Cheap Life Insurance | Tips + 5 Best Providers

It’s easier than ever to find cheap life insurance, yet many people still think buying coverage would be too expensive, too big a hassle or both.

So they put off buying life insurance until they have more money. Or they decide to wait until they have more time to deal with the applications, the medical exam, and the insurance agent.

In reality, waiting will usually make your coverage more expensive. And, people with less money actually need life insurance more than people who have achieved more financial stability.

When you compare quotes online and learn how to control more of the buying process, you can save a lot of money on premiums. Most people who buy life insurance through us are surprised how cheap their coverage can be.

6 Cheap Life Insurance Tips

Several factors work together to determine how much you’d pay for life insurance coverage. You can control many of these factors; others you can’t change.

So let’s explore the things you can control. By controlling these factors, you’ll give yourself access to cheaper life insurance rates.

#1 Find the Most Affordable Type of Policy

You can categorize any life insurance policy as either a term life policy or a whole life policy. Whole life policies last the rest of your life.

Term life policies last for a specific period of time, which we call your “term.”

What is the Least Expensive Form of Life Insurance?

Because it’s only temporary, a term life policy can give more coverage for less money.

Term life insurance is inherently a low-premium product compared to other types of life insurance. A minimal amount of money needs to go toward funding the death benefit because a significant portion of the premium calculation resides in the payout ratio or probability.

In most cases, the price difference between term and whole is staggering:

Not only does whole life coverage last longer, but whole policies also hold additional cash value, adding even more to their cost.

This cash value component can be useful, but it’s not necessary if you need only life insurance coverage to protect your family’s finances in case you die unexpectedly.

A third reason why term life has gotten cheaper is that people are living longer. This means that the policies that insurers are issuing today are being targeted at a population with a lower probability of death within the “sweet spot” of the term insurance market – ages 30 to 45.

So if you’re looking for cheap life insurance, start with term life quotes.

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#2 Choose the Right Amount of Coverage

This one’s almost too obvious to mention: The more coverage you buy, the more you’ll pay. Still, shoppers often buy more coverage than they need, meaning they’re overinsured.

How Much Coverage Should You Purchase?

It’s better to have too much insurance than too little, they say. Maybe so, but it’s even better to have just the right amount.

To find the right amount of coverage, consider how much money your family would need if you died and your family no longer had:

  • Your salary: If you’re the primary earner in your family, your insurance should replace your income for seven to 10 years.
  • Your future savings: Your coverage could replace the money you’d planned to save for your children’s college or a bigger house.
  • Time to pay your debts: Your mortgage, your private student loans, your car loans — these debts won’t necessarily go away if you die. Your insurance could keep your family from being responsible for repayment.

If you earn, say, $75,000 a year, a $1 million policy may be enough to protect your family. Even if you like the idea of a $2 million policy, the higher premiums probably wouldn’t be necessary.

#3 A Shorter Term Length is Less Expensive

The same goes for your term length. A 20-year term policy will cost less than a 30-year policy, for example.

How do you decide? If you expect your children will be financially independent and most of your debts will be paid off within 20 years, buying a 20-year policy instead of a 30-year policy can save you a significant amount of money.

Level Premium Funding

Level premium funding also helps lower the cost of term life insurance. With the most basic type of term insurance, annual renewable term life, you pay premiums for one year, and the insurer only charges you one year’s worth of death benefit coverage. On your policy anniversary, the insurer recalculates your risk of death and increases your premium to reflect your older age.

With level premium funding, the insurer collects premiums in excess of the one year cost of insurance and then guarantees death benefit coverage for:

It invests the excess premium and uses investment interest and the excess premium to hold down the rising cost of insurance. As insurers have gotten better at investing and diversifying out of government debt, they’ve also been able to lower premiums of term policies.

It often is recommended that consumers consider a level-term policy for 10 years or more. However, if your life insurance needs are shorter, a short term life insurance policy may be the option that makes the most sense for your family.

#4 Improve Your Credit Score

Life insurance underwriters base premiums on the amount of risk your policy create for the company. A riskier policy requires a higher premium.

Many underwriters now consider your credit score as part of your risk quotient. A lower credit score tells insurers you take more financial risks and may also make riskier choices elsewhere in life.

Sounds like a stretch? Maybe so, but there is a documented connection between lower credit scores and higher instances of claims. You can help yourself find cheaper insurance by improving your credit score first.

Speaking of risk, your driving record can also give underwriters insight into your habits. Having citations for reckless driving or speeding within the past few years can raise your premiums.

#5 Stop Smoking

Smoking or other forms of tobacco use will inflate premiums more than just about any other factor. The reason should be obvious: People who smoke tend to die sooner, and it’s not just lung cancer.

Smokers also are more likely to die from pneumonia, emphysema, and other kinds of cancer, too.

I Quit Smoking, How Do I Get Cheaper Life Insurance?

With most insurance companies you may need to be tobacco-free for at least a year or two before you can qualify for the cheaper non-tobacco rates.

#6 Compare Life Insurance Quotes

Prior to purchasing life insurance, it is important to compare several policies from different insurance companies in order to ensure that you are getting the best coverage for your specific needs, while at the same time obtaining a premium quote that fits easily into your budget.

Just as with any other type of product or service in the market, though, cheapest does not always indicate best, as you will oftentimes “get what you pay for”.

Top 5 Cheap Life Insurance Companies

Life insurance coverage should be customized to your specific needs. An insurance company which fits one applicant perfectly may be a terrible match for someone else.

So any kind of “best life insurance company” list should be considered general advice.

The following companies offer good places to start for many applicants searching for cheap coverage:

Haven Life

Haven Life, a New York City-based startup has grown rapidly over the past few years by offering a simple and transparent approach to term life policies.

If you’re looking for quick, quality coverage at competitive rates, Haven Life’s online application can deliver.

The company can even offer some of its most qualified applicants medically underwritten coverage without a medical exam — truly the best of both worlds. Haven Life sells only MassMutual term policies.

Banner Life

Banner Life also excels with transparency, quality, and affordability. You won’t get an instant decision, and you’ll need a medical exam to unlock the biggest savings, but many people looking for cheap life insurance like Banner Life’s competitive rates.

Banner Life tends to look more favorably on applicants with health problems in their family history.

Along with term life, Banner Life issues more complex policies such as universal coverage. For cheap coverage, stick with the term policies, especially if you’re young and need a lot of coverage.

AIG Direct

Another large insurer with quality coverage and competitive rates, AIG has become a favorite over the past decade. Applicants with diabetes, in particular, often have good results when they apply for a policy from AIG.

Applicants with weight issues can also get a favorable classification from AIG Direct.

Protective Life

We often recommend Protective Life for applicants who want cheap coverage. Protective gets high marks from A.M. Best, and it’s basic, term policies compare well with other carriers, especially for applicants in their 40s and 50s.

If you’ve ever been a smoker, you may have a harder time qualifying for non-tobacco rates with Protective Life.

Pacific Life

We’ll round out this list with Pacific Life, another quality insurer with competitive rates. Pacific Life often extends more favorable rates to people with high cholesterol.

Other Factors That Determine Premium Costs

You can find cheaper insurance by controlling the issues discussed above: your policy type, term length, and coverage amount will have an immediate impact.

Over time, you can also improve your credit score, driving record, and tobacco status, too.

The following factors will be harder to change, though still possible in most cases:
Your Overall Health Matters a Lot

The healthiest people usually find cheap life insurance without having to look very long. Normally you can’t take advantage of your good health without taking a medical exam to prove your status.

A medical exam takes time and includes needles, so no-exam life insurance can look appealing. However, no-exam coverage will cost significantly more and offer less coverage.

Unless you really have health issues you can’t resolve, a medical exam can unlock cheaper insurance rates.

To get the cheapest rates, you should give yourself some time to prepare for the exam. Try to shed a few pounds if your body-mass index is a little high. A diet with more fruits and vegetables and less sodium could lower your blood pressure some.

Naturally, you should consult a physician before making huge changes, but sometimes even small improvements to your health exam can lead to cheaper life insurance rates.

Underwriters will want to know about your family’s health history, too. There’s nothing you can do about past health issues, but you can find an insurance company less likely to emphasize family health history during underwriting. We’ll get more into that below.

Your Age Matters, Too

Younger people also get cheap term life insurance. No, you can’t change your age, but you can stop putting off buying coverage.

The longer you wait, the more you can expect to pay when you lock in a rate.

A term policy’s premium stays level throughout the term. So getting coverage when you’re young can save you money each month for decades.

Riders Can Add Cost

A life insurance rider adds an extra feature to your policy, and it also will add extra cost. When you’re shopping for coverage — especially when you’re working with an agent — it can be tempting to add riders.

For example, many companies offer a waiver of premium rider. With this rider, you could keep your insurance even if a disability later in life prevented you from working and you couldn’t pay the premium.

You may think, “Why not add it? It would be nice to have.”

And you could be right. It would be nice to have if you needed it. If you’re trying to find cheap life insurance, though, too many riders can become a hindrance. You’ll have to find the right balance.

Your Occupation and Hobbies

Once again, risk affects premiums, so applicants with riskier jobs such as construction workers or wilderness guides tend to pay higher premiums than administrative assistants and retail clerks.

Someone who seldom leaves home on the weekends may get cheaper life insurance than a similar applicant who competes in drag races every Saturday night.

In these cases, most people accept higher premiums rather than changing their professions and hobbies.

Better to find insurance to fit your life than to change your life to fit an insurance policy.

Are Premiums and/or Benefits Guaranteed?

Check to make sure that the benefit amount and/or the premium amount is guaranteed from year to year – and if they are not, find out how much they will vary. If the premium increases by a large percentage over time, it could actually end up costing you more in the long run.

On the other hand, if the benefits also increase – and you anticipate a future need for the additional amount of coverage – the policy could be a good fit for you. This is especially the case if you don’t have to prove evidence of insurability in order for the benefit amount to rise.

Charges and Fees

In addition to the premium, some life insurance policies may have additional costs. For example, if you cancel the policy or take out your cash value within a certain time period, the policy may hit you with a surrender charge. This is important to be aware of, as any type of surrender charge or other hidden fees could negate an otherwise lower premium cost.

The New CSO Mortality Tables

When the insurance industry moved from the 1980 CSO mortality tables to the 2001 tables, policies got cheaper, and insurers could lower premiums. While some insurance companies took this opportunity to raise profits, others saw this as a competitive opportunity.

CSO mortality tables are how insurance companies class risk – in other words, it’s how they determine what to charge you based on your risk of death at any given age. When actuaries completed the 2001 model, they found that, in some instances, males outlived females – reversing a long-standing trend showing females outliving males. This was particularly true in the 20-30 age bracket. Smoking had a greater impact on mortality, meaning insurers may have chosen to raise premiums on smokers.

However, mortality tables were extended out to age 120, instead of 100, meaning that term policies could be positively affected. This means, in plain English, that you get to pay less for term insurance because people are generally living longer lives.

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Finding Cheap Life Insurance When You’re High Risk

So far we have stressed the factors you can control to get cheap life insurance. Unfortunately, many people have high-risk conditions they can’t control.

Applicants with diseases such as diabetes, cancer, or a heart condition automatically pose a higher insurance risk.

Other applicants have health conditions preventing them from losing weight which can make getting cheap insurance more difficult.

Work With An Independent Life Insurance Agent

In these cases, your first step should be to reach out to an online independent life insurance agent like ours or an independent agent in your area.

Ideally, your independent agent should work with at least 10 insurance companies. A captive agent will usually work for one insurance company.

Why does this matter?

If you present in a high-risk insurance category and you fail to qualify for coverage, a captive agent will likely steer you toward a more expensive policy within the same company.

An independent agent can guide you to a different insurance company — ideally the company most likely to work with people who have your condition.

You should still do what you can to control your diagnosis:

  • Go to your specialist regularly: Life insurance underwriters fear the unknown. If you had a heart attack two years ago and have stopped following up with your cardiologist, you’ll have more trouble getting affordable coverage.
  • Keep your condition under control: Having your condition under control for two years or longer will show underwriters you’re successfully managing your health.
  • Follow your physician’s advice: If your specialist prescribes medication but your pharmacy database shows no evidence you’ve ever bought it, your application could raise a red flag.

It is possible for someone with a chronic medical condition to find cheap life insurance with some extra guidance. We’d be glad to help when you call, email, or leave a comment below.

Work with a Financially Strong, Quality Provider

You should never sacrifice the quality of your coverage to save money. Luckily, you don’t really need to. The highest quality companies can typically afford to offer the most competitive rates.

Independent rating agencies can help you measure a life insurance company’s quality. Agencies such as A.M. Best and Fitch Ratings investigate insurers regularly. They issue grades, usually ranging from AAA or A++ down to C, D, or F.

Better ratings mean better quality coverage. When you’re buying life insurance coverage to protect your family in case you die, quality is a must.

Finding Your Way to Cheaper Life Insurance

All five companies we listed above can offer affordable premiums, especially for term coverage, to a lot of shoppers.

Ultimately, though, your ability to make the right decisions as you shop for coverage can help even more. As you shop, remember to:

  • Buy just enough, and not too much, coverage: both in face value and term length.
  • Try to get healthier before your medical exam.
  • Drive more carefully and improve your credit score by paying your bills on time.
  • Don’t put off buying the coverage you need now.
  • Avoid unnecessary riders.
  • If you smoke or chew tobacco, quit as soon as possible.
  • If you have a chronic disease, control your symptoms as best you can.
  • Work with an independent agent who can connect you with a wide variety of policies.

Finding the right company and reducing your risk to underwriters — that’s the recipe for getting cheap life insurance.

Doug Mitchell

Doug Mitchell

I have been a life insurance advisor for almost 30 years now. I graduated in finance from Auburn University and I received my Chartered Life Underwriter designation from the American College, a member of the Million Dollar Round Table and Top of the Table member. I have helped thousands of clients all over the country and I will work hard to make sure we find the best policy for your unique situation. You have many choices when it comes to life insurance so have access to over 60 different life insurance companies. I personally started this company and I can assure you that we will shoot straight with you. My goal is to get you approved for the best policy that meets your goals.