Life Insurance Quotes. If this is your first time shopping for life insurance, it’s understandable if you get a little overwhelmed. It’s a complicated process that includes deciding how much life insurance you need for the right coverage, comparing life insurance companies, and comparing life insurance quotes. Our Best Life Insurance Companies rating will explain how to choose the best life insurance company.
Below, we’ll discuss how to understand and compare life insurance rates and quotes.
Once you’ve used a life insurance calculator to estimate how much income you’ll need to replace, it’s time to compare the cost of policies from different companies to find the most affordable coverage. You can also compare quotes for different policy options from the same company to find a coverage amount and payment schedule that work for you. Most insurance companies’ websites provide a calculator to estimate your coverage needs and can generate a free quote with basic information such as your zip code. Some companies offer a tool that shows you quotes from multiple insurance companies all in the same place.
The Insurance Information Institute (III), an organization that provides consumer resources for understanding the insurance industry, notes that life insurance quotes may vary significantly between companies for comparable coverage, because the industry is so competitive. The III advises choosing coverage levels that trigger a discount; for example, a $250,000 policy may actually cost less than a $200,000 policy once you factor in the company’s discount for buying more insurance. The III also notes that some companies charge more if you pay your premiums monthly instead of once or twice a year. With such factors in mind, an effective comparison requires looking at policies’ total costs, not just monthly premiums. Ask insurance companies for a net cost index, which is a standard method of simplifying the costs and benefits of life insurance policies so you can more easily compare them.
What Affects a Life Insurance Quote?
The type of policy you want has the most influence on your quotes, because some types of life insurance cost more than others. How much coverage you buy and the length of your policy term are additional primary factors that will determine your life insurance premium.
Cost Comparison Chart (Female)
Cost Comparison Chart (Male)
There are other factors that you have little or no control over, such as your age, gender, and location. In general, costs are lower when you’re younger and are typically lower for women than men. Life insurance companies consider this information, as well as your height, weight, existing health conditions, family health history, smoking history, and whether you have a dangerous occupation or hobbies.
An insurance company’s underwriting team uses all of these factors to assign you to a risk category. Each risk category has base costs associated with it, and those costs are used to generate your quote for the type, length, and amount of coverage you want.
Risk Class Cost Comparison Chart (Female)
Risk Class Cost Comparison Chart (Male)
For more information, check out our guide to How to Buy Life Insurance.
How Much Coverage Do I Need?
Common reasons for buying life insurance include replacement of income to provide for your spouse financially after your death; coverage of debt, such as car loans, student loans, or mortgage balances; payment of funeral costs and other end-of-life expenses; and coverage of education expenses for dependents. Your personal needs for life insurance coverage depend on your specific financial goals.
Your annual income is a good starting point to determine your life insurance coverage needs. Multiply that figure by five or 10 to get a basic idea of the kind of payout you’ll need to shop for. For a more accurate figure, determine how much your spouse, children, or other beneficiaries need per year to live on, and multiply that number by the number of years they would be depending on your income. Again, other factors should be considered. For example, if you have other financial assets or if your spouse is financially secure, you may need less money. On the other hand, if you want to provide college tuition for multiple children, or if one of your dependents has high medical expenses, you may need more. Keep in mind that major life changes, such as getting married or having a child, may require you to revisit how much life insurance coverage you need.
For more information, see How Does Life Insurance Work?
Types of Life Insurance
There are three main types of life insurance policies: term life, whole life, and universal life. Other types of life insurance include variable universal life and no-exam life, though some insurance companies consider these to be variations of the three main types. Life insurance agents will consider health questions, pre-existing conditions, and other factors to determine your insurability regardless of what kind of life insurance you’re interested in.
- Term Life Insurance: Term life insurance is typically the most affordable type of life insurance. It provides coverage for a predetermined period of time, often between five and 30 years, or until a specific age. If the policyholder dies within this term, the policy pays out to the beneficiaries. If the policyholder lives through the term, coverage typically ends, but the term policy can sometimes be converted to a permanent life insurance policy. For more information, see our guide What is Term Life Insurance?
- Whole Life Insurance: This is a type of permanent life insurance. A whole life insurance policy offers coverage for the rest of your life. Premiums are typically paid monthly, annually, or upfront in a lump sum. A whole life policy accumulates cash value over the life of the policy, and this cash value can often be borrowed by the policyholder. Learn more about whole life insurance in our What is Whole Life Insurance? guide.
- Universal Life Insurance: This is another type of permanent life insurance coverage, but with more options than whole life insurance. Specific features of universal life policies vary by company, but they frequently offer options such as increasing the death benefit or lowering premium payments, both of which depend on the policy’s cash value. The cash value of a universal life policy earns interest based on the company’s portfolio or on a market index. Learn more with our What Is Universal Life Insurance? guide.
- No-Exam Life Insurance: Most life insurance policies require a medical examination, similar to an annual physical exam, to assess the applicant’s health. If this idea doesn’t sit well with you for privacy reasons, or if you have health issues, you may prefer some type of no-exam life insurance. These include simplified issue, guaranteed issue, group, and some term life insurance policies that can be converted to permanent policies after the term is complete. You can learn more with our What Is No Exam Life Insurance? guide.