Comparing life insurance quotes

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Life insurance premiums typically increase as you age, so if you’re thinking about applying for coverage, you may want to get started soon. Getting life insurance quotes can be a great way to find out how much you’d pay for your policy. Just keep in mind that premiums typically don’t vary much among companies. Rather, life insurance companies generate your premium by analyzing your age, gender, state of health, risk factors and level of coverage.

To find the right life insurance policy for your needs and wallet, your individual preferences should be top of mind. Before buying a policy, you may want to research the specifics of each type of life insurance and how they stack up against each other in terms of price.

What is life insurance?

In a nutshell, life insurance is simply a legal contract between you and a life insurance company. The contract says that you will pay a certain amount of money (known as “premiums”) on a periodic basis, such as monthly or annually, and the insurance company will pay your beneficiaries a specified sum of money when you die. This payment is known as the death benefit of the policy.

How much does life insurance cost?

The cost of a life insurance policy will depend upon several different factors, such as your age, gender, health, use of tobacco products, tendency to engage in dangerous activities (such as skydiving) and the amount of coverage that you need.

Those with serious health conditions can expect to pay more for their life insurance, as can men. The reason for this is that life insurance companies, during the underwriting process, try to determine your life expectancy so that they know how much time they have before having to pay out your death benefit. The longer an insurer can expect to wait, the less risk they consider you to be.

Additionally, those searching for whole life insurance will typically pay a higher premium than those searching for term life insurance. This is because with whole life, you are guaranteed a payout, while with term life it’s entirely possible that you will outlive your term and the company won’t have to pay a death benefit at all.

Types of life insurance

There are several types of life insurance. Each type generally has a specific use, and the right type for you will depend upon your situation and what you are trying to accomplish financially.

Term life insurance

This is by far the simplest type of life insurance. Term life insurance provides pure death benefit protection and has no cash value buildup. For this reason, it is usually the cheapest form of insurance available. But coverage only lasts through the term that is specified in the policy. Once the term ends, so does the coverage. Term life insurance is often popular with young families that have small children and may be dependent upon a single breadwinner, because a large amount of coverage can usually be bought at a reasonable price (assuming that the insured is in good health).

Whole life insurance

This is a form of permanent life insurance that builds cash value. Whole life is designed to remain in force until the death of the insured and also has a savings component built into it, which is the cash value account. Part of the premiums that you pay into this type of policy are put into this savings account, where it will grow at a guaranteed rate on a tax-deferred basis. You can access this cash value via a policy loan or withdrawal. Whole life is generally the most expensive type of policy you can buy because of its guarantees.

Universal life insurance

This form of permanent life insurance has cash value and flexible premiums, and the death benefit can also be flexible in many cases. Universal life policies pay interest on the cash value that accumulates inside the policy, and the rate of interest that you earn will fluctuate in tandem with prevailing interest rates.

Variable universal life insurance

Variable universal life insurance is generally the riskiest and most complex type of life insurance available. With this type of policy, the money that goes into the cash value of the policy is invested in a portfolio of mutual fund sub-accounts that invest in stocks, bonds, real estate and commodities. It is possible to lose money in this type of policy when the stock and bond markets perform poorly. It is also possible to get a higher rate of return with this type of policy than with any other type of policy.

Indexed universal life insurance

This type of policy also builds cash value like universal life and variable universal life policies do, but there is no market risk involved. Each policy is linked to an underlying financial benchmark index. When the index goes up, the policy earns interest. When the index goes down, the cash value of the policy simply remains at its current level. It cannot decline in value like it can in a variable universal life insurance policy can.

Final expense life insurance

Final expense life insurance is a specific type of permanent life insurance policy that is designed exclusively to pay for funeral and burial expenses. No medical underwriting is required for this type of policy, but coverage can be expensive in many cases.

Mortgage protection life insurance

This type of term coverage is designed solely to pay off your mortgage if you die prematurely. As with final expense insurance, there is no medical underwriting required, so the cost for this type of coverage is generally relatively high.

What type of life insurance policy is right for me?

There are several options to choose from when considering life insurance coverage. Before you begin shopping for life insurance quotes, consider what type of financial need you want the policy to cover. Some needs may be temporary, such as paying outstanding debts like student loans or a mortgage. But some needs could be permanent, like paying for funeral costs.

Using a life insurance needs calculator can help you determine how much coverage is right for you. If you have temporary and permanent needs for life insurance, purchasing a term and permanent life insurance policy may be something to consider.

For example, let’s say to pay off all your debts and replace your income so your family can stay in the home and pay for childcare would total $1 million. However, you only have a permanent need for funeral costs of $30,000. Getting a quote for $1 million in term and $30,000 in permanent life insurance may be a better solution than choosing just one policy. If you have money saved or prepaid for your funeral, term life insurance may be all you need.

What do I need to get a quote?

Now that you know about the main types of life insurance that are available, it is time for you to apply that knowledge to your own situation and finances. You will generally need to figure out how much coverage you need (or want), take an assessment of the state of your health and look at your budget to see how much life insurance you can afford. Here is a list of the information to have at hand when you start shopping for a specific policy:

  • Use of tobacco – If you smoke or use chewing tobacco, then buying life insurance will cost more than it would if you were a nonsmoker. There are life insurance companies out there that will cater to tobacco users, but their policies will typically still be more expensive.
  • Health conditions – If you have any kind of major health condition, it could add to the cost of your policy. If you have cancer, heart disease, lupus, diabetes, lung disease, cirrhosis of the liver or any other major health ailment, then you may have to pay more for your coverage than a healthy person your age.
  • Prescription drugs – Many life insurers will not count a major health condition as a strike if the condition is being controlled with medications. Have a complete list of all of your medications, including over-the-counter drugs, available. The insurance company will most likely need to know dosage amounts, how the medication is taken (i.e. once a day, twice a day, in the morning or evening, etc.) and how long you have been taking it.
  • Your family’s medical history – Many insurers also want to know whether your forebears have lived long and healthy lives or had serious health problems and died at relatively young ages. They may want to know whether your family has a history of substance abuse, tobacco use or other major health ailments that have been passed down through the generations. This information can help them to estimate your own longevity.
  • The maximum amount of premium that you can pay each month (or year) – Your budget may ultimately determine the real amount of life insurance that you can qualify for. Paying premiums once a year can lower this cost slightly, but of course that requires you to save up enough during the year to cover this cost with a single payment.

How to compare life insurance quotes

Assess your needs

Your life insurance needs will depend on your individual 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 health issues? You may want to look into companies that offer no-exam policies. Do you use tobacco and/or nicotine products? You may want to compare premiums from companies that offer life insurance for smokers to find the best price. An insurance agent can help you pin down any specific needs that you might have.

Research multiple life insurance providers

After nailing down your individual needs, you’ll need to find insurance providers that offer the types of policies you want. An insurance agent can help you find these companies, if you’re having trouble finding all the information you need online. Once you have a list of life insurance companies that offer the right policies, you may want to look closely at customer satisfaction scores, claims processing scores and financial strength ratings from third parties such as J.D. Power and AM Best so that you choose the best life insurance company on the market for you.

Organize your information

It might be a good idea to create a spreadsheet that contains the name of the insurance company, the name of the specific policy that you were shown and the key features that the policy contains. Be sure to make enough rows or columns to accommodate all of the different kinds of riders that policies today can offer. One policy may have accelerated benefit riders that allow you to access a portion of the death benefit while you’re still living to pay for medical or long-term care expenses. This could greatly add to the value of the policy.

Compare your choices

Once you have all of this information organized, you can use a side-by-side comparison to see which policies are giving you the best value. An indexed universal life policy with accelerated benefit riders may well be worth the higher cost when compared to a term policy that doesn’t have these riders. Your financial advisor can also look over this information and give you some insight.

How to save money on life insurance quotes

If you are unpleasantly surprised at how much the type of life insurance that you want or need is going to cost you, there are a few things that you might be able to do to drive down the cost. Here is a list of steps you can take to possibly qualify for a lower premium:

  • Quit using tobacco – Although this may be easier said than done, it is one of the best things you can do to lower your insurance costs. You may have to abstain from tobacco for at least a year before your premiums will come down, but your health and insurable risk will likely benefit from the change in habit.
  • Lose weight – If you are overweight or obese, working on weight loss may reduce the cost of your premiums by a noticeable amount. Overweight people tend to have shorter life expectancies, so shedding the excess weight could pay in the long run.
  • Pay annually – Paying your life insurance premiums on an annual basis will usually yield at least a modest discount. Because an annual premium will have a greater total than monthly premiums, it can help to plan for the bill in advance by budgeting and saving.
  • Take your meds – If you have health conditions that require medications, be sure to take them as prescribed so that the life insurance company knows that you are actively doing something about your condition.
  • Consider term life over permanent – Term life insurance typically only costs a fraction of what permanent policies charge. Just remember that this coverage is only temporary. You may also reach a point where you no longer need coverage, which term insurance may provide a good option for as coverage expires at its set timeframe.
  • Consider buying life insurance while young – The older you get, the more life insurance will cost. Term insurance generally becomes prohibitively expensive after you reach age 50. However, a term life policy can often cost very little for those in their 20s who are in good health.

Frequently asked questions

How much life insurance do I need?

The goal of life insurance is to replace your income should you pass away so your family’s financial needs are covered. While everyone’s needs will vary, calculating your income over the number of years you need coverage plus any debts to be covered should give you an idea of how much life insurance you should buy. An insurance agent can help you determine your need and provide several quote options for life insurance coverage.

Is term life or whole life insurance better for me?

If you’re deciding between term and permanent life insurance, consider what you want your life insurance to do for you. Term life insurance is typically much cheaper than permanent life insurance and remains active for a set period of time, usually between five and 30 years. If you die after the period ends, your beneficiaries won’t receive a death benefit. However, you may be able to purchase a conversion rider for your term policy, which allows you to convert it to a permanent policy before it expires.

Term life insurance may be the right choice for those who only want coverage for a specific amount of time, such as when their children are young. Permanent life insurance, on the other hand, remains active until you pass away. In addition, permanent life policies come with a cash value account that acts as a savings or investment account. If you want lifelong coverage and the ability to withdraw or borrow against your cash value account, a permanent policy may be right for you.

What is the best life insurance company?

The best life insurance company depends on your individual needs and preferences. An independent insurance agent may be able to help you identify which companies offer the policy types you want. From there, you may want to research customer satisfaction and financial strength scores, to make sure you’re choosing one of the best life insurance companies available.

Written by
Mark Cussen
Contributing writer
Mark Cussen writes about a range of topics related to insurance.
Edited by
Insurance Editor