You can get cheap life insurance by taking the right steps when shopping and applying for a policy. Here are tips on how to get the lowest possible life insurance quotes.
Buy a term life insurance policy
You have two main options when buying life insurance: term life insurance and permanent life insurance. A term life policy provides coverage for a certain period, such as 10, 20 or 30 years. Two companies—Banner Life and Protective Life—offer 40-year term life policies. A permanent policy, on the other hand, can provide lifelong coverage.
If price is what matters to you most, a term life insurance policy is the cheapest option.
People often think term life insurance costs more than is actually the case. A 2020 Insurance Barometer Study by LIMRA and Life Happens, both industry-funded groups, found more than half of respondents estimated that a $250,000 term life policy for a healthy 30-year-old woman would cost $500 or more a year. The actual cost is about $160 a year—just $13 a month.
A term life policy can provide cheap life insurance for a period when you need it most, such as the length of your mortgage or until your kids graduate from college. Plus, most term life policies offer the option to convert to a permanent life policy. It’s a way to switch to lifelong coverage down the road, especially if you develop health conditions that would make it difficult to buy a new life insurance policy.
Buy life insurance sooner rather than later
Your age and health are two key factors that insurers consider when determining the rate you’ll pay for life insurance. The younger and healthier you are, the less you’ll pay for coverage. If you want cheap life insurance, buy it sooner rather than later. You will lock in the cheap life insurance rate for the term length of your policy.
Too often people think they have time to make more room in their budget or get in better health before buying a policy. The life insurance quotes you get will only go up each year you wait to apply.
For example, a Lincoln National Life 20-year term policy with $500,000 coverage would cost about $16 a month for a 30-year-old woman in excellent health. The cost of that same policy for a 40-year-old woman in excellent health would be $24 a month and $54 at age 50.
Plus, you risk developing health issues as you age.
Create a ladder of life insurance policies to get more coverage for less
One of the factors that influence how much you pay for life insurance is the amount of coverage you buy. You don’t want to skimp on coverage to save money. You need enough life insurance to protect those who depend on you for financial support.
Once you know how much life insurance you need, you can potentially keep down the cost of coverage by using a strategy called laddering.
To build a life insurance ladder, you buy a few smaller policies that expire at different times, rather than one large policy to cover you for a few decades.
It can allow you to have more coverage initially—perhaps when your children are young or you owe more on a mortgage—then taper off with time as your life insurance needs decrease.
For example, rather than buying a 30-year term policy with a $600,000 benefit, you could buy 10-year, 20-year and 30-year term policies with $200,000 worth of coverage each. During the first 10 years, you’d have combined coverage worth $600,000. The amount of coverage you have will decline as your term policies expire, but the amount you pay will also drop over time.
Avoid unnecessary riders
When you buy a life insurance policy, you typically have the option to get additional features called riders. You can add life insurance riders that allow you to waive premium payments if you become disabled, add coverage for your minor children, and the list goes on.
Although the extra coverage might be appealing, you can get cheaper life insurance by avoiding riders you don’t necessarily need.
Avoid simplified issue life insurance
Traditionally, if you wanted a life insurance policy, you had to get a medical exam. However, it is possible to skip the medical exam with certain types of life insurance policies. One is called simplified issue life insurance. This type of no-exam life insurance might seem ideal because it usually requires only filling out an online application with a handful of questions about your health and lifestyle and getting approved (or denied) for coverage within minutes.
But if you’re relatively healthy, a simplified issue policy can cost twice as much as a policy that requires more thorough underwriting—the process insurers use to gather information about applicants. Simplified issue policies cost more because insurers take on more risk when they have limited information about applicants.
If you’re in good health, fast life insurance options are competitively priced, thanks to technology that quickly assesses your personal information. Companies such as Bestow, Ethos, Fabric, Haven Life and Ladder offer accelerated underwriting term life policies.
Still, some policies require a life insurance medical exam in order to provide the cheapest life insurance quotes.
Shop around for life insurance
It’s easy to get life insurance quotes, and quotes are free. Don’t settle for the first quote you get. For starters, life insurance quotes you see online are often for the lowest available rate. Only a small percentage of applicants actually meet the criteria to qualify for the best quotes. Many people discover that their final quote is higher after the application process.
It’s also smart to shop around because life insurance rates vary significantly from company to company.
If you want to take a DIY approach, get quotes from several insurers. Otherwise, work with an independent insurance broker who works with several companies and will know which one is likely to give you the cheapest life insurance based on your health and age.
