How can I save money when buying life insurance?

Buying life insurance might seem complicated, but the process is simple. Some plans are expensive, but finding cheap life insurance to match any budget is easy when you know what to look for.

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Rachael Brennan has been working in the insurance industry since 2006 when she began working as a licensed insurance representative for 21st Century Insurance, during which time she earned her Property and Casualty license in all 50 states. After several years she expanded her insurance expertise, earning her license in Health and AD&D insurance as well. She has worked for small health in...

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Benjamin Carr was a licensed insurance agent in Georgia and has two years' experience in life, health, property and casualty coverage. He has worked with State Farm and other risk management firms. He is also a strategic writer and editor with a background in branding, marketing, and quality assurance. He has been in military newsrooms — literally on the frontline of journalism.

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Reviewed by Benji Carr
Former Licensed Life Insurance Agent Benji Carr

UPDATED: Apr 1, 2022

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Quick Facts

  • Saving money on life insurance starts by choosing the right type of policy for your needs — term life is the cheapest option
  • You can save money by agreeing to a medical exam, quitting tobacco use, and purchasing the plan as young as you can
  • While some companies are generally less expensive than others, the best way to save money is to compare quotes

Most people have heard that life insurance is one of the best ways to protect your family after your death, but figuring out how to buy it can feel overwhelming when you start looking. That’s especially true if your budget doesn’t have much space for a new monthly bill.

However, there are plenty of ways to save money on life insurance so nearly everyone can afford this valuable coverage. From choosing the right plan to shopping with the most affordable companies, life insurance is within reach for most.

If you’re interested in buying life insurance, use the advice below to determine what you need and how to save money. Then, compare quotes with as many companies as possible to find the most affordable rates.

What is life insurance?

Simply put, life insurance allows you to provide financial protection to your family after your death. Most people buy life insurance for an immediate family member — a spouse or partner and children are most common — but you can choose anyone to be your beneficiary.

In fact, you don’t have to choose one individual or even a person at all. Your death benefit can be split between multiple people or donated to a charity or organization of your choice.

So, how does life insurance work? Once your policy is active, it will stay in effect as long as you make your monthly (or annual) payment. If you die while your life insurance policy is active, your beneficiary will receive a tax-free sum of money.

Beneficiaries can use your death benefit as they see fit unless you specify how you want the money used. The most common things beneficiaries spend a life insurance payout on are the following:

  • End-of-life expenses
  • Funeral costs
  • Mortgages
  • Outstanding debt, such as student loans
  • Living expenses
  • College tuition
  • Estate taxes
  • Charitable donations
  • Down payment on a new house

The process of submitting a claim to a life insurance company is simple. Your beneficiary usually needs to fill out a form and submit a death certificate. After the insurance company verifies the claim, your beneficiary will receive the payout.

Types of Life Insurance

While the above explanation is simple, you can purchase several types of life insurance that affect how long you’re covered, how much your beneficiary will receive, and how much you’ll pay.

The four main types of life insurance are term life, whole or universal life, guaranteed issue life, and funeral insurance. To determine what life insurance policy is best for you, you should carefully consider your needs.

Term life gets its name from the length of time the policy remains active. You can choose how long you want to stay insured, the most common periods lasting 10 to 30 years. After the term ends, you can either renew for another period, convert to a permanent policy, or let it expire.

Term life is usually the most affordable option, making it one of the most popular choices. You can choose a large death benefit with term life without having a hefty monthly bill. While anyone can benefit from term, new parents, newlyweds, and people on the verge of retiring find it especially helpful.

Whole life is a permanent plan that accumulates cash value with every payment you make on it. You can borrow against that cash value later for events like buying a house or sending a child to college.

Whole life is more expensive than term, but you never have to worry about your policy expiring or being denied coverage later in life due to medical concerns.

Guaranteed issue plans skip the medical exam that term or whole life plans require. While the death benefit is significantly smaller, this is a good option for people that can’t qualify for standard insurance policies.

Finally, funeral insurance plans cover the costs of a burial. It won’t help your family pay bills, but it will at least make sure they can afford a memorial for you. In America, the average funeral costs about $8,000, so even a small burial plan can help.

Four Things to Consider Before Buying Life Insurance

Life insurance gives your family the promise of financial security after your death. With all the choices you have, it might sound complicated to pick the right insurance for your needs. However, it doesn’t have to be difficult.

To find the best insurance for your needs, consider the following before you buy.

  • How long do you need coverage? Parents with young kids might select a 10- or 15-year term, while someone with a chronic health condition might choose something longer to avoid being denied later.
  • How much coverage do you need? The larger the death benefit you choose, the more you’ll have to pay. Calculate how much money you think your family will need after your death.
  • Choose a beneficiary. Will your death benefit go to a family member or an organization? What do you want them to do with it?
  • Consider extra features. If you want to borrow against your plan in the future, you’ll need a whole life plan. You can also add features to policies to help you pay for medical bills if you become ill.

You don’t have to figure out every little detail by yourself. An insurance agent can help you hammer out all the details to ensure you get the perfect policy for your needs.

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How can you save money on life insurance?

Life insurance is a valuable investment, but what happens if your budget doesn’t have much room for another monthly bill? You don’t have to worry — there are plenty of ways to find cheap life insurance. Use the following tips to save as much money as possible on your life coverage:

  • Buy young. The older you are, the more your insurance costs. Insurance companies determine your rates by the risk your beneficiary will make a claim during the policy. The younger you are, the less risk you have of dying soon.
  • Choose term over whole life. Term plans are cheaper than whole. Insurance experts recommend that most people get term life insurance.
  • Quit smoking. You’ll have to wait a year after quitting, but non-smokers pay significantly less than tobacco users. If you already have a policy as a smoker, you can have your policy re-evaluated after you quit.
  • Choose a level term policy. “Level” simply means that monthly payments will stay the same throughout the entire policy.
  • Take a medical exam. As long as you are in relatively good health, a medical exam will reassure the company that you’re not a high risk for them.
  • Pay annually. It’s more expensive up front, but you can save money by skipping the monthly payments.
  • Compare quotes. When shopping for insurance, you should never go with your first option. Insurance companies use different formulas to determine rates, and you’ll see wildly different prices.

While you should certainly shop around for the best insurance rates, some companies have a reputation for being affordable. You can browse a few of them below.

Cheapest Life Insurance Companies

You should always choose the life insurance policy that works best for you, but term life offers the lowest prices. To that end, you can compare companies that offer term life plans below.

CompanyMale, age 20Female, age 20Male, age 30Female, age 30Male, age 40Female, age 40Male, age 50Female, age 50
Banner Life$19$15$19$16$30$24$71$57
AIG$19$16$19$16$29$25$73$56
Lincoln Financial$19$16$19$16$29$24$72$56
Securian Financial$21$18$22$18$31$26$87$62
Prudential$40$26$36$29$45$41$92$80
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To get an idea of how much you can save by choosing term, consider the cheapest companies for whole life.

CompanyMale, age 30Female, age 30Male, age 40Female, age 40Male, age 50Female, age 50Male, age 60Female, age 60
Banner Life$61$46$141$108$341$240$1,145$755
AIG$62$46$142$108$343$241$1,152$760
State Farm$69$54$149$119$389$269$1,158$854
Transamerica$74$57$154$118$359$256$1,159$375
Guardian Life$65$57$159$119$359$259$598$375
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As you can see, term is more affordable. However, having insurance is always a wise investment for your family’s future. As long as you can afford it, any life insurance plan is worth the money.

Find Affordable Life Insurance Today

While life insurance can protect your family’s future long after you’re gone, it can be pricey. However, there are options for even the smallest budgets to get the valuable coverage everyone deserves.

Now that you know what to look for when buying life insurance, you’re ready to compare quotes with companies to find the best rates. No matter if it’s term life or a simple funeral policy, affordable insurance is within reach.

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