We are an independent, advertising-supported comparison service. Our goal is to help you make smarter financial decisions by providing you with interactive tools and financial calculators, publishing original and objective content, by enabling you to conduct research and compare information for free – so that you can make financial decisions with confidence. The offers that appear on this site are from companies from which TheSimpleDollar.com receives compensation. This compensation may impact how and where products appear on this site including, for example, the order in which they appear. The Simple Dollar does not include all card/financial services companies or all card/financial services offers available in the marketplace. The Simple Dollar has partnerships with issuers including, but not limited to, Capital One, Chase & Discover. View our full advertiser disclosure to learn more.
How to Get Cheap Life Insurance in 2021
The two basic keys to getting cheap life insurance are:
- Look for a term life insurance policy.
- Get quotes from multiple providers. You can do so by using our tool above.
If you want to get the most affordable life insurance, there are several other things you can do to minimize costs. We have six tips to help you find cheap life insurance, which we’ll share with you in this article.
It’s true there are factors you have less control over when it comes to the cost of life insurance — such as your age — but there’s a lot within your control, too.
The Cheapest Life Insurance
- Lowest premiums: TIAA
- Most flexible term times: Transamerica
- Best customer service: Pacific Life
- Most policy variety: MetLife
- Most comprehensive coverage options: New York Life
Tips to Find Cheap Life Insurance
Beyond the two basic principles mentioned above, there are other ways you can lower your rate as well. Life insurance can be tricky to understand. Many companies analyze your health differently and also calculate risk in slightly varying ways. Following these steps is key to finding the cheapest life insurance for you.
Tip #1: Quit smoking
When you quit smoking, you’ll be thrilled at the amount of money you get to keep in your pocket. Ditching tobacco use will also save you money on life insurance. Of course, saving money is just the cherry on top of the benefits of going tobacco-free; just think, you’ll have more cash to fund your long, healthy life.
Tip #2: Lose weight
Saving money on life insurance just might give you the little nudge you need to get serious about dropping a few pounds. If your weight is within the range medically classified as obese, you’ll pay higher insurance rates than if you lost enough to get into a healthier weight category.
Tip #3: Drive safely
Reckless driving that leads to at-fault collisions on your driving record puts you in a higher risk category, which correlates with higher life insurance premiums.
Tip #4: Avoid filing bankruptcy
While circumstances out of your control can all but force you into filing bankruptcy, if you can prevent it from happening, you’re likely to pay less for life insurance. A bankruptcy is considered a “credit attribute” that can indicate a tendency to make bad decisions, and it can also be a red flag for health problems.
Tip #5: Choose your hobbies wisely
Life insurers consider your hobbies when they calculate your eligibility and premiums. Risky activities like sky diving and scuba diving, tend to hit premiums the hardest. Rock climbing, motorcycling and even hunting can increase what you pay. It’s up to you to decide if it’s worth paying higher life insurance rates to keep up your hobby.
Tip #6: Be honest
Life insurance companies keep an eagle eye out for potential fraud, and if they find any fibs on your application, they can start to question the certainty of other information, and that can be reflected in your quoted premium price. Also, if a claim is filed one day and it’s discovered that you were deceitful when applying for your policy, your beneficiaries might not get the payout that they were depending on.
Why Is Term Life Insurance the Cheapest?
You generally have two options for life insurance. There are various hybrids and nuances, but a life insurance policy is usually either:
- Term life insurance
- Whole life insurance
What is term life insurance?
Term life insurance acts much like your auto insurance, so it’s easier to understand. Like your car insurance, you pay a premium each month for the period of time you wish to be covered, and if you don’t use the insurance (i.e., you don’t die) during that time period, the insurance company keeps the money and does not have to pay a death benefit. This is just like your auto policy: If you don’t get into an accident, there is no payout from the insurance company.
Term insurance is generally cheaper because the coverage is only provided for a specific period of time. In most cases, the insurance company will never pay out because you will outlive the term and the policy will expire. However, term life premiums can and do rise with age, whereas whole life premiums stay steady. Late in life, they can become cost-prohibitive.
What is whole life insurance?
Whole life insurance is a life insurance policy that remains in force for the insured’s whole life. In this case, you or your survivors are guaranteed to receive a payout from the insurance company as long as your payments are current.
Whole life insurance has an investment growth component to it where dividends are accumulated tax-deferred. Part of your premium pays for the death benefit, and part of your premium is invested to produce these dividends and increase your policy’s “cash value.” Your cash value typically can be accessed during your lifetime, which is a nice living benefit.
Your premium payment is generally higher than with term life, but it does not increase over time. Your premium stays the same once your policy is in force no matter what your health or age is. Additionally, because of the cash-value buildup, at some point you can usually use the growth in your policy to pay your premium. This way, you can have a policy in place for the rest of your life without making another out-of-pocket premium payment.
What Impacts Your Life Insurance Rates?
Once you choose the type of insurance you want, your actual insurance cost is based on many factors, with age and health being the biggest. For either term or whole life, the following factors can impact how much you pay:
- Overall health
- Family health history
- Lifestyle (high-risk activities)
Life Insurance Calculator
To help determine how much life insurance you or your family members need, we’ve created this calculator that takes into account your life situation.
How I Use Life Insurance
Experts argue about which is better, but there is a specific purpose for both term and whole life insurance. If you structure them properly, you can create a very affordable life insurance program that is comprehensive enough to meet all of your goals.
Here’s how I approach life insurance:
- I use term life to cover my fixed debts or expenses that are likely to exist for a fixed period of time.
- I supplement long-term coverage with a whole life policy that has more growth and tax-advantaged features.
I am 34 years old, married, have two young children and have a home with two vehicles. I use cheap term life insurance to cover debts and to take care of my wife, kids and family expenses.
If I died tomorrow, here is what I would want covered:
- My mortgage debt, so the house will be paid off.
- Vehicle ownership expenses, so my cars will be paid off.
- Approximate child expenses for 18 years.
- Cost of four-year college tuition for two kids.
These expenses end roughly 20 years into the future, so I try to match my coverage term to that time frame.
When I started looking into life insurance, I had recently graduated from college and didn’t have enough money to buy a whole life policy, so I bought a term life policy.
I made sure my term could be converted to whole life insurance. I value this conversion flexibility because I like the idea of growing my money tax-deferred, and estate tax policy seems to always be in flux.
I plan to leave money to my children, and this gift may be taxable in the future. I can use whole life to cover any tax implications for my kids at the time of my death.
Granted, I do understand that what I’ve outlined here may not be the cheapest, but I wanted to provide some personal details that may help you.
How Much Should You Buy, And When Should You Start?
A general rule of thumb is to buy at least 10 times your annual salary in life insurance. So, if you make $50,000 per year, you would want to look at a $500,000 life insurance policy. As you can imagine, this broad calculation might not fit your unique situation.
For a more accurate approach to finding affordable life insurance, follow these steps:
- Add up any mortgage or student loan debts you want covered.
- Add up your monthly expenses for the period of time you want covered.
- Add in any educational or other extraordinary expenses you want covered.
- Finally, add in any other obligations you do not want to burden your survivors with (e.g., taxes or other debts).
Going through this exercise will give you a more realistic portrayal of how much coverage you need. An additional benefit to this process is that, if your quotes end up coming in much higher than your budget, you can remove items from your list and adjust your number to arrive at a more reasonable premium payment.
How to get started
Generally, when you experience major life changes, like buying a home, getting married or having children, you start to accumulate many financial responsibilities that you want to protect with life insurance.
There really isn’t much of a need to buy term life insurance before these events.
However, many people choose to start whole life insurance programs at a very young age because cheap insurance is so plentiful and the policy owners can milk the cash value growth for a longer period of time.
Whatever decision you make, it can’t hurt to get started by getting a quote from several providers. You can find the most affordable life insurance (whether it’s term or whole) and then decide if it fits within your current budget.