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.
Our top picks for cheap life insurance
- Northwestern Mutual
- State Farm
- Mutual of Omaha
- Principal Financial
- Liberty Mutual
|J.D. Power Overall Customer Satisfaction Rating||AM Best Rating||Better Business Bureau Rating|
|Northwestern Mutual||5 out of 5 stars||A++ (Superior)||A+|
|State Farm||5 out of 5 stars||A++ (Superior)||A|
|Mutual of Omaha||4 out of 5 stars||A+ (Superior)||A+|
|Principal Financial||4 out of 5 stars||A||A+|
|Liberty Mutual||4 out of 5 stars||A (Excellent)||A+|
Northwestern Mutual ranked #1 in the 2019 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.
Northwestern’s term life policies allow you to convert them to whole life coverage early in the term. Convert your policy at an early age to enjoy a locked-in premium for the remainder of your life. Converted policies retain their death benefit while accumulating a cash value over time. After the policy matures, you can borrow from your policy’s cash value or use it as collateral for a bank loan. Later, if you decide you don’t need the policy, you can surrender it for a cash payout.
Ranked #2 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 claims that a healthy, 25-year-old woman living in Illinois can purchase a 20-year, $250,000 term life policy for around $175 per year. An Instant Answer term policy is a great way to protect your family when your kids are young, or while you’re working to pay off a home mortgage.
Mutual of Omaha
Ranked #3 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 or greater protection. The provider writes accidental death policies for people 18 to 70 years of age, renewable up to age 80. Mutual of Omaha’s accidental death policies cover work-related and non-work-related accidents, providing coverage up to $1 million. Accidental death coverage also pays $300,000 if the insured dies while driving or riding as a passenger in a private vehicle and up to $1 million if killed when riding as a paid passenger in an aircraft, boat or bus.
Ranked fourth 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.
Principal’s Irrevocable Life Insurance Trust plans help your survivors avoid paying estate taxes and shelter your assets from creditors. Delaware tax laws govern all Principal ILITs, regardless of where you live, and provide estate planning that ensures equitable distribution of your estate. Principal also offers private split dollar arrangements, which help you maximize gift tax exclusions and charitable trusts to establish an income stream for your survivors.
Ranking fifth in the Power’s study, Liberty Mutual offers whole life insurance and level premium convertible term life policies. Qualified applicants can also purchase temporary coverage, which offers a streamlined application process and medical exam.
To compliment a Liberty Mutual life insurance policy, you can add critical illness insurance, which covers costly illnesses and medical procedures such as cancer, coronary bypass surgery, organ transplants and strokes. Liberty Mutual’s standard critical illness policies cover copays and deductibles, as well as everyday expenses, like groceries, mortgage payments and utility bills.
Choose term life insurance
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.