Life insurance. For many people, the mention of it usually comes with the knee-jerk reaction of “I’m not interested” and “that’s too expensive.” 

Granted, some life insurance policies can be a little pricier than others, but several affordable options provide great coverage. Term life insurance, for one, is typically one of the cheapest options available. 

Even with its attractive price point, a term life policy has enough coverage to help put your kids through college, pay off a mortgage, or cover outstanding debt should you pass away unexpectedly. Not only do you get a low-cost coverage option, but you also get a little peace of mind when you purchase a term life insurance policy.

Another hurdle that usually stops consumers from purchasing life insurance is the process itself. That is one of the reasons why Insurify makes it incredibly easy and simple to compare 20 or more quotes from reputable insurers on the same screen. By just answering a few questions, you will be well on your way to finding the perfect term life policy.

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How Much Life Insurance Costs

Even though life insurance delivers several benefits, the cost of a policy can sometimes be intimidating. Paying monthly premiums for coverage that you may never use is also something that many people have a hard time wrapping their heads around. That is why it is important to get multiple quotes and look at all your options. 

Much of the cost can be determined by the type of policy you select, the term length, the coverage amount, and your health, age, family background, and lifestyle. As you can see, multiple factors make up your monthly premiums. One of the largest determining factors of how much you pay is the life insurance coverage itself.

The type of policy you decide to go with will have a large effect on the cost of the policy itself. A term life insurance policy will normally be the most affordable life insurance option.  A permanent life insurance policy, like whole life insurance, will be substantially more expensive but feature extra perks, like a cash component. 

Below is a breakdown of the two life insurance products and the costs associated with each.

Term Life Insurance Cost

With term life insurance, you are expected to pay a monthly premium for an agreed-upon period of time. Should you pass away while your policy is active, the insurance company will pay out a death benefit to your beneficiaries. For most types of policies, the cost of coverage is dependent on the amount of coverage you get and the length of the term itself.

For those seeking affordable coverage, Insurify has term life insurance policies starting as low as $15/month for $100,000. Thanks to our simple and easy to use platform, you can quickly compare multiple qualified insurers in minutes to find the best plan for you.

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Whole Life Insurance Cost

Unlike term life coverage, whole life insurance tends to be more expensive. Some policies can be as much as 5 to 15 times as expensive as term life insurance. While the price does tend to be higher, there are some added benefits to choosing a permanent plan: 

  • Whole life policies last longer. Term life policies are limited in the length of coverage they provide, but whole life will continue on as long as the policyholder pays the premiums, making it more likely that the policy will still be active when you die.
  • Whole life comes with a cash value component. Whole life plans come with a cash value component and a life insurance component. Part of your premium goes toward the cash value, while the other part goes toward the death benefit or payout.

Premium rates also tend to be higher with whole life because of management fees that aren’t present with term life insurance

How Age Affects the Cost of Life Insurance

While insurance companies will take into account your age when assessing your monthly premiums, there is something else you must consider. Life insurance rates will never be as cheap for you as they are today. Regardless of what you do, even the best life insurance companies will charge you a higher rate as you get older. 

On average, every year you decide to delay buying life insurance, you risk the cost of your monthly premiums increasing by approximately 5–10 percent. That is one of the reasons why it is suggested that young people consider buying term life insurance when they are in their 20s and 30s.

Not only will you lock in a cheaper insurance rate while you are younger and in good health, but by doing so will save hundreds of dollars each year. It is important to shop around for quotes on a comparison site like Insurify until you find an affordable option that provides you with coverage that will last as long as you need it to.

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How Health Factors into Life Insurance Costs

Your overall health is one of the most important factors when it comes to the price of your monthly premiums. The healthier you are, the less you will have to pay for coverage. 

During the underwriting process, insurers ask several questions about your and your family’s health. In addition to the health questions, there may be a medical exam requirement, depending on how much coverage you are looking for and the type of insurance product.

Often underwriters will assess higher premiums for health-related factors such as:

  • High cholesterol
  • HIV/AIDS
  • High blood pressure
  • Hepatitis
  • Diabetes
  • Nicotine use
  • Chronic illness
  • Recreational drug use

Having a medical history and pre-existing medical conditions can often lead to higher premium rates, too. That is one of the reasons financial professionals recommend shopping around to find an insurance company that will provide a policy with comprehensive coverage and an affordable rate.

For those who use marijuana, smoke cigarettes, or chew tobacco, you may also be assessed a higher premium as well. Luckily, there are several insurance providers who have special accommodations for smokers and former smokers. Shopping around for smoker-friendly insurance companies is easy with Insurify.

How much life insurance do you need? 

Financial experts often recommend getting a life insurance policy that covers 10–15 times your income. 

However, your current finances and obligations will play a big part in determining how much life insurance you will really need. For those with loved ones who depend on them, you may want to look at more coverage compared to someone who either lives alone or doesn’t have dependents any longer.

Having enough coverage to replace your income and cover your dependents’ expenses is a great place to start. Add in any type of outstanding debt or future expenses, such as college for your kids, and you should have a good idea of just how much life insurance you need. 

For a detailed look at how to calculate the exact amount of life insurance coverage you should buy, see the formula below:

  • Step #1: Calculate the total amount for all your resources, including after-tax income and liquid assets.
  • Step #2: Add your expenses and debt together. This will help you determine your financial obligation.
  • Step #3: Subtract your financial obligation number from your total liquid assets, which will leave you with your coverage gap.

The coverage gap is the number you want to shoot for when applying for a life insurance policy. Depending on the amount you need, insurance companies can offer a death benefit from $20,000 all the way up into the millions. The amount that you qualify for is usually contingent on your income and overall net worth. 

To compare life insurance quotes, policies, and coverage amounts, check out Insurify. Insurify allows you to compare all your life insurance options all in one place!

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Understanding the Components of a Life Insurance Policy

Now that you have an idea of how much life insurance coverage you need, let’s look at what makes up a life insurance policy. 

Generally, there are two main components of a life insurance policy: the death benefit and the premium. If you decide to choose a whole life policy, then there will be a third component known as cash value.

The death benefit is also known as the face value and is the actual amount of money that will be paid out to your beneficiaries upon your death. 

The premium is the money that each policyholder is required to pay in order to maintain coverage. By making these monthly payments, the insurance company guarantees that they will release the death benefit to your beneficiary.

Cash value only exists with a permanent policy and ultimately serves two purposes. First, it acts as a savings account for the insured to use throughout their life. Second, the cash value can be used to pay premiums or purchase additional insurance. 

How do you get a life insurance quote?

Getting a life insurance quote doesn’t have to be hard. With Insurify, the process usually only takes a couple of minutes and requires just a few things from you. 

Many people are often reluctant to get life insurance because they think the process is time-consuming. That is one of the reasons we have worked hard to provide an experience that is unmatched by our competitors. Getting a life insurance quote through Insurify is quick and simple and allows you to view multiple insurers all in one screen. 

Best and Cheapest Life Insurance Companies

Cost is often the number one concern for consumers who are shopping for a life insurance policy. However, finding a company that can combine an affordable plan with comprehensive coverage can be difficult. 

With that in mind, we’ve put together a list of the best and cheapest life insurance companies that do a great job balancing price and protection:

#1 Principal Financial

Consumers who are looking for an affordable option should consider adding Principal Financial to their list of companies to obtain a quote for. Principal offers very competitive life insurance rates and favorable underwriting for health conditions ranging from asthma and diabetes up to cancer.

Positives:

  • Extremely competitive life insurance rates at every age bracket
  • Financially strong with a solid reputation for timely death benefit payouts
  • Favorable underwriting for common medical conditions, such as asthma, diabetes, sleep apnea, and a history of cancer

Negatives:

  • Fewer term length options and riders when compared to competitors in the industry
  • Canceling a policy or changing a beneficiary can only be done over the phone or by mail

#2 Mutual of Omaha

Anyone with a complex medical history will normally have a harder time finding an insurance company that offers a competitive rate. Mutual of Omaha has made a commitment to this group of consumers and provides competitive life insurance pricing for many of its products. 

Positives:

  • Competitive rates and pricing for individuals with many common health conditions 
  • A strong option for those with a complex medical history who need an affordable option
  • High customer satisfaction ratings 

Negatives:

  • Life insurance policies tend to get more expensive than competitors the older you are
  • Lack of customization options for death benefit ranges, term lengths, and riders

#3 State Farm

State Farm provides consumers with a wide range of customizable life insurance options, including some products that don’t require a medical exam. This makes it a great place for those with less complicated medical histories to start.

Positives:

  • Wide range of term, whole, and universal life insurance products
  • Offers policy options that do not require a medical exam 
  • There is an abundance of rider options available
  • Temporary coverage of at least 60 days is offered to customers during policy approval process

Negatives:

  • Monthly premiums tend to be higher than the industry average 
  • Minimal term length options available
  • Policy changes must be done through an agent

#4 Guardian Life

Not only does Guardian Life provide an excellent catalog of life insurance options, but it also offers the possibility of a dividend to its customers. While the dividend isn’t guaranteed, the company has paid out cash perks to consumers numerous times over the years.

Positives:

  • Easy-to-navigate online quote tool for life insurance 
  • Convertible term life insurance options are available for consumers who want to maintain coverage without going through underwriting again
  • Strong reputation built over the course of 160 years of providing customers with coverage

Negatives:

  • Premiums can be higher than the industry average 
  • There isn’t much information on their website for product information
  • Must apply for coverage through an agent instead of online

#5 John Hancock

For those who have never shopped for life insurance before, the experience can be overwhelming if you don’t know where to start. John Hancock simplifies the buying experience by offering an easy and simple-to-use online tool when applying for life insurance.

Positives:

  • Easy and simple-to-use online tool for applying online
  • Monthly premiums tend to be below the industry average 
  • Excellent health can earn you a discount on your insurance rates
  • Specific coverage is available to those with diabetes

Negatives:

  • The company does not offer temporary coverage 
  • Customer service ratings are lower than some competitors
  • There have been several customer complaints about not receiving death benefits in a timely manner

How to Make Sure You’ve Got the Best Deals on Life Insurance

We all want to feel safe and secure in life, but money and the cost of products can be a hindrance sometimes. Often, we have to choose between buying one item or another—we don’t always have the luxury of choosing both. Luckily, with life insurance, we have the luxury of shopping around and finding the best rate.

Companies like Principal Financial and Mutual of Omaha provide competitive rates that allow you to maintain coverage at a fraction of the cost. To help compare these providers and other affordable term life insurance providers, Insurify offers an easy-to-use solution.

Finding an affordable term life insurance policy doesn’t have to be complicated, with Insurify, you can compare quotes from more than 20 insurers within a matter of minutes.

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Updated January 12, 2021

Doug Shaffer is a freelance writer for Insurify. While he has been writing for the insurance sector for the past three years, his writing career spans more than a decade. During the moments he manages to break away from the keyboard, he can be found spending time with his family.