Whether you want to make sure that your loved ones are well protected or just want peace of mind, this section will provide essential info to help you get started.
What is life insurance?
Life insurance is a contract between you and the insurance company. You agree to pay set premiums to the insurance company during your lifetime (or agreed-upon term). In return, after your death, the insurance company will pay a specified sum of money to your designated beneficiaries. Typically, life insurance can cover funeral expenses, mortgages, college tuition, and more.
Get a quote on life insurance today and protect your loved ones with reliable coverage.
Who needs to buy life insurance?
Traditionally, only people with dependents (like a spouse or young children) sought life insurance policies. Today, however, a good life insurance policy makes sense for a wide range of individuals. Experts recommend getting life insurance if someone you know (such as a business partner, spouse, or family member) may suffer financially upon your death.
Life insurance can be an important component of a sound financial strategy. It can:
- Provide for your dependents
- Help pay for college
- Pay for funeral expenses
- Pay for estate taxes
- Generate an inheritance
When should I buy life insurance?
You should buy life insurance when you feel the time is right. Take a look at your finances, and then ask yourself a few questions:
- Do you have any dependents or young children in the family?
- How will your family fare without your financial contribution?
- Do you have enough in your savings to pay for funeral expenses and any outstanding debt?
- Would you like to leave your loved ones an inheritance?
Depending on your answers, now may be the right time to buy life insurance. And since life insurance rates increase as you age, the sooner you buy, the lower your rates will be over time.
How much life insurance do I need?
There isn't a standard answer to this question as each individual situation differs. Some experts recommend getting a policy that's 10 or 20 times your annual income, but our partners at Efinancial think it best to carefully consider your situation. To figure out how much life insurance you really need, ask yourself:
- How much money will your dependents need to maintain their standard of living without your financial contribution? And for how long will your dependents continue to need your support?
- What expenses will be incurred by your funeral and potential medical bills?
- Do you have a mortgage payment or children who have yet to go to college?
A life insurance calculator can help you determine a rough estimate of how much is enough. But to really ensure that you don't get more or less coverage than you need, we recommend speaking with a licensed agent.
I'm a first-time life insurance buyer. What mistakes should I avoid when choosing life insurance?
Life insurance may seem intimidating and confusing, and it might seem easy to make mistakes. However, the process isn't as complicated as you might think. In truth, the biggest mistake you're liable to make when choosing life insurance is not choosing it at all.
Here are 3 common misconceptions that can be detrimental:
- "I don't need it" — Even if you're young and healthy, life insurance provides benefits (and peace of mind) should an accidental death occur.
- "I'll get it down the road, not now" — If you have something to protect (family, loved ones, etc.), you should buy life insurance now since rates increase as you age.
- "I can't afford it" — Term life policies for young, healthy individuals are surprisingly affordable. And, you don't have to buy a huge policy, just as much as you can afford today. As your needs change, you can purchase another policy to supplement the coverage you already have.
Comparing life insurance policies
What factors should I look at when comparing life insurance policies?
Like all insurance policies, price is an important factor. After all, nobody wants to overpay for a policy. That being said, try to make sure you're not skimping on coverage to get a lower rate. When evaluating term life insurance policies, we suggest comparing coverage terms, the coverage amount, and the insurance company's financial rating on A.M. Best.
For whole life or universal life policies, you'll also want to compare the investment options and cash returns available on each policy.
Many people start comparing life insurance policies by getting a quote online.
What's the easiest way to compare term life insurance quotes?
The internet is your best bet to compare life insurance rates. Most life insurance companies will generate a quote in just a few minutes, and all you need is your
Our partners at Efinancial work with more than 100 life insurance companies, so they can search for the most competitive life insurance rates from trusted providers and deliver them to you.
What are the pros and cons of a term life insurance policy?
Term life insurance is a great option for young families who prefer to pay less for life insurance. These policies are designed to ensure that the insured's loved ones will be financially safe should unexpected death occur.
Term life insurance is affordable and flexible. You can choose your policy term (typically 1 to 30 years) to match your needs. And for healthy, non-smoking adults, rates are very affordable. Payments are fixed and will not increase over the life of the policy term, and you can customize your policy by adding extra coverage (also known as riders) when your policy goes in force. Additionally, you can also buy a second life insurance policy to maximize your level of coverage, which can sometimes prove to be cheaper than adding riders to an existing policy.
On the other hand, term life insurance only insures you for the stated policy term. That means if you die a year after your term expires, no payments will be made. Your policy also doesn't accrue any cash value, unlike other types of life insurance. Some policies, however, will let you convert your term life policy to a permanent or whole life policy. Check with your insurer when you buy to see if this is an option.
Costs and savings
How much does term life insurance cost?
The cost varies depending on the length of your policy, the amount of coverage, and your personal info. In general, however, term life insurance policies for young, healthy individuals can be very affordable — as little as a few hundred dollars per year. Older adults, those with pre-existing health conditions, and smokers can expect higher premiums.
To get an idea of how much a term life policy will cost, get multiple life insurance quotes. While these quotes aren't definite, they'll give you a good idea of what you can expect in terms of price.
How do I get cheap life insurance?
Life insurance is one area where you don't want to skimp, but you certainly don't want to overpay either. To find life insurance you can afford without compromising coverage or quality, you should consider term life policies.
Term life insurance is generally affordable, especially if you're healthy and relatively young. When searching for the best rates, make sure you compare policies side by side, as rates can vary drastically from insurance company to insurance company.
How can I save on life insurance?
You can lower your premium in a number of ways:
- Improve your health. Since life insurance rates are determined by your health, the healthier you are, the lower your rates will be. If you smoke, try to quit. Eat healthier. And get at least 30 minutes of exercise every day. The result will be a healthier you and lower premiums.
- Buy only what you need. If you only need coverage for 10 years, don't buy a policy with a 30-year term. And don't buy more coverage than you really need. A professional assessment will help you determine the right amount of coverage.
- Ask for a reevaluation if your health improves. If you're paying a higher premium because of a health issue, request a rate evaluation with your insurer. Many insurers will lower your rate based on your new health profile.
- Raise your credit score. Your credit affects your insurance premiums across the board. Since insurance companies deem those with lower credit scores riskier to insure, they generally increase the premiums to compensate for risk. So check your credit score, and if it doesn't earn you any bragging rights, work on raising it before you apply for life insurance.
- Check for insurance discounts when you shop.
- Buy sooner rather than later. Since age greatly affects your rate, the sooner you buy, the more you'll save.
What life insurance discounts are available?
This will depend on the insurance company. In general, you can score a discount if you buy multiple insurance policies from the same company. Since most companies charge a monthly installment fee, you can also save by paying your premiums annually.