Purchasing a life insurance policy is one of the smartest ways to protect your loved ones. “Having the right life insurance protects the finances of those you love–such as a partner, spouse, children or parents after you’re gone,” says insurance expert Laura Adams. The policy you buy today may ensure that your surviving spouse can pay off your home’s mortgage and your kids can realize their dream of a college education. “You can also use a life policy as a financial planning tool to pay the liabilities of your estate, such as taxes and legal fees,” says Adams.
Insurers offer many types of life insurance, from something to cover you for a few years to something to cover you for your whole life. Life insurance costs vary widely, based on when you purchase a policy, the type of coverage you choose and the amount of coverage you need. With so many life insurance companies in the market, finding the best cheap life insurance may seem challenging, but don’t worry, because we’ve done some of the legwork for you.
The best cheap life insurance companies
|J.D. Power Overall Customer Satisfaction Rating||AM Best Rating|
|Northwestern Mutual||790 / 1,000 points||A++ (Superior)|
|State Farm||838 / 1,000 points||A++ (Superior)|
|Mutual of Omaha||789 / 1,000 points||A+ (Superior)|
|Principal Financial||772 / 1,000 points||A|
|Liberty Mutual||N/A||A (Excellent)|
Northwestern Mutual ranked #4 in the 2020 J.D. Power U.S. Life Insurance Study. Northwestern offers affordable life insurance, including term life, universal life and whole life policies, as well as annuities and long-term care insurance. The provider advertises $1-per-day term life insurance, claiming a healthy, 35-year-old man can purchase a $500,000 term life policy for as low as $306 per year.
Though you’re required to take a medical exam for life insurance with Northwestern, you have the option to convert it to whole life coverage early in the term without another exam, with a locked-in premium for the remainder of your life. According to the J.D. Power 2020 U.S. Life Insurance New Business Study, 54% of purchasers completed medical underwriting to get their policy. While you can’t get a quote online through Northwestern Mutual, you can calculate how much you need and whether it’s a permanent or temporary need online.
Ranked #1 in the J.D. Power survey, State Farm sells term life, universal life and whole life policies. State Farm’s term life policies go the extra mile by providing coverage up to age 95, while most of its competitors terminate coverage after you turn 80.
State Farm’s unique Instant Answer term policy provides $50,000 in term life coverage up to age 50. If you qualify for an Instant Answer policy, you won’t have to take a medical exam or physical. State Farm also offers a multi-policy discount on auto if you purchase life, which could offset the cost for life insurance. Consumer Affairs rates State Farm 4 out of 5 stars while its national complaint index with the National Association of Insurance Commissioners is far below the national average at just 0.19.
Mutual of Omaha
Ranked #5 in the J.D. Power study, Mutual of Omaha has provided quality insurance products since 1909. The carrier offers whole life and universal life policies, as well as term life coverage starting at $100,000. Mutual of Omaha extends term life coverage to policyholders 18 to 80 years of age, offering terms ranging from 10 to 30 years.
You can couple a Mutual of Omaha life insurance policy with accidental death coverage, which allows your beneficiary to be paid twice if you die due to an accident. Quotes can be calculated online but you will have to speak with a representative to complete your application. While Mutual of Omaha does have 4 out of 5 stars with Consumer Affairs, the life insurance company’s NAIC complaint index is a bit above average at 1.19.
Ranked ninth in the Power’s survey, Principal Financial offers permanent and term life insurance, with terms ranging from one to 30 years. Principal’s permanent life portfolio includes universal life, variable life and survivorship insurance, which covers two people in a single policy, with the death benefit payable after the second insured dies.
With over 140 years of life insurance experience and superior financial strength, Principal Financial offers plenty of options for life insurance and retirement planning. Principal has an extremely low complaint index of 0.05 with the NAIC, showing optimal performance compared to other life insurance providers. You can get a quote online or through the mobile app, but to proceed with the application, you’ll have to speak with a Principal Financial insurance professional.
Liberty Mutual did not make the J.D. Power ranking for 2020 and offers whole life insurance and level premium convertible term life policies, including simplified issue term and whole life without a medical exam. A very healthy 35-year-old female in Iowa is quoted online for rates as low as $29.25 per month for $500,000 in coverage on a 20-year term life insurance policy.
Quotes are forwarded to Liberty Mutual agents to complete the application process. Liberty Mutual offers a wide choice of riders and add-on benefits to tailor your life insurance policy for your family’s needs. However, Liberty Mutual does have a higher-than-average complaint index of 2.14, suggesting it might not be the best fit for everyone.
Reasons to choose a term life insurance policy
Term life insurance provides the most economical coverage. Term life policies usually feature terms ranging from 10 to 30 years and most terminate coverage when you turn 80. Term policies provide a death benefit, but most don’t pay back any of your investment if you outlive the term. However, many term life policies allow you to renew your coverage at the end of the term, typically at a higher rate, and some enable you to convert your coverage to a permanent, whole life policy, which offers a death benefit while building a cash value.
Level-premium term life policies feature a fixed premium rate throughout the term. For the best rate, purchase a term life policy while you’re relatively young and healthy. Typically, a person in their 30s can purchase term life insurance for a few hundred dollars a year, compared to several thousand dollars per year for whole life insurance.
“What surprises most people is how affordable a term life insurance policy can be. The premium depends on your health and age, which means the cost can only go up as you get older. So it’s wise to shop and compare life insurance quotes sooner rather than later,” says Adams.
Some insurers offer accelerated death benefit riders for term life policies, which enable the insured to use a portion of the death benefit to pay for medical bills or long-term care associated with a terminal illness. Some providers also offer an optional return of premium rider, which pays back a percentage of premiums if you outlive your policy’s term.
Term life policies provide excellent protection for growing families. Many homeowners purchase term life policies to cover the length of their mortgage term, ensuring that their loved ones can remain in their home, even if they die suddenly. Parents often buy term life policies to protect their children’s college funds or to provide a financial cushion for a surviving spouse.
How to get cheaper life insurance
If you’re not satisfied with your life insurance rate, you can take action to reduce it:
- Shop the market. Life insurance providers base rates on many factors, including your health history, your occupation and even your leisure activities. However, underwriting guidelines vary among insurers, so shopping around can help you find the cheapest life insurance for your unique qualifying factors.
- Purchase a policy while you’re young. The longer you wait to buy life insurance, the more you’ll pay in premiums.
- Take control of your health. If you have a preexisting condition, follow doctor’s orders to control the condition or eliminate it.
- Watch your weight. All insurance carriers consider your body mass index when determining your premium. By maintaining a healthy weight for your height, you can enjoy a lower life insurance rate.
- Don’t smoke or use other nicotine products. If you smoke, quit now. Your insurer might not immediately offer you a rate reduction after quitting, but you can likely get a more favorable premium after a few years.
- Avoid dangerous activities. Folks who enjoy hazardous pastimes, like skydiving or rock climbing, usually pay higher life insurance premiums.
- Reevaluate your coverage level. Once you’ve paid off your mortgage and your kids have flown the coop, you may not need as much life insurance coverage.
- Inquire about discounts. Most insurers offer numerous discounts for paying annually, setting up automatic payments and opting for electronic billing. Oftentimes, you can get a great discount when you bundle two or more types of policies, like life insurance, homeowners insurance and car insurance.
- Evaluate employment benefits. Life insurance provided through employer benefit programs sometimes offer lower rates, because they benefit from group pricing.
Frequently asked questions
How do I get affordable life insurance?
Start by shopping around for the best rate. It’s best to purchase life insurance while you’re still young and healthy, because insurers base premiums on your life expectancy. Also, maintain a healthy weight, take control of preexisting health issues and avoid using tobacco and nicotine products.
What is the average life insurance cost per month?
The cost of life insurance depends on many factors, including your age and gender. On average, 30-year-old men pay around $23 per month for a $500,000, 30-year term life policy, while women pay about $20 for the same coverage. The cost increases with age, with 50-year-old men paying about $80 per month for a $500,000, 30-year term life policy and women paying around $62.
If I outlive the term of my term life policy, will the insurance company refund part of my premiums?
Most term life policies don’t refund any of your payments at the end of the term. Some insurers offer return of premium riders, which pay back a portion of your payments if you outlive the term of your policy. Typically, you also have the option to renew your policy at the end of the term, but at a higher rate, based on your age.
Do any life insurance policies provide an investment vehicle?
Permanent life insurance policies such as whole life, universal life and variable life insurance policies build a cash value over time. Some permanent life policies allow you to adjust premiums, choose investments and change your coverage level.