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How to compare life insurance quotes

Learn how to compare life insurance quotes to find the best coverage for you.
Updated Jan 29, 2024

Life insurance can seem complicated, but it doesn't need to be. A good life insurance policy protects your family from financial disaster, gives you peace of mind that your loved ones will be cared for if you're not there and can be an integral part of a strategic financial plan. Finding the right life insurance policy may take a little time and research, but it's worth it to have all the facts at hand before you purchase the policy that works best for your needs. Bankrate's insurance editorial team created this guide to help you understand the types of life insurance that are available and how to best compare life insurance quotes to ensure that you are getting the most bang for your buck.

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This advertising widget is powered by HomeInsurance.com, a licensed insurance producer (NPN: 8781838) and a corporate affiliate of Bankrate. HomeInsurance.com LLC services are only available in states where it is licensed and insurance coverage through HomeInsurance.com may not be available in all states. All insurance products are governed by the terms in the applicable insurance policy, and all related decisions (such as approval for coverage, premiums, commissions and fees) and policy obligations are the sole responsibility of the underwriting insurer. The information on this site does not modify any insurance policy terms in any way.

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What is life insurance?

Life insurance is an agreement between you (the insured) and a life insurance company. You pay a life insurance premium in exchange for a coverage amount provided to your beneficiaries by the insurer if you die during the coverage period. Your beneficiary — the person or persons you designate to receive the funds — will receive the face amount of the life insurance policy upon your death (assuming the policy is still active). The face amount, also called a death benefit, is the amount payable to the beneficiary or beneficiaries at the time of your passing. Depending on the type of policy you have, coverage will either be guaranteed for your lifetime or expire at the end of your chosen policy term.

Learn more: Guide to life insurance

Who needs life insurance?

Life insurance can be a useful purchase for many people. If anyone depends on your income, if you want to help ensure your loved ones can pay your end-of-life expenses or if you want to leave a financial gift to a person or organization, life insurance could be a great financial tool.

Life insurance can be especially useful for families with children, for example. You might consider a term policy that lasts until after they have graduated from college so that their education costs can be paid for even if you were to pass away. Or you might need a policy to pay off outstanding debt, such as a mortgage, so your spouse or partner isn't left struggling to cover the payments alone following your death.

Even single people and seniors can benefit from life insurance to allow them to make a substantial gift to a beloved charity or to be sure that their loved ones won't incur debt in paying for funeral costs. Business owners, too, should consider life insurance to allow the business to thrive if they aren't around.

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How to compare life insurance quotes

When it comes to comparing life insurance quotes online, by phone or through an agency or broker, there are a few things to keep in mind. Rates for life insurance are based on factors related to your current medical condition, medical history and lifestyle choices, so you may not see vast differences in premiums between companies until you’re underwritten. To find the ideal insurance company to meet your needs, work with a licensed agent or broker. They can help you pinpoint what your financial goals are and help determine which insurer and type of life insurance is best suited for you.

  1. Assess your needs: Your life insurance needs depend on your circumstances. Do you only want coverage until your children graduate from college? If so, a term life insurance policy might be right for you. Are you dealing with serious or long-term health concerns? You may want to look into companies that offer no-medical-exam policies. Do you use tobacco or nicotine products? You may want to compare rates from companies that offer life insurance for smokers to find a more affordable price.
  2. Research multiple life insurance providers: After determining your specific financial and coverage needs, you’ll need to find life insurance companies that offer the policies you want. Once you have a list of life insurance companies that offer the policy type you need, you may want to compare each provider based on customer satisfaction and financial strength ratings from third-party agencies, such as J.D. Power and AM Best.
  3. Gather your information: To get the most accurate quote possible, you'll want to collect your personal and health information. This includes your date of birth, height and weight, information about medications you take, health conditions you live with and information about your family’s medical history.
  4. Contact your preferred companies: Answer any questions they have in order to receive your quote. Some companies offer online quotes, others require you to contact an agent to receive a quote.
  5. Compare life insurance choices: Once you have all of this information organized, you can conduct a side-by-side life insurance comparison to see which policies give you the best value. A life insurance quote will tell you the type of policy it is, the amount of the death benefit or other coverage limits, as well as any riders that can be added to the policy.
  6. Apply for a policy: Once you've chosen a company and know what type of insurance you want, apply through a licensed agent or online. You may need to submit to a medical exam, depending on the policy, and you will need to choose a beneficiary. Also, most life insurance specialists recommend selecting a backup beneficiary in case your original selection dies before you, as well as setting up a trust or custodial account if you need to leave money to your minor children.

If you’re unsure how to apply for life insurance or what exact steps you need to follow, it’s best to ask your agent or life insurance company for clarification, since the process can vary between companies and policy types.

Learn more: How to buy life insurance

Types of life insurance policies

While there are multiple types of life insurance policies, they all fall under two broad categories: term life and permanent life. The kind of policy that you choose will be based on your financial situation and your goals. Because not all insurers offer each policy type, it’s helpful to understand what each policy has to offer before obtaining a quote.

Term life insurance policies

Term life insurance provides coverage in the form of a death benefit and has no cash value buildup. For this reason, it is usually the cheapest form of life insurance available. But coverage only lasts for the term that is specified in the policy; once the term ends, the coverage expires, unless you have purchased a policy that has the option to renew or convert to a permanent life insurance policy. Term life insurance quotes may be popular with younger families with small children who may depend upon a single or primary financial contributor. It’s also usually a good choice if you only want coverage for a shorter amount of time, for example, as you pay off a mortgage.

Learn more: Best term life insurance companies

Permanent life insurance policies

Unlike term life insurance policies that are in force for a specifc amount of time, permanent life insurance policies remain active for the duration of the policyholder’s life (as long as premiums are paid). Another element unique to permanent life policies is that they accumulate cash value. This accumulated value can be used in various ways, such as borrowing against it as a loan, withdrawing a portion of it for immediate needs or using it to pay policy premiums. Keep in mind that if you borrow or withdraw against your cash value and do not replace it, your death benefit will be reduced. There are several different types of permanent policies to choose from, but, generally, permanent policies are much more expensive than term life policies.

Whole life insurance policies

A whole life insurance policy is the most basic type of permanent life insurance. Whole life insurance policies remain in force until the death of the insured. When you pay premiums, a portion of it is put into a cash value account, which will grow at a guaranteed rate on a tax-deferred basis. You can access this cash value via a policy loan, but accessing the funds can affect the death benefit amount your beneficiaries receive in the future.

Learn more: Best whole life insurance companies

Universal life insurance policies

Universal life insurance is a form of permanent life insurance with cash value and flexible premiums. The death benefit may also be flexible, which allows you to adjust your coverage as your needs change. Universal life policies accumulate interest on the cash value of the policy, and the rate of that interest will fluctuate in tandem with current interest rates. In addition to policy loans, many universal policies also provide policy owners the option to withdraw from the cash value account. This will reduce the death benefit, but, unlike a policy loan, it doesn’t accumulate interest you need to pay back.

Learn more: Best universal life insurance companies

Variable life insurance policies

Variable life insurance is a type of policy where the cash value is kept in a separate portfolio that gets invested in stocks, bonds, real estate and commodities. Because of this, your cash value amount can increase or decrease daily based on the market’s performance. It also provides no guarantees of either interest rate or minimum cash value. Variable life insurance was the first policy designed to shift the investment risk to policy owners. Because these policies have the greatest risk, you will have to work with a financial advisor who is licensed to sell variable life insurance, as it’s legally required for agents who sell variable insurance to be securities licensed.

Final expense life insurance policies

Final expense life insurance is a specific type of permanent life insurance policy that is designed to pay for end-of-life expenses like funeral and burial costs. Many of these policies do not require medical underwriting, but coverage limits are relatively low and the premiums may be comparatively higher than other types of coverage.

What type of life insurance policy is right for you?

You should consider what type of financial need you want the policy to cover before shopping for the best life insurance policy. Some needs may be temporary, such as paying outstanding debts like student loans or a mortgage. But some needs could be longer-term, like business succession planning, growing wealth or paying for funeral costs.

If you have both temporary and permanent needs for life insurance, you might consider purchasing a term policy that has the option to convert to a permanent policy later. Alternatively, you may prefer to purchase both a term policy and a permanent policy with different coverage amounts.

For example, let’s say you need $300,000 in coverage to help your spouse pay off your mortgage if you pass away. However, you still want coverage for your funeral costs even after the mortgage is paid. Getting a quote for a $300,000 term policy to cover your mortgage commitment and a smaller amount in permanent life insurance for your end-of-life expenses may be better than choosing just one policy. If you have money saved or prepaid for your funeral, term life insurance may be all you need. Discuss your situation with a financial planner or licensed life insurance agent to learn what approach may be best for you.

What lifestyle factors affect my life insurance quotes?

Life insurance quotes take multiple aspects of your life into account to determine your rate. For example, age is one of the biggest life insurance rating factors and may also limit you on the type of coverage you can buy. Life insurance for seniors is generally more expensive since it’s more likely that an older insured will pass away early in the policy period. In addition to age, there are other lifestyle factors that affect your life insurance policy quotes and rates:

How much life insurance do I need?

How much life insurance you need will vary based on several circumstances, such as:

  • Age
  • Age of spouse and/or children
  • Likely future financial needs of spouse and/or children
  • Current amount of debt including mortgage and car loans
  • Burial and funeral expenses

One way to decide how much coverage to buy is to use a life insurance calculator. If you're still unsure how much coverage to buy, work closely with your licensed life insurance agent and financial advisor for guidance.

How to save on your life insurance premium

Life insurance can be an important part of your overall financial plan, but it can be expensive depending on your rating factors, the coverage limit you need, the policy type you choose and the riders you add. And, unlike auto and home insurance, life insurance does not offer discounts to help offset the cost. Here is a list of steps you can take to possibly earn a lower premium:

Frequently asked questions

Written by
Mary Van Keuren
Contributor, Insurance

Mary Van Keuren has written for insurance domains such as Bankrate, Coverage.com, and The Simple Dollar for the past five years, specializing in home and auto insurance. She has also written extensively for consumer websites including Reviews.com and Slumber Yard. Prior to that, she worked as a writer in academia for several decades.

Edited by Editor II, Insurance