How to find affordable life insurance

Buying cheap life insurance does have to mean skimping on coverage. Knowing how companies set rates means you can take the right steps to finding an affordable life insurance policy.

Life insurance is a crucial part of a financial safety net. That’s why shoppers want the best and most affordable life insurance they can get. While it may seem like there has to be a tradeoff between finding a cheap policy and a comprehensive one, shoppers can make life insurance more affordable by:

Buy life insurance early

Life insurance is useful for people who have dependents and large debts. That means it usually isn’t a priority for young people — it’s a concern for people with children, mortgages, and other responsibilities.

But there’s a benefit to buying early. Life insurance is almost always cheaper the younger you are when you buy it. Rates rise an average of 8-10% every year you put off applying. Plus, when you buy young, you lock in premium rates for the entire duration of the policy, so you’ll still be paying the same low price decades later.

Read our explainer for more information on life insurance rates by age.

Shopping for life insurance over 50

Even though it’s better to buy young, you may still need life insurance later on in life. While it will inevitably be more expensive, it’s still possible to find affordable rates, especially if you’re healthy.

One thing to consider: Look for a smaller benefit amount and shorter term length than you would if you were in your 30s. Because you have fewer, if any, dependents, you likely don’t need as much coverage as you would have needed decades earlier, so a smaller policy that fits your needs (until your mortgage is up, for instance) might also fit your budget.

You can also look into other types of no medical exam life insurance, like simplified issue or guaranteed issue. These allow you to apply for life insurance without a medical exam but they can be more expensive than a typical term policy; still, because of less-stringent health qualifications, they may be better options for older or less-healthy applicants.

If you’re an older applicant, learn more about life insurance for seniors.

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Shop for the right type of policy

There’s more than one type of life insurance, and the policy you choose plays a huge role in how much you end up paying for it. Most shoppers will choose between term and whole life insurance but there are other considerations to make as well.

Affordable term life insurance

What type of life insurance is the cheapest? In almost every case, the answer will be term life. It’s the best option for most shoppers, especially those who are price-conscious.

Why is a term life insurance policy the cheapest? Because it’s the most straightforward type of life insurance — it provides only a death benefit, without any additional investment components — and it expires after a set period of time.

Learn more about term life insurance rates.

Affordable whole life insurance

Whole life insurance is a type of permanent life insurance, which means it lasts for as long as premium payments are made, with no expiration date. It’s also a type of cash-value life insurance that has an investment option that gains interest over time.

However, that investment component, along with maintenance fees, makes whole life insurance considerably more expensive than term life — up to six to 10 times as expensive. But it can still be a valuable tool for many people, especially those with complex financial situations who would benefit from the cash value.

Affordable whole life insurance is still an option if you’re smart about the coverage you need, the company you choose, and your overall health, but know that it will almost always be more expensive than a comparable term policy.

Learn more about whole life insurance rates.

Supplemental group life insurance

One way to keep a personal life insurance policy affordable is to supplement it with additional employer-provided coverage.

Group coverage provided through a workplace is typically a benefit that’s provided at little or no cost to an employee. However, it usually does not provide enough coverage for a person’s needs and is tied to his or her employment.

But while an employer-provided group policy isn’t enough on its own, it can work to supplement a private policy. If you’re able to get, for instance, $50,000 worth of coverage for free, you can consider lowering your private policy slightly to make it more affordable.

Learn more about the benefits and drawbacks of group life insurance.

Get the right amount of coverage

It can be easy to overestimate the amount of life insurance you need and buy too much, raising the cost considerably. Do you really need a million dollars in coverage, or will $500,000 provide enough protection for your beneficiaries?

You can use a life insurance calculator to determine your needs, or crunch the numbers on your own. The best way is to use a needs-based approach to figure out the benefit amount and term length that works for you. Take into account:

  • Existing debt, like a mortgage or student loans
  • Future college plans
  • Dependents, including children and aging parents
  • A financial cushion you want to leave behind
  • Final expenses, like end-of-life medical care or funeral costs

For more information, learn about how to calculate how much life insurance you need.

Consider the ladder strategy

One tricky situation when it comes to how much life insurance you need is that your coverage needs decrease over time. Your mortgage debt decreases, you need to provide for kids for less time, and so on.

By using the ladder strategy, you can get the coverage you need while ensuring you’re not paying for coverage you won’t need later in life. Using the ladder strategy, you buy multiple policies of varying coverage amounts and term lengths. As the decades pass, some policies will expire, and at the end you’ll be paying for a small policy that covers your current needs and nothing extra. Policyholders can spend up to 50% less on life insurance by laddering smaller policies versus buying one larger policy.

Learn more about the life insurance ladder strategy and talk to a licensed expert to find out if it’s right for you.

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Understand the underwriting process

Life insurance companies largely set the price of policies through the underwriting process. Here, they determine how risky an applicant is to insure by using:

  • Health and health history. This is done primarily through a paramedical exam and request for documents from your doctor. Learn more about the life insurance medical exam.
  • Motor vehicle reports, which shows your driving record.
  • A phone interview to find out your dangerous habits (like smoking) and hobbies (like rock climbing).

At the end, the underwriter will assign a classification to you that determines your policy cost.

There isn’t anything you can do to change what happens in the underwriting process, but knowing what insurance companies are looking for can help you make the right choices in life to lower your insurance costs. For example, you can control any health conditions like diabetes with appropriate medication and treatment, or you can curb the high-risk habits that will ding you.

Learn more about what happens during the life insurance underwriting process.

Choose the best life insurance company

Keeping in mind that life insurance companies use your health to determine your policy cost, it’s also important to know that not all carriers treat different health conditions the same way. One might be more lenient to diabetics who are managing their condition, while another might offer the better rates to former smokers than other insurers.

That’s why the best life insurance company for you is usually the one that will be most accommodating to your health situation and offer the most competitive rates. Going with the wrong one can cost you thousands of dollars over the decades you own the policy.

To learn more about which companies are the best for different health circumstances, and what else you should look for in a carrier, see our page on the best life insurance companies.

Compare quotes

Taking all of the above into account — insurance coverage amount, type of policy, different companies — can feel overwhelming. The last thing you want to do is compare quotes for different plans. But it’s crucial to do so, because comparing life insurance quotes can save you up to 40% by making sure you’re getting the best deal.

You can do all of the above and figure out what type of insurance you need, the death benefit size, which company is best for a given health situation, and more, and then go to each company individually, write down their offers, and compare manually. But it’s much easier to use an automated process like Policygenius to gather the best life insurance plans, let you compare them quickly, and apply instantly.

What won’t save you money

Knowing how to get affordable life insurance coverage is important, but so is recognizing myths about saving money. It’s untrue that you can save money by buying directly through a company. Using a life insurance agent or broker does not come with additional costs; life insurance rates are highly regulated, so the same policy cannot be offered at a discount by some parties or marked up by others. You will pay the same amount for an individual policy by buying from the carrier or using an independent broker.

What is a good price to pay for life insurance? That depends on an individual person’s budget. But getting the cheapest policy possible that still fits your financial needs is a good start. Follow these tips to get the most affordable life insurance policy possible without skimping on coverage.

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Policygenius’ editorial content is not written by an insurance agent. It’s intended for informational purposes and should not be considered legal or financial advice. Consult a professional to learn what financial products are right for you.


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