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5 Ways To Get Cheap Life Insurance

There’s no bad time to buy life insurance, so if you’re ready to shop, you may be wondering how to get cheap life insurance.

One of the top reasons that people don’t own life insurance is because they think it’s too expensive, according to the 2020 Insurance Barometer Study by LIMRA and Life Happens. Many people believe this because they don’t have a good grasp of how much life insurance costs.

If you’re among those who think this way, you might be surprised how affordable life insurance can be. In fact, you can get cheap life insurance if you take the right steps when shopping and applying for a policy.

1. Buy a Term Life Insurance Policy

You have two main options when it comes to buying life insurance: term life insurance and permanent life insurance. A term policy will provide coverage for a certain period of time, such as 10, 20 or 30 years. Two companies—Banner Life and Protective Life—offer 40-year term life policies.

A permanent policy, on the other hand, will provide lifelong coverage.

“A term insurance policy is the cheapest way to go,” says Jon Voegele, chair of Life Happens. More than half of the 2020 Insurance Barometer Study respondents estimated that a $250,000 term life policy for a healthy 30-year-old woman would cost $500 or more a year. However, the actual cost is about $160 a year—just $13 a month.

A term life policy can provide cheap life insurance for a period when you need it most, such as the term of your mortgage or until your kids graduate from college. Plus, most term life policies offer the option to convert to a permanent life policy. It’s a way to switch to lifelong coverage down the road, especially if you develop health conditions that would make it difficult to buy a new life insurance policy.

2. Buy Sooner Rather Than Later

Your age and health are two key factors that insurers consider when determining the rate you’ll pay for life insurance. The younger and healthier you are, the less you’ll pay for coverage. So if you want to get cheap life insurance, buy sooner rather than later. You will lock in cheap life insurance for the term length of your policy.

Don’t make the mistake of thinking you have time to make more room in your budget or get in better health before buying a policy. The cost of coverage will only go up each year you wait to apply. Plus, you risk developing more health issues as you age. For example, a Haven Life term policy with $500,000 coverage for 20 years would cost about $19 for a 30-year-old woman in excellent health. The cost of that same policy for a 40-year-old woman in excellent health would be almost $31 a month.


3. Create a Ladder of Term Policies to Get More Coverage for Less

One of the factors that influences how much you pay for life insurance is the amount of coverage you buy. The larger the face amount, the higher the premium. To be clear, you don’t want to skimp on coverage just to save money. You need enough life insurance to protect those who depend on you for financial support.

Once you know how much life insurance you need, you can keep down the cost of coverage by using a strategy called laddering.

When you build a life insurance ladder, you buy several smaller policies that expire at different times rather than one large policy to cover you for several decades. “You can definitely save money by laddering,” Voegele says.

It can allow you to have more coverage initially—perhaps when your children are young or when you owe more on a mortgage—then taper off with time as your life insurance needs decrease.

For example, rather than buying a 30-year term policy with a $600,000 benefit, you could buy 10-year, 20-year and 30-year term policies with $200,000 worth of coverage each. During the first 10 years, you’d have combined coverage worth $600,000. The amount of coverage you have will decline as your term policies expire, but the amount you pay also will drop over time.

4. Avoid Unnecessary Riders

When you buy a life insurance policy, you typically have the option to get additional features called riders. You can add life insurance riders that allow you to waive premium payments if you become disabled, to add coverage for your children, and the list goes on.

Although the extra coverage might be appealing, you can get cheaper life insurance by avoiding riders you don’t necessarily need.

5. Avoid Simplified Issue Life Insurance

Traditionally, if you wanted to get a life insurance policy, you had to get a medical exam. However, it is possible to skip the medical exam with certain types of life insurance policies. One is called simplified issue life insurance. This type of policy might seem ideal because it usually requires only filling out an online application with a handful of questions about your health and lifestyle and getting approved (or denied) for coverage within a matter of minutes.

However, if you’re healthy, a simplified issue policy can cost twice as much as a policy that requires more thorough underwriting—the process insurers use to gather information about applicants. These policies cost more because insurers take on more risk when they have limited information about applicants.

If you’re in good health, there are fast life insurance options that are competitively priced, thanks to technology that quickly assesses your personal information. Companies such as Bestow, Ethos, Fabric, Haven Life and Ladder offer accelerated underwriting term life policies.

Still, some policies require a life insurance medical exam in order to offer you cheap life insurance.

Shop Around

It’s easy to get life insurance quotes, and quotes are free. Don’t settle for the first quote you get. For starters, life insurance quotes you see online are often for the lowest available rate, Voegele says. However, only a small percentage of applicants actually meet the criteria to qualify for the best rate. Many people discover that their final quote is higher after the application process.

It’s also smart to shop around because life insurance rates can vary greatly from company to company.

If you want to take a DIY approach, get quotes from several insurers. Otherwise, work with an independent insurance broker who works with several companies and will know which one is likely to give you the best rate based on your health and age.