How to Buy Life Insurance Like a Pro

Life insurance is a purchase only made once or twice in a lifetime, so it is common to be unaware of the ins and outs of buying a policy. The potential pitfalls are significant, so review the following tips before purchasing a life insurance policy.

Get the Right Type and Amounts

Many suggest most people only need life insurance to cover their working years and while they raise a family. Term life insurance is typically most affordable for larger amounts and covers you when you need it most, like when your family is young.  Permanent insurance is best (1) when you know you will have estate taxes to cover, (2) if you want to use insurance as an investment vehicle with guaranteed returns, or (3) you have a spouse or disabled child that you need to support after your death. 

Because life insurance policies are usually sold by commissioned sales people or by order takers, you need to be sure you are in the know and trust the person before you buy.  Don’t get sold a policy or amount you don’t need, or overlook the types and amounts that are right for you. We know several reliable insurance agents who we can refer you too.

Don’t Name a Minor as a Beneficiary

If you’ve named a minor child as a beneficiary, or even a secondary beneficiary, after your spouse, you could be creating double trouble. First, your life insurance would have to go through a court process and subject to the control of a financial guardian, and then second, whatever is left would be distributed to your minor child when he or she turns 18.

You can easily avoid this by naming a trust as beneficiary of your life insurance, thereby keeping your life insurance out of court and ensuring your child doesn’t receive control until he or she is ready. Plus, then you get to decide who takes care of the life insurance money you are leaving behind, until it’s distributed to your child. And, you can even build in protection against your child’s future divorce, or any creditor issues.

Term Insurance to Fund Divorce Settlements

If you receive child support and spousal support, insist that your spouse have a term life insurance policy to guarantee you are able to collect on your settlement, even if you have to pay the premiums. 

Don’t Overlook Living Benefits

A living benefits rider could allow you to access funds if you were diagnosed as terminally ill or with a chronic and debilitating condition, leaving you needing long-term care.

If you are ready to purchase a life insurance policy that works for you, please meet with a Personal Family Lawyer®, like me, who can ensure you have the legal planning to protect the life insurance proceeds.  I offers Family Wealth Planning Sessions that help you protect and preserve your wealth for future generations. Before the session, we’ll send you a Family Wealth Inventory and Assessment to complete that will get you thinking about what you own, what matters most to you, and what your wishes are when you die.


This article is a service of Tom Culpepper, Personal Family Lawyer®. We don’t just draft documents; we ensure you make informed and empowered decisions about life and death, for yourself and the people you love.  That’s why we offer a Family Wealth Planning Session™, during which you will get more financially organized than you’ve ever been before, and make all the best choices for the people you love. You can begin by calling our office today (call Amy at 937-589-4144) to schedule a Family Wealth Planning Session and mention this article to find out how to get this $750 session at no charge.

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