Compare Rates and Save on Life Insurance


Tips for How to Compare Life Insurance

Updated: Oct 10, 2023

A life insurance policy is an investment that protects your loved ones from financial disaster when you pass away. Unfortunately, there are many misconceptions about life insurance that could result in you purchasing the wrong policy or not getting one at all.

Finding the best life insurance as well as the most affordable life insurance for your needs is easy when you know what to look for. Learning about the different types of life insurance, determining how much coverage you need, understanding factors that affect costs and investigating different ways you can buy insurance can help you find the right coverage for you and your family.

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Key Takeaways

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Life insurance grants death benefits to your beneficiaries after you pass away, which can be used for any immediate, ongoing and future financial obligations.

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There are two main types of life insurance: term and whole. The type you choose determines your premiums, level of coverage and additional benefits.

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Many factors affect life insurance premiums, such as your age, gender, health, level of coverage and type of insurance.

Comparing Life Insurance: The Basics

Before comparing life insurance policies, understanding the basics can help give you a solid foundation of what to look at and why. From defining what life insurance is to figuring out how much coverage you need, familiarizing yourself can help you better plan for your family’s long-term financial needs.

What Is Life Insurance?

Life insurance policies grant death benefits to your loved ones when you pass away. In other words, a beneficiary is given a non-taxable lump sum after your death that can be used for various purposes — to pay for your funeral, address any debts or help with their living expenses. In some cases, they may also include a cash value that builds over time and can be accessed while the policyholder is alive.

Life insurance premiums must be paid on a monthly, quarterly, annual or semi-annual basis. Premiums are calculated based on factors like your age, coverage level, health status, type of coverage and more.

However, not all deaths are covered by insurance policies. For instance, if you work in a high-risk industry or have dangerous hobbies — such as sky diving — insurers may add a clause prohibiting a payout if your death results from your high-risk hobby or job. Your beneficiary may also not receive a payout if you're murdered and they're tied to your death.

Why Do You Need Life Insurance?

A life insurance policy can pay for various expenses after your death — be it your funeral, federal or state estate taxes, your beneficiary’s living expenses, or even contributions to a desired charity. Because of these benefits, most people believe that life insurance is only useful if you have dependents — but this isn’t always the case.

Not only is life insurance more affordable than people think, but it can be helpful for just about anyone. Some policies accumulate cash value over time that you can use to supplement your retirement or help with large purchases, such as a home. There are even specific endorsements, called “riders,” for chronic and terminal illnesses that can let you access some of your death benefit while you’re alive, under certain circumstances. For instance, if you are terminally ill and are given a certain period to live, you may use your death benefit to help pay for care and expenses.

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Purchasing life insurance as early as possible can keep your premiums down and ensure you have some form of protection. The older you are, the more difficult it can be to obtain life insurance — you may end up having to pay higher premiums and only be eligible for certain types of coverage.

Main Types of Life Insurance

When purchasing life insurance, you may come across two different types: permanent and term life insurance policies. Understanding the difference can help you figure out which one is best for your needs.

Permanent Life Insurance

Permanent life insurance is active for the entire duration of your life. The three most common types of permanent life insurance are whole, universal and burial:

  • Whole Life: This is the most common type of permanent life insurance. It includes both a death benefit and an investment component. You typically pay a fixed premium for a specified death benefit, and the investment grows over time.
  • Universal Life: This policy also includes a death benefit and investment component. It’s more flexible than whole life because you can increase or decrease your premium payment. When you reduce the amount you pay in premiums, that amount is taken out of your policy’s accumulated cash value.
  • Final Expense: A final expense policy is an affordable form of permanent life insurance that provides a small death benefit to handle funeral and burial costs. It does not have a cash value.

In general, most permanent life insurance comes with a fixed premium, a death benefit and cash value. The cash value is the savings component of your policy that grows tax-free each year, which you can withdraw or loan after a certain period. While the premiums for permanent life are typically higher than term life, the guaranteed lifetime coverage and cash value often make up for it.

Term Life Insurance

Term life insurance is a more affordable option than whole life insurance as it only provides coverage for a specified period. Coverage can last anywhere between one to 30 years, after which it expires and has to be renewed. Unlike whole life insurance, however, it does not come with cash value.

How Much Life Insurance Do You Need?

Life insurance payouts come in different amounts — while you can set it to $100,000 or anywhere upwards of $1 million, the coverage you qualify for depends on your needs, income and overall net worth. However, it's crucial that you have enough coverage to secure your family's financial future or meet any other important needs; unfortunately, many U.S. adults are inadequately covered.

To get an idea of how much coverage you need, multiply your annual salary by 10 and then add your current and planned financial obligations — be it the mortgage for your house, outstanding student loans or the cost of your children’s education.

For instance, if you make $70,000 a year, your base payout would be $700,000. If you have around $30,000 left in student loans, a mortgage of $250,000 and an expected education expense of $100,000, we’d recommend considering upwards of $1 million for your death benefit.

You may also want to consider the expenses of your beneficiaries — do they need special care? Do they plan on going to medical school? Consider as well your plans for the future, such as if you plan to move in the next five years to a better, more expensive home or are considering going back to school. The additional debt should be included in your payout to alleviate the load on your family and loved ones.

Compare Life Insurance Rates

Ensure you’re getting the best rate for your life insurance. Compare quotes from top providers to find the most affordable life insurance coverage for your needs.

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What Affects Your Life Insurance Costs?

Various factors help determine your life insurance premiums, and every provider weighs those factors a little differently. From age and gender to your coverage and term length, knowing what affects your premiums can give you an idea of how much you can expect to pay before applying.

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    Term Length

    The length of your life insurance policy plays a significant role in determining the cost of your premiums. Permanent life policies are more expensive than those with a specified term because the chance of payout is higher. With a permanent policy, you're guaranteed to receive a benefit, but you won't receive any benefit if you pass away after your term policy's coverage period.

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    Coverage Amount

    The death benefit amount is another factor that affects your premium — the higher it is, the higher your premium. In general, a policy with a death benefit of $1 million costs more than a policy with $250,000 in coverage.

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    Premiums are typically cheaper for policyholders who apply for their policies at an early age. Younger people have fewer health-related risks and are less likely to pass away prematurely than someone older. For instance, Mutual of Omaha offers policies with $250,000 in coverage to a 30-year-old at an average of $12.04 per month, but the same policy may cost a 60-year-old $74.18.

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    On average, women live five years longer than men. Having a higher life expectancy means more time to pay premiums, which can lower women's cost of life insurance. Nationwide, for example, offers life insurance policies with $500,000 in coverage at an average of $22.75 per month for a 20-year-old male and $19.69 for a 20-year-old female.

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    Your health determines how risky you are to insure, as certain conditions may result in a sooner payout. Certain life insurance policies require a medical exam, medical history or a review of your family's medical history to assess your health.

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    Smoker or Non-Smoker

    Being a smoker means that you have a higher risk of lung disease and other health conditions, increasing the chances of you needing a payout and, in turn, increasing your premiums. For example, a 10-year life insurance policy at Progressive for a 30-year-old male smoker with $500,000 in coverage costs an average of $63.95 per month. On the other hand, the same policy for a non-smoker of the same age and gender costs $23.49 on average — that’s more than a 50% increase in premiums.

Ways to Get Life Insurance

If you're just about to get life insurance, there are a few ways you can do it: online or in person, and through an insurer, agent or broker.

Purchasing a policy directly from an insurer is easy — you can do so through their online quote generator or by visiting one of their branches to speak to an agent. However, if you’re still in the planning or researching stage, it can be time-consuming to gather multiple quotes through this method.

You can also purchase life insurance from an agent or broker. Like insurers, they can be reached online or through in-person visits, but the only difference is that they can give you quotes from different insurers and help you evaluate your options better.

Compare Life Insurance Rates

Ensure you’re getting the best rate for your life insurance. Compare quotes from top providers to find the most affordable life insurance coverage for your needs.

Insurance Rates

The Best Life Insurance Policy for You

The best life insurance policy depends on your current needs and financial situation. While a whole life policy may be your ideal choice, a term policy might be better given your current budget. Carefully assessing your options is the best way to find the right coverage for you.

Type of Life Insurance
Who It’s Best For
Who It May Not Work For

Term Life

  • More affordable than
    whole life insurance
  • Offers flexibility in
    the length of the term
  • Can be converted to
    whole life insurance
  • Comes with an
    accelerated death benefit
  • Premiums may increase
    over time
  • Does not accumulate
    cash value
  • Temporary coverage and
    needs to be renewed
  • Those who want affordable death benefits and
    to financially support their loved ones
  • Those who are self-employed
  • Those who only want coverage for a short-term need,
    such as your child’s college tuition
  • Those planning for their
  • Those with long-term

Whole Life

  • Often comes with
    a fixed premium
  • Typically builds cash value
    and may offer dividends
  • Can be used for estate
  • Offers lifetime coverage
  • Comes with an
    accelerated death benefit
  • Often costs more than
    term life insurance
  • Has penalties if you decide
    to cancel coverage
  • Not the best investment
    vehicle for high returns
  • Those who are estate planning and want to pass
    on inheritance to loved ones
  • Those who can afford higher
  • Those who have a lifelong
  • Those that want to accumulate cash value while
    keeping beneficiaries protected
  • Those who only need insurance
    for short-term needs
  • Those who just started working and
    may not have the budget

Tips for Buying Life Insurance

Purchasing life insurance is a commitment — regardless of whether you buy term or whole life insurance. While you can cancel coverage at any time, it’s better to choose a policy that meets your needs from the get-go to avoid any penalties and receive the lowest premium possible. MoneyGeek outlined key steps to take while buying a life insurance policy:


Decide how much life insurance you need.

To determine how much coverage you need, determine what financial resources your dependents require after your death. Think about funeral costs, debts and living expenses they may need to cover.


Compare life insurance companies.

You want to choose an insurer that you can rely on to give your beneficiaries a payout. Take a look at each company’s financial stability and customer ratings to get a good idea of which companies are most reliable.


Make sure to have all your personal information on hand.

When you ask for a quote, insurers will require that you provide some personal information about your identity, health and age. Insurance companies use this information to determine your level of risk and, ultimately, your premium.


Gather life insurance quotes.

While it may be tempting to go for the first insurer with low rates, make sure to do your research. Some insurers may initially offer a low rate that can increase significantly after the policy has been fully underwritten.


Compare life insurance quotes and policy options.

When you have at least three to five quotes from different insurers, compare life insurance quotes and policy terms. Keep in mind that the cheapest isn't always the best; in some cases, it may be better to opt for a higher-priced policy with better terms.


Factor in whether you need to complete any extra steps.

Consider whether the policy you want to apply for requires additional steps, such as completing a medical exam or providing your family's medical history. If this is something that you think could put your premiums at risk, you may want to opt for a different policy.


Decide on a policy and purchase it.

Once you’ve picked out the right policy, purchase it! You can either get it through an agent, broker or insurer.

Compare Life Insurance Rates

Ensure you’re getting the best rate for your life insurance. Compare quotes from top providers to find the most affordable life insurance coverage for your needs.

Insurance Rates

Life Insurance FAQs

Life insurance can be a bit confusing for anyone looking to get their first policy. Find answers to the most frequently asked questions about life insurance below.

About Mark Fitzpatrick

Mark Fitzpatrick headshot

Mark Fitzpatrick is a senior content director at MoneyGeek with over five years of experience analyzing the insurance market, conducting original research and creating content that can be personalized for every buyer. He has been quoted on insurance topics in several publications, including CNBC, NBC News and Mashable.

Mark earned a master’s degree in Economics and International Relations from Johns Hopkins University and a bachelor’s degree from Boston College. He is passionate about using his economics and insurance knowledge to bring transparency around financial topics and help others feel confident in their money moves.