A Millennial’s Guide: How to Buy Life Insurance

Life insurance is depressing. You're gambling with an insurance company about whether or not you'll die before a certain age. But man is it important. We'll hold your hand and walk you through the what, why, when, and how's of life insurance.

This will probably be the worst post you will ever read on this site. Way to pump people up, Johnny.

It will also be one of the most important.

Life insurance is depressing. You’re gambling with an insurance company about whether or not you’ll die before a certain age. If you lose your bet, you’re out tens of thousands of dollars. If you “win,” you rake in a handsome 6- or 7-figure payday. Oh, and you’re dead. Pretty fun bet to place in your 20s and 30s, eh?

So while I’d rather spend my day waiting in line at the DMV than jump into this morbid topic, we’ve just got to rip this bandaid off. So if you bookmark only one thing today, let it be this post. Better yet, if this is something you’ve been meaning to do, don’t bookmark this post — just do it. Or leave it open as a tab in your browser for a few weeks, making you feel guiltier and guiltier every time you pass over it until you finally do it.

We’re going to walk through the entire process of buying a life insurance policy. Hold on to your party hats.

Why Do I Need Life Insurance?

Because you do. When you buy life insurance, you’re setting up a contingency plan that will support your loved ones financially while they move forward without you and your income (both current and future). Basically, life insurance is an emergency fund on steroids. But unlike an emergency fund, you don’t have to save all that money on your own. For a fraction of the policy’s pay out, you can buy peace of mind knowing that your family is taken care of. All in all, life insurance is a great deal and an invaluable investment for you and your family.

Tl;dr (too long; didn’t read) answer: you need life insurance because you love your family.

When Do I Need to Get Life Insurance?

There’s no “time to get life insurance” age. It all boils down to a simple question: if *poof* you weren’t here tomorrow, would it affect anyone financially? For Joanna and I, we answered “no” for the first five years of our marriage. We were both college graduates with professions, limited debt to our name, and no dependencies. But as soon as our little human, Sally, came along, we moved solidly to the “yes” column. Parenthood is probably the most common trigger, but for others it might be a home purchase, a medical condition/disability of a significant other, or other event/factor resulting in an increased cost of living.

Another consideration is that generally, the younger you are, the healthier you are. That directly translates to a cheaper premium. So take advantage of the younger, healthier you and lock in a great, affordable premium for the next 20- or 30- years.

Tl;dr answer: buy life insurance as soon as others depend on your income.

What Type of Policy Should I Get?

First things first, there are two equally boring policy options: term and whole (aka permanent).Term life is insurance at its purest. If X bad thing happens, you will give me $X. Whole life insurance is a little murkier. Whole policies pay out at any age of death, as long as you continue to pay premiums until your death. Whole life policies also include “cash value,” sometimes pitched as savings or investment accounts by insurance salesmen.

The merits and drawbacks of both plans have already been debated to death, but most sensible financial experts agree so we’ll just cut to the chase. Go with a term life policy. Whole life is expensive, inefficient, and it’s a pretty lousy investment. It also pays out a much higher commission for insurance salesmen, so if you’ve got an agent, don’t be surprised to be sold hard on whole life. There are a few scenarios where whole makes sense, but if you’re young, healthy, and don’t have a ton of money to your name, term is your policy.

The important thing to remember is that this is insurance, not an investment.

Tl;dr answer: go with term.

GIF Intermission


How Much Life Insurance Do I Need?

There’s a better way to ask this question: how much money would my family need to reestablish life without me? Depending on who you listen to, you’ll probably hear a bunch of formulas that range from as few as five years to as many as twenty years of your current salary. So if you currently make $100k, that’s a range of $500k to $2 million. That’s not particularly helpful.

Instead of just using a year multiplier, really think about your current financial situation and what it would take to cover those expenses. Here’s one method to get to your coverage amount.

  • Add up your mortgage and any other outstanding debts. The last thing you want to do is leave your family with debt payments. Let’s call these debts.
  • Look at your current budget and figure out your annual budgeted expenses. Let’s call these living expenses.
  • Decide the amount of time it might be reasonable to expect that the surviving spouse could reestablish a livable salary. It might be five, ten, or twenty years depending on your specific circumstances. Let’s call this duration.
  • Multiply living expenses by duration to get a solid baseline of minimum coverage. Then add your debts.
  • Consider and add any additional costs that you might incur without your spouse like child care, employment training costs, tuition to go back to school, funeral expenses, children’s college expenses, daughter’s weddings (ahhh great… now you got me all teary eyed — can we just stop writing about this stuff yet?), etc. etc. Let’s call these additional expenses and add those to your total.
  • Take your total and add an extra 5-10% of extra padding. When in doubt with life insurance, round up.
  • And here’s your formula: debts + (living expenses x duration) + additional expenses = estimated total x 1.05 OR 1.10total coverage needed. YEAH MATH!

For an alternative, nerdier approach to spreading your coverage amount over time and reducing it as you grow older (when you should theoretically have less coverage needs), you can read up on laddering policies here.

Tl;dr answer: figure out how much money your family would need without you and for how long, plus a 5%-10% cushion.

How Do I Buy Life Insurance?

Getting through the previous four questions took Joanna and me… two years. It’s not like we don’t know how to read or use AskJeeves or anything. But every time I’d put “GET LIFE INSURANCE!!1!” on my weekly to do list, I’d do a little more research, get overwhelmed, and put it off another week or 100. All of this is to say, if you can just smack your head a few times, pump yourself up, and then plow through the sections above, you’re way more than halfway there. Actually buying your policy is gravy — not very appetizing, kinda hard to swallow, but still gravy-ish gravy.

So you now know why you need life insurance, when to get it, what type of policy to get, and how much. It’s time to shop! (By the way, if your significant loves shopping, saying “Let’s shop for a [life insurance policy] today!” is a trick way to get them pumped about any mind numbingly boring financial product purchase.) I’ll walk you through what we did, as well as providing some alternate routes.

Step 1: Get some quotes online

We started our policy shopping where we start most of our shopping: the interwebs. It’s instinctual with our generation and seems much easier than the alternative — talking to people. After an hour of searching and browsing sites, I was shocked at how antiquated life insurance shopping is online. I felt like I was dialing up on my modem and connecting to AOL on a lot of sites. On others, I worried that entering my phone number for a quote was going to be sold to the bad guys from Taken. All in all, we were super underwhelmed.

And then we found AccuQuote.

KAYAK.com is to travel search as AccuQuote is to life insurance search. Alright, so the site might not be quite as pretty, but it’s hard when your competition is photos of Hawaiian beaches. AccuQuote stood out for two reasons. One, it almost exclusively offers term policies. Two, once you fill out your information, you don’t have to wait for a phone call or a sale-sy email. They actually give you quotes right there on the site from a handful of reputable providers. I promise this entire post isn’t a giant sales pitch for them, we just found them especially helpful among a sea of lackluster options.

Step 2: Make sure the coverage/premium fits your budget

After filling out the form and reviewing the quotes, you’ll want to make sure that the monthly premium can fit your budget. If it will break your budget, look to cut costs in other categories or earn a little extra money. Otherwise, you might need to settle for a smaller coverage amount that you can afford for the time being. But remember, you can always (assuming you remain in a passable state of health) add more policies in the future.

Step 3: Select a company and quote

Now it’s time to select a quote. Here’s what a sample quote looks like on AccuQuote:

AccuQuote quote

Take note of the annual premium (what you’ll pay), the coverage type (which denotes the length of the policy), and the various ratings (the financial soundness of a company). You’re looking for the lowest premium by the highest ranked company with a policy that accepts your health/medical/risk profile. For the most part, the premiums won’t fluctuate too wildly from quote to quote. Maybe more important than saving a couple bucks a year is to ensure you’re insured by a highly-rated, financially healthy company. For us, Prudential was an option that cost a few dollars more a year than other policies, but it had a higher rating and we’d had previous pleasant experiences working with them with a 401k plan.

Step 4: Apply for a policy

Once you feel good about a quote, it’s time to apply. With AccuQuote, you can always ask and/or change policies later in the application process, so don’t be too worried about making the perfect selection just yet.

The application process is fairly personal and tedious. Lots of questions about your current health, your medical history, your family’s medical history, what adventure sports you participate in,the worst thing you did when you were 12 (kidding), etc. Remember, they’re about to make a bet on you not dying, so they need all the information they can get before they put money on their horse — you. During the application, answer truthfully. If you lie, many of those mistruths will be unearthed in your medical exam, and if they’re not and the insurance provider finds out about them, buh bye policy.

After you fill out the application, you’ll likely get a phone call within 24-hours from an AccuQuote representative. Remember that at no point are you obligated to go forward with a policy. You’re still in the dating phase. My phone chat was actually really awesome. The woman was very thorough, answered all my questions, helped me find an even more inexpensive option, and never once tried to upsell or force any additional products on me. We even spent five minutes just chatting about our cats. I was surprised by how natural that topic was for me to talk about length. Anyway, she walked me through a few more application questions specific to Prudential’s policy, helped me schedule an at-home medical exam, and outlined next steps.

Alternative options

We’ve never had an insurance agent. Part independent spirit, part stubbornness, part not wanting to talk to people on the phone, we’ve just never really considered having one. But if you have an agent you trust, ask them to provide you with some quotes. You should still use AccuQuote to get your own quotes and compare them against your agent’s. If your agent quotes you at significantly higher rates, ask why.

If you feel you need more hand holding than what’s outlined in this post, Term4Sale is another popular option for finding a local independent agent. You can get quotes with direct contact information for that company’s local agent and have them walk you through the process from there.

Tl;dr answer: go to AccuQuote.com, get some quotes, make sure it fits your budget, choose a policy, and apply

GIF Intermission


Finalizing Your Life Insurance Policy

Almost there! See this hasn’t been so bad. There are only a few final steps and considerations before you’re walking out the door with a brand… new… life insurance policy. That would be the worst Price is Right prize ever.

Medical exam

Somehow I missed the memo that getting life insurance (or at least a good policy) requires a complimentary medical exam. I mean, it totally makes sense, I just never imagined a guy coming to my house at 8am with a scale, blood drawing kit, and containers to hold my urine. AccuQuote did a great job prepping me on things to do and not do leading up to the exam like refraining from caffeine and high-sugar or fatty foods, avoiding overly strenuous exercise (weird, right?), and when to start fasting. That week leading up to the medical exam might have been my healthiest ever. Oh, what saving money will compel us to do.

The actual exam was no sweat (assuming you’re cool with getting your blood drawn). It took about three or four weeks before I got the approval back from AccuQuote. I was actually super pumped about getting approved because I knew that all of my lab results said good enough things for an actuary to want to bet on me living for a long-ish time. That’s kinda cool, right? Just agree with me. Thanks. At least in our situation, Prudential also sent me my medical results, which I plan on taking to a doctor sometime in the near future to count as my yearly physical.


Should the D word happen, you need to designate where that money will go. Usually your primary beneficiary will be your surviving spouse. You can then select a contingent or secondary beneficiary like a legal guardian of your children. It’s generally not a great idea to assign any children under 18, as they won’t have control of the money until they reach 18 years old. You can make things simple and assign your estate as beneficiary (which is what we hope to do soon). But no matter what you do, review your beneficiaries every few years and change them whenever appropriate.

Premium payment term lengths

Most companies will offer monthly, quarterly, or annually payment options. If you have the money to pay the annual installment, do it. You’ll save processing fees that are assessed every time a payment is issued. Those add up over the course of a year (times 30).

Keep your S.O. in the know

This whole post is a terrible date night topic, but it’s definitely a discussion you should have with your significant other. You might have different opinions on coverage needs or what you can afford right now, but most importantly, you’ll both want to know what it all means should it all happen. Once you get your policy paperwork, make sure your spouse knows where it’s filed.

Pray you never use it

This is definitely one insurance you never want to see cash out. While it might cost $20k+ after 30 years of paying premiums, you should feel relieved when your plan expires. If you’re budgeting, living within your means, and making smart financial decisions, you won’t need a life insurance policy after your 50’s and 60’s. You’ll likely be empty nesters with reduced living costs, a paid off or nearly paid off mortgage, and on the cusp of enjoying the fruit of your compounding interest labors in retirement. Be grateful that you’re alive and that your family has you instead of a bunch of green paper.

Any other nuggets of wisdom to add? Any questions or fuzzy areas? Chime in with a comment.

*Note: if you choose to purchase a policy through AccuQuote from a link in this article, we earn a small commission. We actually had such a positive experience months ago with AccuQuote in our own search for life insurance that we sought out this affiliation. We love those dudes/dudettes 1000%.

Previous Post Next Post

You Might Also Like


  • Reply TT February 27, 2015 at 7:49 am

    I agree with everything written. I would add a suggestion to also consider a policy for your spouse even if they stay at home. Technically no one is relying on income from them as ostensibly they have none. However, think about how your budget would be affected if all of a sudden you had to face funeral costs and then had to immediately put children in daycare–sounds expensive! Being the breadwinner, my policy is much larger in terms of payout than my wife’s, but I take great comfort in knowing there is something there to cover her as well; $10 a month can go a long ways towards a policy.

    • Reply Rachel February 27, 2015 at 9:00 am

      We have a joint (decreasing term) life insurance policy, it pays out the same if either of us were to meet an untimely demise and should cover the mortgage and then a bit. We plan to take out additional cover if and when we become responsible for little humans.

      In my line of work I’ve seen too often where a ‘housewife’/’SAHM’ had less insurance and the husband really struggled when she died. If the breadwinner is suddenly also the primary caregiver you may find that work hours have to be cut or extra childcare/cleaners/accountant/taxi… are needed to cope. A non-earning parent or lower-earning partner should still have life cover.

      One other point, you two are obviously good and healthy. When we took out our policy my boyf had only stopped smoking 11 months previously. Now it’s nearer 4 years. After we get the all clear from a freak, one-off hospital admission we’ll be requoting for cover and hopefully the pinker lungs will reduce our premiums!

      • Reply Johnny February 27, 2015 at 9:25 am

        Great points, Rachel. Agreed on the SAHM/D coverage. And very smart thoughts re: requoting for better health. Lower premium, better health, and longer life — sounds like a celebration will be in order!

    • Reply Johnny February 27, 2015 at 9:20 am

      Yep, great point. We actually tried to get a smaller policy out for Joanna at same time as me for this very reason, but she was too far along in her pregnancy. I guess actuaries don’t want to mess with that risk. Makes sense. But it’s on our to do list of post-preggers fun.

      • Reply Julie February 27, 2015 at 3:46 pm

        That’s interesting that they wouldn’t insure Joanna at this time. I had my life insurance medical exam 4 days before my daughter was born (full term). I asked our agent about that, because obviously my weight would be much higher than normal, and my bloodwork would not be at its normal levels. Our agent told me that the company sees people in the same condition all the time because it’s a “popular” time to finally buck up and get insurance. Though I don’t know what my rates would have been non-pregnant, they’re pretty competitive so I think I did ok.

        • Reply Johnny March 2, 2015 at 8:19 am

          Wow, no way! Yeah, I’m not sure if maybe we were trying to apply through the same policy, but it definitely had very specific health/risk criteria. But it’s good to know that it’s possible with the right policy. Back to the search we go!

  • Reply Leigh February 27, 2015 at 11:07 am

    Another thing to note is that a lot of employers offer life insurance as a benefit. For example, my current and previous employers offered two times your base salary as a small taxable benefit. I set a combination of parents and siblings as my beneficiaries as I am unmarried and have no children. I wish I could opt out of the employer provided coverage though as no one needs my life insurance money and I plan to self-insure for life insurance with the amount of money I’ve saved at this point. Speaking of which, it’s been five years since I wrote my will and my assets have grown a lot, so I should probably re-evaluate my beneficiaries on each of my accounts.

    • Reply Johnny March 2, 2015 at 8:29 am

      Great point, Leigh. I’ve had about the same amount of coverage (2x salary) offered by my employers, although none is offered by my current one. It’s a nice gesture, but you’re right, that “free” policy is coming from your salary. The only other concern is that it’s easy to assume that since you’re already covered at work that you’re good when the reality is that it’s likely non nearly enough coverage.

  • Reply Tarynkay February 27, 2015 at 11:45 am

    This is a wonderfully clear and comprehensive post. Not enough people talk about this. I love the gifs, too.

    I would add- when accounting for your debt load when you consider how much life insurance to buy, keep in mind that student loans are forgiven in the event of death or permanent disability. This is not a good plan for getting rid of your student loan debt, but it is good to remember that you won’t need to buy enough policy to cover that debt.

    • Reply Johnny March 2, 2015 at 8:37 am

      Great point, Tarynkay. And you’re exactly right — not a great plan for getting out of debt (I’d rather pay money than die :)), but a good reminder when considering the amount of needed coverage.

  • Reply Racheal February 27, 2015 at 11:53 am

    I seriously want to hug you for writing this post. Thank you so much! You made an extremely overwhelming topic seem very easy and straightforward.

    Two questions:

    1. Do you have a good resource to provide to salespeople who are trying to sell you whole life insurance? I know you said that “most financial experts agree” that term is better, but I just want something I can say that will make them leave me alone. Ha!

    2. I have life insurance through my job. What are you thoughts on that? Is that enough or do I need to supplement?

    Thanks in advance!

    • Reply Johnny March 2, 2015 at 9:06 am

      You are most welcome, Racheal. Glad it was helpful. As far as your questions…

      1. Here are two resources: http://www.daveramsey.com/article/the-truth-about-life-insurance/ and http://www.dailyfinance.com/2014/07/03/whole-life-insurance-bad-investment-most-people/. Dave Ramsey’s article does a good job articulating and simplifying our beliefs here. The DailyFinance article does a good job outlining when whole might be a good idea (which is rarely).

      2. Life insurance offered through your employer is a great start, but it all depends on your coverage needs. Before Sally came along, our employer offered policies were actually adequate. But that changed overnight with Sally’s arrival. The other thing to consider is the cost of getting supplemental coverage through your employer vs. getting it on your own. Go grab a quote from AccuQuote or elsewhere, and then ask your HR what it will cost to get the same amount of coverage through their provider and whether or not that cost is subsidized or discounted by your employer at all (because that represents an additional cost as soon as you leave your current employer). Odds are you’re going to get a better deal shopping on your own.

  • Reply Danny C. February 27, 2015 at 3:30 pm

    The “amount you need” formula should be adjusted for Social Security Survivor benefits, which are pretty generous. The last time I checked, my wife would be eligible for over $50,000 annually until our children turn 18 and then gradually diminishes to $22,000 per year. That’s about the same as having $1.25 million in the bank and living off of the 4% while kids are in the house.

    • Reply Johnny March 2, 2015 at 9:59 am

      Good point. My understanding is that all SSS benefits for the surviving spouse are halted after children turn 18, so what’s the $22k referring to? Money after she’s 60, I assume? The eligible benefit amount varies wildly, but based on my calculations, Joanna would be looking at a similar benefit.

      I’ll add this to the calculation portion above when I have a chance, but similar to retirement, we’d still prefer to calculate life insurance coverage needs on known numbers that are within our control. I expect Social Security to still be solvent for a while, but you get my drift. And much like retirement, life insurance coverage amounts tend to be underestimated, especially when you factor in things like inflation, taxes, etc. I’d imagine SSS benefits would help cover this gap, as opposed to being an unnecessary excess in funds for the surviving family.

  • Reply Cydney A. March 2, 2015 at 12:49 am

    Great post! The only thing I would add is that you should independently check the life insurance company’s rating. Its not worth having life insurance if the firm may go insolvent. I’d always double check with AM Best or Wards to ensure its a carrier likely to be able to honor their promise if needed.

    • Reply Johnny March 2, 2015 at 10:02 am

      I really like AccuQuote’s set up for this reason — all of the company ratings were listed inline with the quote. Nothing hidden or additional research required, unless of course you want to double check, like you mentioned. If done with a broker or other website though, this should be the first step after getting quotes.

  • Reply Terri March 2, 2015 at 3:24 pm

    Thank you so much for posting this! My husband and I are in our twenties with our first baby and it’s definitely time to look for life insurance. Will be using your link for sure!

    • Reply Johnny March 21, 2015 at 2:44 pm

      So glad to hear it, Terri! The peace of mind is worth every penny.

  • Reply The Roamer March 3, 2015 at 12:43 am

    Can you elaborate. Why isn’t it good to make your beneficiary your children….

    I would appreciate more detail

    In my limited thought process if they are 18 then I would be less likely to leave them the money because then they are adults. If they are small that’s when they need the financial back up .

    • Reply Johnny March 21, 2015 at 3:08 pm

      Basically, law requires that a minor has a guardian who watches over and administer proceeds. Here’s a nice article that dives into it deeper than I could: http://www.newyorklife.com/learn-and-plan/should-I-name-minors-as-policy-beneficiaries.

      But you’re absolutely right about wanting to make sure they are taken care of financially while their young. The distinction, though, is that someone else (a guardian) will be the one who will be charged with making sure that happens. Which makes choosing who the guardian might be an even more important task.

  • Reply Kristina March 3, 2015 at 10:20 am

    *timidly raises hand*
    What if you do not have any dependent(s) and you don’t have any family to name as beneficiaries, per se??
    Is this even necessary for me?

    • Reply Abigail @ipickuppennies March 3, 2015 at 5:25 pm

      I’d say no. Until you have someone you want to protect financially, there’s no point.

    • Reply Melanie March 17, 2015 at 12:58 pm

      I agree with Abigail. The consensus from Dave Ramsey and other financial experts is if no one else is depending on your income to live, you do not need life insurance. I am a single 30 yr old female and do not plan to get it until I’m married or married and a parent.

    • Reply Johnny March 21, 2015 at 3:24 pm

      Abigail and Melanie have pointed you in the right direction. Unless someone depends on you financially, you should be fine without life insurance. Usually that applies to those without dependents, hence why it’s called a “dependent.”

  • Reply Abigail @ipickuppennies March 3, 2015 at 5:33 pm

    I finally got my act together last year and got some coverage. My husband is on disability, so I need to leave him enough to pay off the mortgage and give himself a little breathing room to figure out how he can support himself.

    That’s because we can only really afford $125,000. I’m bipolar and have a couple of health issues, so my rates are higher. I pay $50 a month.

    The biggest thing I’d stress is get life insurance early. The earlier you get it, the fewer health problems you’re likely to have, meaning you can lock in a low rate for up to 30 years.

    • Reply Johnny March 21, 2015 at 3:28 pm

      I think a lot of people hold off on buying *any* coverage until they can afford what they think they need. Any coverage is better than no coverage, so good on you for doing whatever you can now. And should your budget allow in the future, you can always purchase additional coverage.

  • Reply Chanel | Cultural Xplorer December 31, 2015 at 2:49 pm

    Thank you so much for this post – just purchased life insurance using Accuquote!

  • Reply Saving To Provide For Survivor Needs 17 Mortgage Life Insurance - life-insurance-quote-online March 21, 2016 at 4:14 am

    […] A Millennial’s Guide To Life Insurance | Our Freaking … – Reply Leigh February 27, 2015 at 11:07 am. Another thing to note is that a lot of employers offer life insurance as a benefit. For example, my current and previous … […]

  • Reply Kristi May 9, 2016 at 9:04 pm

    Just a heads up, I requested quotes from accuquote and they called me 19+ times in 5 days. So prepare to have your phone and email blown up! I am going through a local insurance agent that works with multiple companies instead.

  • Leave a Reply