Our guide to finding the most affordable policy without skimping on coverage.
Life insurance is an investment that protects your family, but it’s also an expense. It needs to be affordable.
Whether you’re a first-time or repeat buyer on a budget, life insurance is still within your reach. When they’re calculating your rate, underwriters look at a range of factors. Some of them are out of your control, like your age, but there are a few ways you can take action and cut the cost of your premium.
Rankings are based on the rates of 14 life insurance companies provided by Quotacy. Monthly rates are based on a $500,000 policy, though your premium will vary depending on your age, health, coverage amount and other factors.
Jump to your age
18- to 30-year-olds
31- to 40-year-olds
41- to 50-year-olds
51- to 60-year-olds
61- to 70-year-olds
*For smokers, coverage is only available for those aged 65 and below.
Tips to get cheap life insurance
Life insurance is customized to the individual, so no two policies are the same. While some factors are out of your control, like your age, there are a few things you can do to minimize the cost of your life insurance.
To find the most affordable policy, follow these tips.
Go for term life
It’s the simplest and cheapest type of life insurance overall. Term life provides protection for 10, 15, 20 or 30 years — though some insurers offer 5- and 25-year policies. In most cases, the premium stays the same for the life of the policy, so you’ll know exactly what to expect each month.
The best term length for you covers your biggest financial obligation, like a mortgage, car loan, your kids’ college costs or the time between now and your retirement. You should only purchase as much coverage as you need.
The lower the term length, the lower the premiums will be. A 5- or 10-year term are the most budget-friendly options.
Remember, if you find you need more coverage later on, you can ladder your life insurance by purchasing another term life policy.
Get quotes from a bunch of providers
Like all major purchases, it pays to shop around for life insurance. Insurers calculate risk in their own way, and they weigh factors like your health, driving record and occupation differently. For example, some insurers pull up your five-year driving record; others only care about the last three years. Some insurers might penalize you for having a family history of heart disease, cancer and diabetes, while others only emphasize heart conditions.
To save money, it makes sense to compare providers. When you’re researching, look at insurance companies that offer low premiums without skimping on coverage. Then, compare the price points. Even if the cheapest premiums differ by a few dollars a month, that adds up.
Check each company’s financial ratings
Even when it’s cheap, life insurance is still an investment, so you want to make sure your insurer has the cash reserves to pay out claims when you die. To find out how financially stable each provider is, check its A.M. Best, Moody’s and Comdex ratings. These agencies assess the financial strength of insurance companies and provide a rating based on their research. Ideally, your provider should score an A (Excellent) or A+ (Superior).
Generally speaking, the younger and healthier you are, the cheaper your rate will likely be. So if you’ve determined a need for life insurance, lock down a low premium by purchasing a policy as soon as possible.
The reason for this is simple. When they’re crunching the numbers, life insurance underwriters look at your life expectancy based on your profile right now. As we age, our health deteriorates and our likelihood of dying increases. So applying early, before those health problems set in, means you’ll be able to access a better rate.
Bundle your insurance coverage
Do you need other kinds of coverage? You may be able to cut the cost of your premium by bundling your life insurance with your auto, home or umbrella insurance. When you’re comparing providers, ask about whether you can earn a discount by combining your policies.
Tread carefully with this strategy, though. It works best if you’re purchasing or reviewing all of your insurance at the same time. That way, you’ll have leverage with companies who are competing for your business. If you make the switch from a different provider, that’s a win for them.
Get a medical exam policy
Sure, it’s time-consuming, but it’s worth applying for a policy that requires a medical exam. No-exam policies like guaranteed issue and simplified issue are convenient if you need coverage fast, but they often cost three to six times more than underwritten policies.
There’s a logical reason for this. Since insurance companies can’t get a complete idea of your health and medical history, you’re riskier to insure. To compensate for that risk, insurers err on the side of caution and charge a higher premium.
Unless you need coverage ASAP, like to fulfill a court order, or you have a major health issue that will prevent you from qualifying for life insurance, do the medical exam. It’s not that bad: A medical professional comes to your home or place of work and asks questions about your health and family medical history, records your height and weight and takes a blood or urine sample. It takes three to eight weeks for your insurer to assess the results and offer you a rate.
It pays to kick the habit. Remember, life insurance is a game of risk, and from a provider’s perspective, a smoker is far riskier to insure than a nonsmoker.
Smokers have a lower life expectancy, and smoking has been proven to increase the chance of developing other health conditions, like lung cancer.
Most insurance companies classify you as a non-tobacco user if you haven’t smoked in the last one to five years. Once you’re deemed a nonsmoker, you may be eligible for preferred rates.
If you’re not interested in giving up smoking, your best bet is to apply with companies that are known to be lenient with tobacco users.
Work through your health issues
On the same note, do anything you can to improve your health. Along with your weight, underwriters assess all aspects of your well-being. If you’re overweight or have high blood pressure or cholesterol levels, you’re likely to be penalized with a higher rate.
The goal is to make sure your insurer has the most positive version of your health profile. To achieve this, it’s a good idea to see your doctor before applying for life insurance. That way, it gives you a chance to take care of any underlying health issues. It also ensures that your insurance company gets your latest medical records and no surprises pop up in the medical exam. If you can prove that you’ve made progress between your last doctor’s visit and your medical exam, that will work in your favor.
Don’t lie, though. It’s important to be completely honest when answering questions on your life insurance application. If your provider finds out that you submitted false information, it has every right to cancel your coverage and you’ll have to forfeit all the premiums paid.
Say no to riders
For the cheapest rate, have a needs-only approach to life insurance. In other words, stick with the basic coverage and don’t dress up your policy with riders unless you really need them.
Riders are optional extras that can be added to your policy for a fee. For example, you can opt into accelerated death benefits, spousal coverage or long-term care riders. While riders add more layers of protection, they also increase premiums — sometimes drastically.
The exception is the income protection rider. This stretches out the death benefit payout over a longer period, like 10 or 20 years. Since your provider won’t have to fork over a huge lump sum of money as soon as you die, this may lower your premium.
Pay your premiums annually
When you buy life insurance, you have the option to pay your premiums monthly, quarterly, semiannually or annually. If you can pay up front, many insurers will reward that with a discount of up to 10%.
As you’re comparing providers, ask about their discount programs. You may find you’re privy to other discounts, too.
Look into an annuity payout
Did you know you can choose how your beneficiaries receive the death benefit?
Typically, if you die while your policy’s still in force, your loved ones will get a tax-free lump sum of money. However, to reduce your premium while you’re alive, you can opt for an annuity payout. This means that your beneficiaries will receive the cash over a number of years.
This option isn’t offered by all insurers. It can be complicated, so be sure to read the fine print — if your annuity includes interest, this may impact taxes later on down the line.
Buy more coverage
It sounds counterproductive, but it may suit your situation. Life insurance is priced at a cost per thousand. The rates per thousand decrease once you reach the $100,000 mark. Think of it as buying in bulk.
For example, purchasing one $200,000 policy is cheaper than buying two $100,000 policies.
If you’re tossing up between two similar coverage amounts, you may be able to save money by buying more coverage.
Clean up your driving record
Good drivers are usually eligible for the best rates. Depending on the provider, to be classified as a safe driver, your driving record must be free of DUIs, accidents and major traffic violations in the past three to five years.
To get cheap life insurance, pay any outstanding parking tickets and avoid speeding and reckless driving. Bonus: This will look good on your auto insurance application, too.
Is term or whole life insurance cheaper?
Term is almost always cheaper. The reason isn’t subtle: Term offers protection for a set time, so there’s a good chance you’ll still be alive when your policy expires. That means there’s less chance of your insurer having to cough up money.
This is similar to an auto insurance policy: If you don’t get into an accident, the insurer gets to keep the cash.
On the other hand, whole life is a type of permanent policy. It lasts a lifetime. Everyone dies, so your insurer knows it’s going to have to pay our your death benefit at some point.
Whole life also has an investment component, where a portion of your premium is invested in the market to increase your policy’s cash value. Once you’ve accumulated enough cash value, you can borrow against your policy and pay interest to your provider. These factors increase the overall cost of whole life, too.
Term life is ideal for those with short-term financial obligations, such as existing debt or young kids who aren’t in the workforce yet.
It’s also a good option for those on a tight budget. If you have financial dependents, you’ll likely want life insurance — and if term life is all you can afford right now, it’s better than nothing. Most term policies come with a conversion feature, which allows you to upgrade to a permanent policy at a later date.
Why is life insurance more expensive for males and smokers?Why is life insurance more expensive for males and smokers?
It comes down to life expectancy. Males and smokers have a higher risk of dying than their female and nonsmoking counterparts. In turn, insurers have to assume more risk — so they protect themselves, and their bottom line, by charging a higher premium.
Let’s look at the average life expectancy in the US. A man who reaches age 65 can expect to live until age 84.3, while a woman is likely to live until 86.6. Of course, these are averages; about a quarter of 65-year-olds will live past age 90.
As for smoking, it’s proven to increase the occurrence of other health conditions, like cancer. It’s also linked to poor habits, such as an unhealthy diet or sedentary lifestyle — all factors that can affect your life expectancy.
Ideally, your life insurance policy should be affordable and offer the coverage you need. If you’re on a budget, there are a few ways to cut down the cost of life insurance, like choosing term life over permanent policies, buying sooner rather than later and steering clear of riders that hike up the price.
When you’re hunting for cheap life insurance, compare providers and their discount programs to make sure you’re getting the most value for your money.