Cheapest Life Insurance Companies 2021. For many people, life insurance is primarily a way to provide for their loved ones’ financial future in the event of their death. It makes sense that you would want to do this in the most cost-effective way possible, assuming that coverage amounts and other requirements are met.
Briefly, you buy a life insurance policy from a life insurance company, either directly or through a broker. With term life insurance, assuming your premiums are paid up, your beneficiaries will receive a death benefit if you die during the term of the policy.
A permanent insurance policy – such as whole life or universal life – can provide coverage until you die or until you reach a certain age. These policies sometimes act as an investment vehicle because they accumulate cash value over time. Read How Does Life Insurance Work and How to Buy Life Insurance for more information.
Different companies charge different premiums for the same amount of coverage, so it pays to shop around for the best deal. We determined the cheapest life insurance companies to help you find the right company to fit your budget. Our Cheapest Life Insurance Company ratings are based on information that was collected between June 1, 2020, and August 19, 2020.
Cheapest Life Insurance Companies
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Banner Life: Banner Life is the cheapest life insurance company in our ranking, with a sample monthly rate of $46.63. Our sample case is a 35-year-old woman with average health and 20-year term life insurance with $1 million in coverage.
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Pacific Life: Pacific Life is the second cheapest life insurance company in our ranking, with a sample monthly rate of $46.72. Read more in our Pacific Life review.
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Principal: Principal is the third cheapest life insurance company in our ranking, with a sample monthly rate of $47.18.
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Protective: Protective is the fourth cheapest life insurance company in our ranking, with a sample monthly rate of $57.32.
Mutual of Omaha
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Mutual of Omaha: Mutual of Omaha is the fifth cheapest life insurance company in our ranking, with a sample monthly rate of $61.28.
How Much is Life Insurance?
One of the biggest hurdles to getting life insurance is the perceived expense of a life insurance policy. According to the financial services industry researcher LIMRA, 50% of Millennials overestimate the cost of a life insurance policy, and one of the top three reasons for not getting life insurance is that people consider it too expensive. While there are a number of factors that can drive up the cost, life insurance isn’t always expensive.
Monthly premiums charged by our Best Life Insurance Companies vary considerably. The cheapest are listed in the chart below and range from $46.63 a month for Banner Life to $61.28 a month for Mutual of Omaha. The rates are for a 35-year-old woman with average health and 20-year term life insurance with $1 million in coverage.
Many factors affect how much a given life insurance company will charge you for a specific policy. All of these considerations help the company determine how long you might live and thus the likelihood that it will have to pay out on a claim. Factors that determine how much you will pay for life insurance include:
- Length of term: For a term life insurance policy, the longer the term, the more total premium payments you will make. This is simply because you are more likely to die during a longer term than a shorter one.
- Amount of coverage: The more coverage you buy (i.e., the higher the death benefit) for a given type of policy, the higher your life insurance rates will be.
- Age: This is the most important personal characteristic for determining your life insurance cost. All else being equal, the older you are, the likelier that an insurance claim will be filed and the more you will pay.
- Gender: Women often have lower life insurance costs than men because they tend to live longer.
- Health history: Before selling you a life insurance policy, the insurance company usually will require a medical exam. It also reviews copies of your medical records to determine your current health and your medical history. If you have a serious pre-existing condition, like heart disease, or have had one in the past, your premiums will likely be higher. Other factors taken into consideration include weight, blood pressure, and cholesterol levels. Finally, people in poor health can expect to pay more for life insurance because they are at greater risk of life-threatening health problems. By contrast, those who are in excellent health will have more affordable life insurance.
- Family health history: Many medical conditions are hereditary, and a family history of one – even if you don’t have it yet – could raise your premiums.
- Smoking: This is a well-known risk factor for cancer, heart disease, and other potentially fatal conditions. If you smoke or use other tobacco products, you typically pay more for life insurance.
- Hobbies and occupation: If you skydive, scuba dive, or engage in other potentially dangerous recreational activities, you generally will pay higher life insurance rates. This is also true if you are a firefighter or have another high-risk job.
Premiums aren’t the only factor to consider when purchasing life insurance. For term life insurance, you also want to get a term that’s long enough to meet your needs – for example, to provide coverage until your children graduate from college.
Permanent life insurance such as a universal or whole life insurance policy presents other considerations, including the rate of return on your investment and the rate you would be charged for borrowing against the policy. Our guides on whole life insurance and universal life insuranceexplain the advantages and disadvantages of these types of policies.
If the main reason you’re buying a life insurance policy is to take care of your loved ones, shopping based primarily on price could be a good idea. However, if you want your policy to serve as an investment vehicle or as part of your retirement savings plan, other factors should be considered as well. Before purchasing life insurance, talk to a financial consultant who can help you think through all of these considerations
How Much Life Insurance Do I Need?
Finding the balance between cost and amount of coverage when purchasing life insurance can be daunting. If you buy too little you can leave your dependents with financial burdens they’re not equipped to pay. But if you purchase too much you could end up with premiums that limit your quality of life and any other long-term financial goals you’ve set.
The Washington State Insurance Commissioner and California Department of Insurancerecommend taking a careful look at your individual circumstances to determine how much life insurance you need. Factors to consider include:
- How many dependents you have, the standard of living you want them to have after you die and their future educational needs.
- Your family’s current and probable future debts, income, and assets.
- Out-of-pocket costs your estate will owe after you die, including credit card debts, mortgage payments, funeral, and other end-of-life expenses.
- How your loved ones will support themselves without your salary.
The Insurance Information Institute says you should also consider “hidden income” that isn’t part of your annual salary. Examples are your employer’s 401(k) matches, health insurance subsidies, and other fringe benefits. All of this will be lost upon your death and must be replaced by life insurance coverage if you want your beneficiaries to maintain the same standard of living.
It’s best to talk over these issues with your beneficiaries before buying a policy. Once you estimate the life insurance payout you need, determine the monthly premium you can afford to pay. Finally, choose a policy that provides enough coverage, stays within your budget, and accomplishes any other financial goals you may have, such as accumulating cash value as an investment.
For an idea of how much life insurance might cost you based on your age, see the chart below. These average monthly costs are for a non-smoking female who falls in a Standard Plus risk class (average health) and is buying a policy with $1 million of coverage. These rates are for policies purchased within the last five years through Hallett and Quotacy.
Cost Comparison Chart
Group and Free Life Insurance
- Subsidized by employer
- Often guaranteed regardless of age or health status
- Coverage amount may not meet your needs
- Limited customization
- Not portable
Some employers and membership-based groups offer life insurance, often known as group life insurance, as a benefit. The American Council of Life Insurers (ACLI) explains that group life insurance is based on a contract between the employer or group to provide life insurance – usually term insurance – to all employees or members. Some employers provide this free of charge as part of the employee’s benefits package.
According to the ACLI, group life insurance represented 43% of all existing life insurance policies in 2018. Group life insurance coverage offered by employers is usually a multiple of an individual employee’s annual salary.
One of the benefits of group life insurance is that it’s subsidized by your employer and is often guaranteed regardless of your age or health status. However, the amount of coverage usually isn’t enough to fully provide for your dependents.
Moreover, group policies don’t allow much customization, such as changing or accelerating the death benefit. Group policies also aren’t portable: If you’re fired from or leave your job, your coverage goes away. Some group policies can be converted to individual policies in that situation, but the premiums will likely be higher.
If you have access to group life insurance, it’s a good idea to take advantage of it, especially when it’s provided at no cost. That said, you will probably need to supplement this with an individual policy to have a high enough coverage level, especially if you end up leaving your employer.
Cheapest Life Insurance for Women
The sample monthly rates below are for a 20-year term, $1-million policy for a female non-smoker who falls in a Standard Plus risk class (average health).
|Mutual of Omaha||$61.28||$131.80||$295.20||$920.42|
Cheapest Life Insurance for Men
The sample monthly rates below are for a 20-year term, $1-million policy for a male non-smoker who falls in a Standard Plus risk class (average health).
|Mutual of Omaha||$74.18||$171.36||$406.14||$1,359.02|
Cheapest Life Insurance for Seniors
Seniors can expect to pay more for life insurance than younger people. These sample monthly rates are for a 10-year term policy with $500,000 in coverage for a female non-tobacco user in the Standard risk category. Individuals in this risk category may have one or two chronic diseases.
These sample monthly rates are for a 10-year term policy with $500,000 in coverage for a male non-tobacco user in the Standard Risk category. Individuals in this risk category may have one or two chronic diseases.
Cheapest Life Insurance for Smokers
Smokers pay more for life insurance than non-smokers, all else being equal. Here are sample monthly rates for a 20-year term life insurance policy with $1 million in coverage for a 35-year-old female smoker.
|COMPANY/COST||PREFERRED SMOKER RATE||STANDARD SMOKER RATE|
These sample monthly rates are for a 20-year term life policy with $1 million coverage for a 35-year-old male smoker.
|COMPANY/COST||PREFERRED SMOKER RATE||STANDARD SMOKER RATE|
Cheapest Life Insurance for Children
Because they present little insurance risk, life insurance for children is relatively affordable. A parent or guardian often will add a child rider to an existing term or whole life policy rather than buy a stand-alone policy for the child. Stand-alone policies for children are so rarely requested that many companies don’t even offer them.
This type of rider is typically available for children up to ages 18 to 25, depending on the insurance company. One rider usually covers all of an individual’s dependents, no matter how many children he or she has.
You may not qualify for a child rider if the life insurance company assigns you a table rating. This refers to a portion of the risk category that the underwriter determines after evaluating your health and lifestyle.
The following are annual costs for a child rider providing $10,000 coverage.
|COMPANY||COVERAGE RANGE||AGE AVAILABILITY||EXPIRATION AGE||ANNUAL COST|
|Banner Life||$5,000 – $10,000||20-55||Child’s 25th birthday||$55/year|
|Pacific Life||$1,000 – $10,000||18-55||Child’s 25th birthday||$55/year|
|Nationwide||$5,000 – $25,000||18-55||Child’s 22nd birthday||$50/year|
|Protective||$1,000 – $25,000||18-64||Child’s 25th birthday||$60/year|
|Mutual of Omaha||$1,000 – $10,000||18-55||Child’s 23rd birthday||$72/year|
Cheapest Life Insurance With No Exam
When you apply for a life insurance policy, the insurance company normally will require you to get a medical exam to determine how healthy you are, and thus what sort of insurance risk you present.
You might be able to skip the physical exam and speed up the approval process by applying for no-exam life insurance. Premiums for a no-exam policy are often higher than with a traditional policy, but there are a few options available. The most affordable option is probably to look for a standard policy that offers accelerated acceptance. One low-cost route is to look for a company that offers accelerated acceptance or accelerated underwriting on its term policies. For individuals in good health, accelerated acceptance waives the medical exam for no additional fee.
Some no-exam life insurance policies provide less coverage than a traditional policy can. Older people, smokers, and those who just want to speed up the application process should consider a no-exam policy. But if you’re healthy, not in a rush, and/or want a large amount of coverage, a traditional policy is probably the best way to go.
Although life insurance quotes are unavailable for no-exam life insurance, you can read more about it in our What Is No Exam Life Insurance? guide.
How to Lower Your Life Insurance Premiums
If you have people that depend upon your income, life insurance should be a priority. However, if you’re also on a tight budget, that means making smart choices. Here are a few ways to help lower your premiums:
- Quit smoking. Smoking is bad for you in more ways than one; it also results in higher premiums.
- Don’t purchase more life insurance than you need. Doing some careful math, as we suggest in “How Much Life Insurance Do I Need,” will help you determine your most accurate coverage amount and keep your premiums as low as possible.
- Shop around. Talking to an independent agent who works with more than one company can help you get the most affordable life insurance.
- Buy a term life policy. Term insurance is the least expensive type and is sufficient for the basic premise of this type of insurance, which is simply to provide a lump sum of money to your dependents if you die. You can consider a whole life or universal policy if your income increases.
- See about group insurance. If your employer offers life insurance as part of your benefits package, the premiums are often lower. Sometimes it’s even free. However, keep in mind that if you leave the job, you will lose that coverage.
- Buy as soon as you might need coverage. The older you get, the higher your premiums will be.