is a sequencing problem rather than a judgement one.

• Work out the gap before looking at any quote
• Decide the term length from when the obligation ends, not from what quotes cheapest
• Get quotes on identical benefit, term, class and riders
• Gather medical and financial detail before applying, not after being asked
• Apply once, through someone who can place it with more than one insurer if there is any health history
• Read the issued policy against what you were told, inside the free look period
• Only then cancel anything the new policy was meant to replace

What good advice sounds like

The useful test is not whether someone is enthusiastic about a product. It is whether they asked enough questions to have an opinion worth hearing.

Someone doing this properly will ask what you owe, what you earn, who depends on you, what cover you already hold, and how long each obligation runs - before recommending anything. They will explain why they are proposing a shape rather than only a price, and they will tell you which insurers they can place with and how they are paid.

One last thing

Nothing here needs doing quickly, with one exception. Life insurance is priced on age and health, and a diagnosis in the meantime changes what is available rather than only what it costs. Take the time you need on the amount and the structure - just do not leave the application unstarted for a year while you think about it.