Purchasing a life insurance policy is one of the best ways to financially protect your loved ones. But unlike home or auto insurance, the cost of life insurance does not vary significantly. Life insurance premiums are mostly based on the type of policy you need, as well as the coverage limit, your age, gender and your overall health.
However, life insurance can be expensive, so Bankrate did some research to find the cheapest life insurance companies. To identify the cheapest carriers, Bankrate looked at the top life insurance companies by market share and evaluated each one based on factors like no-medical exam policy options, customer service and more.
The best cheap life insurance companies
|J.D. Power Overall Customer Satisfaction Rating||AM Best Rating|
|Northwestern Mutual||807 / 1,000 points||A++ (Superior)|
|State Farm||822 / 1,000 points||A++ (Superior)|
|Mutual of Omaha||795 / 1,000 points||A+ (Superior)|
|Liberty Mutual||N/A||A (Excellent)|
Northwestern Mutual ranked third in the J.D. Power’s 2021 U.S. Individual Life Insurance Study. The company offers a variety of different life insurance policies, 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.
Although you’re required to take a medical exam to get life insurance from Northwestern Mutual, you have the option to convert it to whole life coverage early in the term without another exam, which has a locked-in premium for the remainder of your life. While you can’t get a quote online through Northwestern Mutual, you can calculate how much coverage you need.
State Farm was rated the number one life insurance provider for overall customer satisfaction in J.D. Power’s study. The company sells basic life insurance policies, including term life, universal life and whole life insurance. State Farm’s term life policies go the extra mile by providing coverage up to age 95, while most 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, or a maximum of 10 years. If you qualify for an Instant Answer policy, you won’t have to take a medical exam. State Farm also offers a multi-policy discount on auto insurance if you purchase life, which could help you save money. In terms of customer reviews, State Farm has fewer than average complaints about individual life insurance as rated by the National Association of Insurance Commissioners (NAIC).
Mutual of Omaha
Ranked fifth in J.D. Power’s U.S. Life Insurance Study, Mutual of Omaha has provided quality insurance products since 1909. The carrier offers whole life and universal life policies, and its term life coverage limits start at $100,000. Mutual of Omaha sells term life coverage to customers between 18 and 80 years old and offers 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 get two payouts if your death is ruled an accident. You can get a quote online, but you will have to speak with a representative to complete your application and purchase a policy.
Liberty Mutual was not ranked in J.D. Power’s 2021 U.S. Life Insurance Study, but it’s a strong provider nonetheless. Liberty Mutual offers whole life insurance and term life policies, including simplified issue term and whole life policies without a medical exam.
You can get a life insurance quote from Liberty Mutual online, but you’ll need to work with an agent to complete the purchase 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 2.20, suggesting it might not be the best fit for customers looking for top-rated customer service.
Reasons to choose a term life insurance policy
Term life insurance is a good option for people looking for an affordable premium. 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. Term life policies usually cover 10 to 30 years, up to age 80. This policy has level premiums over the policy’s life and a guaranteed death benefit as long as premiums are paid.
While term life insurance is a good option for many young, healthy individuals or families, there are downsides to this type of life insurance. When your term life policy expires, you typically lose coverage unless your policy is convertible. Additionally, you do not get cash value with term life insurance.
How to get cheaper life insurance
Life insurance rates are different for every individual. However, life insurance premiums do not vary like auto and home insurance. If you’re hoping to get the cheapest life insurance rate possible, there are some things you can do. Here are some suggestions:
- 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 the doctor’s orders to control the condition or eliminate it.
- Don’t smoke or use other nicotine products. If you smoke, consider quitting 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.
- Evaluate employment benefits. Life insurance provided through employer benefit programs sometimes offers lower rates because they benefit from group pricing. Keep in mind, these policies will typically end if you leave your employer or retire.
Frequently Asked Questions
How do I get affordable life insurance?
Life insurance rates do not vary too much between providers, unlike property and casualty insurance policies. The cost of life insurance is mostly based on your age, gender, overall health, the type of policy you get and the coverage limit. If you are looking for affordable coverage, it’s a good idea to buy a policy when you are young and healthy, which will help you lock in a low rate for the future. You can also manage pre-existing health conditions and avoid using tobacco and nicotine products to possibly avoid a rate increase.
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 your policy term. 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 cash value over time. Some permanent life policies allow you to adjust premiums, choose investments and change your coverage level.
Can I switch life insurance providers to save money?
If you shop around and find that a different life insurance company will offer you a lower premium, you are allowed to cancel your current policy and switch providers. If you have term life insurance, you can simply stop paying the premiums, and your coverage will end. However, if you have a whole life policy, you have to formally cancel by contacting your insurance provider. Plus, most carriers charge a cancellation fee for whole life insurance, which means switching carriers may not be worth it.