Understanding Life Insurance Quotes and Finding the Right Policy
If you have loved ones who depend on you, securing life insurance is a vital step for financial protection and offers peace of mind. Finding the right policy involves comparing quotes from multiple life insurance companies to ensure you get the best coverage for your specific needs and budget.
This article will guide you through the process of understanding different types of life insurance, how to obtain multiple quotes, and how to choose a policy that works for you.
Quick Facts
- Life insurance quotes vary depending on policy type, insurer, age, gender, health history, and policy limits.
- A term life policy with a $250,000 death benefit and a 20-year term for a healthy 30-year-old typically costs less than $200 annually.
- Quotes are estimates; your actual price may vary after the underwriting process is complete.
What is a Life Insurance Quote?
Life insurance quotes serve as a basic estimation of the cost of a potential policy. Using information like your age, gender, and whether or not you use tobacco, insurance companies can provide an idea of how much your policy might cost. However, these early estimates are not set in stone and are subject to change.
Quotes can vary significantly between insurers, since each applies its own underwriting formulas and risk assessments. Comparing quotes allows you to see which insurer might offer the best price for your desired coverage.
Keep in Mind
- Quotes are based on basic information and are merely estimates.
- Your rate may change after submitting a full application and undergoing the full underwriting process, which could include a medical exam and blood work.
How to Compare Life Insurance Quotes
Comparing life insurance quotes involves more than simply looking at the price. Consider these tips as you consider your life insurance options:
- Collect Your Information: Insurance companies will generally ask for your age, height, weight, and an assessment of your overall health. They’ll likely inquire about your health, asking if your health is poor, fair, good, or excellent. They’ll also ask if you’ve used tobacco in the past few years.
- Shop Around or Work with a Broker: You can obtain quotes yourself by requesting them directly from one or more insurance companies. Alternatively, working with a broker can streamline the process for you. Insurers pay brokers; individual customers do not.
- Decide on a Policy Type: Keep in mind that some companies provide online quotes only for certain types of coverage, such as term life insurance. For other types, particularly permanent life insurance, you may need to work with an insurance agent.
- Set Coverage Limits and Add-ons: To make sure you’re making an “apples-to-apples” comparison, ensure the quotes are for the same coverage type, policy benefit amount, and riders and add-ons.
- Consider Financial Stability and Customer Satisfaction: Life insurance policies can be active for decades, so it’s important to choose an insurer that is financially stable over the long term and has a strong reputation for customer satisfaction. Research insurers by looking at the company’s AM Best financial strength ratings and customer satisfaction ratings from J.D. Power.
Types of Life Insurance to Consider
There are many types of life insurance available, with significant variations in both cost and structure. All life insurance falls into two primary categories:
Term Life Insurance
Term life insurance pays a death benefit to your beneficiary only if you pass away while the policy is in force. Terms can range from 10 to 30 years. Because coverage ends when the term ends, term life is usually far less expensive than other forms of life coverage.
Types of term life insurance include:
- Level Term: Your premiums remain the same throughout the policy term.
- Renewable Term: Premiums stay consistent during the initial term. When that term ends, you can extend your coverage for another term, but the premium will likely be higher.
- Return of Premium Term: You can get some or all of the premium paid back at the end of the term if you’re still alive. However, premiums are typically higher for this type of term policy.
- Increasing/Decreasing Term: Increasing term policies offer an increasing death benefit amount, with a slight premium increase as you grow older. Decreasing term policies lower your premium payments over time, resulting in a lower death benefit amount.
- Guaranteed Issue: You won’t need a medical exam to secure guaranteed life insurance. However, you’ll face higher premiums, and the policy might only pay a reduced death benefit for its first few years.
Permanent Life Insurance
Permanent life insurance lasts for your lifetime. In addition to a death benefit that pays out to your beneficiaries, permanent policies generally include a cash value component. You may be able to access that cash value while you’re still alive, depending on the type of permanent policy you purchase. Permanent life is usually more expensive than term life insurance.
Permanent life insurance also comes in a few different forms:
- Whole Life: Whole life policies have a death benefit and can also build cash value. When you pay premiums for a whole life policy, your insurer sets aside a portion of your premiums, and you can borrow against that money while you’re still alive.
- Universal Life: Universal life insurance also features a death benefit and cash value, and it lasts throughout your life — as long as you pay your premiums. Universal life insurance allows for flexible premium payments.
- Variable Life: Variable life policies differ from other types of permanent policies; you can invest your cash value in stocks, bonds, or money market funds. However, if your investments lose money, the policy’s cash value and death benefit could decrease.
How Life Insurance Works
All life insurance types serve the same basic purpose and work similarly. The purpose of all life insurance is to provide loved ones with financial protection if you pass away. You pay a monthly premium, and the insurance company agrees to pay out a death benefit to your beneficiaries if you die while the policy is active. Policies can get more complex with riders that add living benefits, such as a terminal illness rider. Some types of life insurance offer additional benefits, like a cash value component.
Average Life Insurance Quotes
The cost of life insurance will affect the type of policy you choose. Generally, permanent life insurance — such as whole life — is more expensive than most term life insurance products.
Average Quotes for Term LIfe Insurance
Term life coverage is often the most affordable form of life insurance. Depending on your age, you can purchase a 20-year, $250,000 policy for $10–$60 per month.
Source: Insurify partner SelectQuote provided these averages based on 20-year term policies from one or more of the companies SelectQuote represents. Rates are for men and women in excellent health. Premiums may vary depending on individual health, issuing company, and other factors.
Source: Insurify partner SelectQuote provided these averages based on 20-year term policies from one or more of the companies SelectQuote represents. Rates are for men and women in excellent health. Premiums may vary depending on individual health, issuing company, and other factors.
Average Quotes for Whole Life Insurance
Whole life coverage is generally more expensive than term life, but it is permanent and remains active for your entire life, as long as you pay your premiums. Premiums are more affordable if you purchase a policy in your 20s, a $250,000 policy will cost $60–$70 per month but will rise to hundreds of dollars if you purchase coverage later in life.
Source: Insurify partner SelectQuote provided these averages based on whole life policies from one or more of the companies SelectQuote represents. Rates are for men and women in excellent health. Premiums may vary depending on individual health, issuing company, and other factors.
Source: Insurify partner SelectQuote provided these averages based on whole life policies from one or more of the companies SelectQuote represents. Rates are for men and women in excellent health. Premiums may vary depending on individual health, issuing company, and other factors.
Factors That Affect Life Insurance Quotes
As part of the underwriting process, insurers consider several factors when setting your rates. These are some key factors:
- Age: In general, life insurance is more affordable when you are young. Premiums are usually cheapest for people in their 20s and 30s.
- Gender: Men tend to pay more for life insurance than women. Statistically, men die younger and are more likely to have major health issues, such as heart disease.
- Overall Health: If you have past or current health issues, such as high cholesterol or high blood pressure, you will likely pay a higher rate than those with a clear health history.
- Occupation: Your profession can also impact your premiums. People in higher-risk professions, such as construction workers, pilots, and drivers, will pay higher rates.
- Smoking: Those who use tobacco products face a higher risk of developing issues like lung cancer and COPD, and thus will have higher premiums than non-smokers.
- High-Risk Activities: Enthusiasts of high-risk sports, such as bungee jumping or skydiving, will pay a higher rate for life insurance.
How to Apply for Life Insurance
Once you’ve compared quotes from several insurers and identified a good life insurance policy and death benefit amount, you can apply in a few simple steps:
- Gather Your Medical Information: The application will ask for your medical and health details, so preparing this ahead of time can make the process easier: age, weight, and height, a list of prescription medications you take and their dosages, any current or past medical diagnoses, and details about your family’s medical history.
- Fill Out the Application: Many insurance companies allow you to apply online or over the phone, or you can apply through an agent. When you submit the application, the insurer kicks off the underwriting process. In some instances, the insurer can complete the process digitally, but some people will require a medical exam.
- Take a Medical Exam: You might have to undergo a physical exam, which will include blood work. In most cases, the insurer will arrange for a representative to visit you at your home or office.
- Wait for Notification: The insurer will need some time—anywhere from a few hours to a few weeks—to review your application and information. Assuming everything looks good, you will get a packet with your policy information, including your rate. You must sign and return the form and pay your first premium to complete the purchase. Once you’ve done that, the policy is in effect.
Life Insurance Quote Comparison FAQs
If you still have questions about finding and purchasing life insurance, these answers to commonly asked questions can help you.
- Whether you’re a parent with minor children or caring for an elderly relative, if you have someone who depends on you financially, you likely need life insurance. A life insurance policy guarantees that your loved ones will be financially secure if you are no longer there. No one formula works for everyone to decide how much life insurance you need, but financial experts often recommend purchasing a policy with a death benefit that is equal to 10–15 times your pre-tax income.
- Based on customer satisfaction rankings from J.D. Power, some of the top life insurance companies include State Farm, Guardian Life, and MassMutual.
- You can request quotes on your own from individual insurers or insurance comparison sites to find good options, or you can work with an insurance broker to do the legwork for you.
- If your priority is cost savings, term life is probably the best bet. Term life is less expensive than permanent coverage. You can purchase a policy with a substantial death benefit to protect your loved ones, but keep in mind that it will last only for the set term (usually 10–30 years).
