Life insurance is important for a number of reasons.
It ensures that your loved ones will be protected once you pass. This is particularly important if you have young children or people depending on your income to sustain their standard of living.
You can also use life insurance to leave your kids an inheritance by purchasing a policy and naming them as the beneficiaries. This will ensure that they’re taken care of when you’re gone.
Unfortunately, though, many Americans have a life insurance gap and are either not insured or under insured. In fact, a 2015 Bankrate money Pulse Survey found that 1 in 3 parents with kids under the age of 18 have no life insurance at all. Of the parents that are covered, 32% have $100,000 or less in coverage!
How to Find Cheap Life Insurance
It is possible to find cheap life insurance, and here are 10 tips to get you started:
1. Shop Around
Just like most purchases you make, looking at different options will help you make the best decision.
People avoid getting multiple quotes due to the time involved. But taking the time to research can save you hundreds of dollars later on.
Tip: Located to the right of this page is our instant life insurance quote form. By simply entering in the required information, you can instantly compare rates from the nations top (A) rated life insurance companies.
2. Don’t Hesitate
Life insurance is a tricky topic since most people find it morbid to speak about death. No one wants to imagine dying and leaving their family behind, so life insurance can get pushed to the side as life gets busy.
But no one knows when their time will be up, so it makes sense to get it sorted now while you’re healthy and your premiums are likely to be low.
Generally, the healthier and younger you are, the more likely you are to get cheap life insurance.
Tip: Its most likely safe to say you are interested in life insurance. This is the time to buy. Life insurance rates only increase the older you get. Go ahead and lock in those rates now rather than later.
3. Stay Healthy
One of the reasons people delay getting life insurance is because they’re not as healthy as they want to be. It can be tempting to wait until you’re healthy to apply, but this just means you’ll spend longer uninsured. Once you’ve improved your health, you can reapply for coverage at a later date to get a lower premium.
Even if you have a chronic condition you can still get low-cost life insurance, it’s just a matter of shopping around.
Life insurance companies also reward people for being safe and healthy. They will often take your current health and habits into account. If you currently smoke, drive a motorcycle, or are 50 pounds overweight, this will impact the cost of your insurance.
Tip: Most life insurance companies will allow for a policy to be re-considered for a rate improvement after one year of having the coverage.
So lets say you purchased a policy at age 40 but received a slightly higher rate due to elevated cholesterol. After one year of working on improving your cholesterol, you can request for re-consideration of a rate improvement.
If granted, not only will your overall premium be cheaper, but your rates will still be based on age 40.
4. Shop online
There are many benefits of shopping online for your insurance. These include time savings, convenience, and of course, cheap life insurance.
You can easily use an online life insurance calculator to get a quote from a number of providers. Some healthy, qualified applicants won’t even need to take a medical exam.
Another advantage of shopping for life insurance online is that you can see how much your policy would cost without making a phone call. This makes it easy to compare between insurance companies, all from the comfort of your own home.
5. Ignore Riders and extras
If you’re looking for the cheapest term life insurance, you should avoid any policy riders or add-on insurance. Often insurance companies will offer different kinds of insurance without the need to get another medical exam.
Riders are extra options that are added to your policy. They will often give you extra benefits such as paying out your medical expenses when you have a terminal illness but haven’t yet passed away. It may also allow you to convert your term life insurance to a permanent policy.
While some of these options can be helpful, if you’re looking for a cheap life insurance policy, keep your rates low with as few riders as possible.
6. Don’t Bundle it up
One way to get cheap life insurance is by not bundling up your coverage.
Keep your home and auto separate from your life insurance coverage. In most cases the discount offered by bundling your home and auto with your life insurance is not greater than if shopped around for you life insurance.
Keep in mind that the discount you’re receiving is on the home and auto policy and not the life insurance policy. So what if you decide to switch your home and auto policy? You’re now locked into a life insurance policy in which you are not getting a discount.
7. Avoid one-company local agents
The name says it all: “one-company” agents work solely for one company. That means that they’re representing that company’s interests. They’ll encourage you to choose that company for your life insurance.
This lowers your life insurance options since the best way to get cheap life insurance is by comparing providers and shopping around. If you don’t want to buy your insurance online, consider finding a financial advisor. They cover a variety of insurers so they won’t just be recommending one option.
8. Do your homework
Most people want the cheapest life insurance possible.
But you also need to check if your insurer will be able to pay out for your policy when the time comes. Once you’ve received a few insurance quotes, it’s time to check each insurer’s financial reputation. There’s no point having cheap life insurance if you’re unable to make a claim in the future.
Skipping this step is a mistake, as this could mean that you pay your premiums for years, and then the company can’t afford to pay out your claim.
9. Don’t Overinsure
It may seem strange, but many people are over insured too. Being overinsured may sound like a good thing, but this just means you’ll be paying more than you need to each month.
People assume life insurance is more expensive than it is, with 8 in 10 people overrating the price for a $250,000, 25-year level term policy according to the 2015 Life Happens Insurance Barometer.
In fact, the average estimate is almost twice as high as the actual cost, particularly among younger consumers who are most likely to enjoy cheap life insurance.
This is because people are unaware of how much insurance they need, and end up overestimating this cost.
Your life insurance needs are likely to change over the years. That’s why it’s a good idea to buy it in modules.
The coverage you need is based on your current income, spending, assets, and liabilities. If you currently make $75,000 a year and die prematurely, your family would need to be covered by at least this much.
In order to create $75,000 a year in investments, you would need to have approximately $1,875,000 invested. This would allow your family to withdraw 4% each year ($75,000). That means that your life insurance would need to be $1,875,000.
10. Check the Small Print
While many companies will offer cheap life insurance, cheaper isn’t always better. Sometimes these policies will be cheap for a good reason, and will only pay your family out if you die under a strict set of circumstances.
Other companies may give you a super low quote, and then charge you a much higher rate once they’ve done their underwriting. This is particularly common if you have certain health conditions.
Choose a happy medium between the cheapest possible life insurance, and a company that will be more likely to pay out when you need them to.
Be sure to read your policy thoroughly before signing. Look online for reviews of the life insurance company to determine whether or not they are likely to hold up their end of the bargain.
Term Life Insurance or Whole Life Insurance?
You’ll usually have two different options for your life insurance. There are various different types within these categories:
Term Life Insurance
This is similar to your vehicle insurance, making it easy to understand. You choose how long you want to be covered for, and pay a premium each month for coverage. If you pass away during that time period, the insurance company will pay out.
If you pass away during that time period, the insurance company will pay out. The insurance will expire and you will need to purchase another policy if you do not use it.
You’re likely to find the cheapest term life insurance when you’re young and healthy since premiums rise as you age. This means that later on in life they can become much more expensive.
Whole Life Insurance
Just like the name says, whole life insurance will cover you for your entire life. This means that you or your beneficiaries will be guaranteed to receive the payout as long as you’ve been paying each month.
While you can definitely find some cheap whole life insurance options, your premium payment is still likely to be higher compared to term life insurance. However, this payment won’t increase over time. That means as you age, you won’t need to worry about purchasing more insurance at a higher rate.
This is an excellent option for people who are purchasing their insurance while they’re still young and healthy. Once you find cheap life insurance you can then be “locked into” that rate for your whole life.
Ultimately, the type of insurance you choose and how much you pay will be based on a variety of factors, including:
- Family history
- Smoking status
- Overall health
Looking for life insurance?
Enter your details in the online quote generator to the right so you can start comparing options for cheap life insurance today.