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Buying term life, comparing quotes, and knowing how companies set premiums can help you find a cheaper life insurance policy.
Life insurance is a crucial way to provide your loved ones with a financial safety net, so it’s important to buy the right policy. But in addition to getting the best life insurance coverage, you also want an affordable life insurance plan.
You may think there has to be a tradeoff between finding a cheap policy and a comprehensive one, but buying when you’re younger, choosing a term life policy, and comparing quotes can help you save money without compromising the coverage you need.
A term life insurance policy is the most cost-effective option for most people
You’ll get cheaper premiums when you’re younger and healthier
Calculate how much coverage you need so you’re not buying more than necessary
Comparing quotes from multiple insurers can save you more than $1,300 per year
Life insurance is almost always cheaper the younger you are when you buy it. Premiums rise an average of 4.5-9% every year you put off applying. Plus, when you buy life insurance young, you lock in premiums for the duration of your policy. That means you’ll be paying the same low price for decades.
The following table shows how the monthly cost of a term life insurance policy increases as you age, based on three coverage amounts. Note that average premiums for women are generally lower than those for men due to their longer life expectancy.
Even though you’ll get the cheapest premiums in your 20s and 30s, you may still need a policy later in life. While it will be more expensive, it’s still possible to find low-cost life insurance when you’re older, especially if you’re healthy.
Someone over 50 and without dependents, for example, could seek out a smaller benefit amount and shorter term length that only covers the rest of their mortgage. The shorter term and lower death benefit will result in more affordable life insurance premiums.
If your coverage needs are very low — $50,000 or less — final expense life insurance allows you to buy a small amount of coverage without undergoing a medical exam. Premiums are comparable or slightly higher than term life rates for less coverage, but it could be the most affordable option for older or less healthy applicants.
In almost every case, a term policy is the cheapest life insurance option. It’s also the most straightforward type of life insurance; it provides a death benefit if you die while the policy is active and it expires after a set time.
Because you can choose a term length that fits your needs, you only pay for the insurance coverage you want. If you’re in your mid-30s, you could realistically take out a 20-year, $1 million term life policy and pay monthly premiums of $50 or less.
Group coverage through a workplace is a common benefit that you can get at little or no cost. The downside is that it usually won’t provide enough coverage for all your needs and it’s tied to your employment.
But, group coverage can supplement a private policy. If you’re able to get a policy paid by your employer, you can consider lowering your private policy’s coverage slightly to make it more affordable.
A whole or permanent life policy can be a valuable tool for some people, but the investment-like component and maintenance fees make whole life insurance premiums five to 15 times more expensive than term life.
If you need a whole life policy, the best way to find competitive pricing is to compare quotes from multiple insurers and be discerning about the amount of coverage you need.
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Life insurance companies set your premiums through the underwriting process. This is where they determine how risky you’ll be to insure by using:
A short phone interview about your hobbies, finances, and health.
Your current health and medical history: primarily through a medical exam or a request for previous medical documents from your doctor.
Motor vehicle reports that show your driving record.
Afterward, the underwriter assigns you a classification that determines your policy cost.
But every life insurance company measures risk in its own way. For example, certain companies offer cheaper premiums than others to former or current smokers or marijuana smokers. That’s why the best life insurance company and the one that will offer the most affordable life insurance is different for every person.
It’s easy to overestimate the amount of life insurance you need and buy too much, raising the cost considerably. But it’s also easy to underestimate how much you need, potentially leaving your beneficiaries without support when you’re gone. Policygenius advisors recommend having coverage equal to at least 10-15x your salary.
Consider all of your financial obligations when choosing a benefit amount and term length, including:
Existing debt, like a mortgage or student loans
Future college plans (for you, a spouse, or a child)
Dependents, including children and aging parents
Any financial cushion you want to leave behind
Final expenses, like end-of-life medical care or funeral costs
Your life insurance needs decrease over time: your mortgage debt decreases, your children need less financial support, and so on.
Using the ladder strategy, you can have the coverage you need only when it’s necessary. With the ladder strategy, you buy multiple policies of varying coverage amounts and term lengths. As the decades pass, some policies expire, and eventually you’ll be paying only for a small policy that covers your current needs. You can spend up to 50% less on life insurance by laddering smaller policies versus buying one larger policy.
Compare the market, right here.
Policygenius saves you up to 40% by comparing the top-rated insurers in one place.
If you want the most affordable life insurance premiums, it’s crucial to compare quotes for different plans. Comparing life insurance quotes can save you $1,300 or more per year.
The easiest way to quickly compare quotes from multiple insurance providers is with an independent insurance broker like Policygenius. Using a broker doesn’t cost you anything, and they can not only find the right policy for your needs but compare quotes and identify the company most likely to offer you the cheapest life insurance policy. Otherwise, you will need to do all of the above — figure out what type of insurance you need, the death benefit amount, which company is best for your health, and more — then go to each company individually and compare manually.
It’s easier than you might think to find an affordable life insurance policy without sacrificing any of the protection you need. Buying term life insurance when you’re young and healthy and, most importantly, comparing quotes with an independent broker can save you thousands of dollars over the life of your policy.
Term life insurance is the most affordable type of life insurance for the majority of people, and costs five to 15 times less than whole life insurance.
The best way to find a cheaper life insurance policy is to compare quotes across multiple providers. Buying a policy when you’re younger and healthier and choosing a coverage amount and length you can afford will also save you money long term.
Life insurance premiums are different for every person and type of policy, but generally, the older or less healthy you are the higher your premiums will be. If you have risky hobbies or violations on your driving record, you’ll also pay more.
Amanda Shih is a life insurance editor at Policygenius in New York City. She has a passion for making complex topics relatable and understandable, and has been writing about insurance since 2017 with specialities in life insurance cost and policy types. She's previously written for Jetty and LegalZoom.
Amanda has a B.A. in literature and communication from New York University.