Compare Life Insurance Providers

September 2020
Results for - Sep 20'
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Life insurance is a tool that helps you plan ahead and provides financial protection for your family for the future. Compare life insurance companies and gain the knowledge to find out which is the right life insurance policy for you.

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Life Insurance: Everything You Need to Know

Just like other types of insurance, there are a few things you need to know when buying life insurance, like how it works and understanding coverage options. For now, let’s start with what it is and who it’s for.

Life insurance is a policy you take out with an insurance company. It’s a legally binding contract where you pay regular premiums to the insurer, and in exchange, they’ll provide a payout to your beneficiaries in the case of your death.

A situation that would call for the need for life insurance is something no one likes to think about but it’s incredibly important for those who have loved ones relying on them financially. When an individual dies, their income is gone, leaving pricey funeral expenses and other costs for family members to pay.

A loss of a source of income for a family can be devastating, so it’s a good idea to be prepared and have the financial security life insurance brings.

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Types of Life Insurance

There are several types of life insurance to meet varying needs and preferences, but the three main ones you should know about are term life insurance, whole life insurance, and universal life insurance.

Term life insurance

Term life insurance is a policy that guarantees the insurance company pays out the “death benefit” if the policyholder dies during a predefined term. When the term expires, it can either be renewed for another term, turned into permanent coverage, or the policy can simply end when it ends.

Terms will typically cover 10, 20, or 30 year periods. This is a popular option because the payouts are bigger and the cost is cheaper than having permanent life insurance, but keep in mind that coverage is temporary.

Good option if you:

  • Have a mortgage you don’t want left to burden a spouse if you die
  • Want your child’s college costs to be covered if you die
  • Want some coverage but can’t afford the high premiums of permanent life insurance

Whole life insurance

A whole life policy falls under the umbrella of permanent life insurance (as does universal life insurance, but we’ll get to that next). If you have this policy, then you’re covered until death so long as you pay your premiums.

It’s the most common version of permanent life insurance, but while having a guaranteed payout for life sounds great, it comes at a high cost. Premiums for whole life insurance policies are far higher than those for term life insurance and can cost as much as five to 15 times more.

Some also view whole life insurance as an investment, but financial experts will tell you that there are better investment vehicles, like 401(k)s and other retirement accounts, real estate, and stocks. So we don’t recommend you buy into that thinking.

This kind of savings strategy—where the longer you pay into the policy, the more cash value you’ll have built up—is a good idea for high-income individuals who have already maxed out their retirement accounts, like their 401(k) and Roth IRA, and their 529 plans (if they have kids).

And while you can borrow money from a permanent life insurance policy, keep in mind that it’s borrowed against the death benefit. A personal loan may be a better choice if you’re in need of fast cash.

Universal life insurance

Similar to whole life insurance, a universal life insurance policy also covers you for life and has a cash value component, but it’s a bit more flexible when it comes to payments. You can choose how much premium you want to pay within a specified range.

The minimum payment amount depends on the cost of insurance, which includes your death benefit and fees. Any amount you pay on top of this premium will go towards your cash value, which is seen as a sort of investment since it’s guaranteed to grow based on both the market performance and the interest rate set by the insurance company.

In short, part of the payment will go towards covering your life insurance and the other part goes into savings and investment.

Universal life insurance is seen as a strategy to build wealth while also maintaining a death benefit, but the benefits depend on market stability, which not everyone may be comfortable with.

 

 

Life Insurance Ratings

When searching for the best life insurance rates, there are third-party agencies that give ratings to life insurance companies. These metrics factor in the company’s financial strength as well as reviews from real customers.

Here are the three major agencies providing ratings for life insurance (and other products, like business loans from lenders):

  • Better Business Bureau (BBB) : This non-profit organization has BBB ratings which represent their opinion on how businesses interact with their customers based on information they gather and complaints. Ratings are from A+ (the highest) to F (the lowest).
  • J. D. Power : J.D. Power rankings on products and services are based on the opinions of a sample of consumers from a range of industries who’ve either used or owned the service being rated. Their rankings for insurance companies are between 0 and 1,000 and factor in customer satisfaction, prices, and offerings.
  • A.M. Best : A Best’s Credit Rating (BCR) is an objective and independent opinion of an insurer’s and issuer’s creditworthiness. An A++ score is their top grade while D is the poorest.

You should always be sure that the insurer you work with has a strong financial rating so there’s no risk of them not being able to pay a claim.

Life Insurance Rates

Your risk factor is something that plays a big role in the premiums you’ll have to pay. This includes things like your age, health history, gender, weight, occupation and even hobbies. All of these can affect your lifespan.

For example, women, individuals in their 40s or younger, and non-smokers will enjoy lower premiums than men, older people, and smokers. It can also be difficult to find affordable premiums for those who are overweight or are in poor health.

One way to save on premiums is by bundling your life insurance policy with other policies. An example of this could be your home insurance.

Here are a few more examples. These will help you can get an idea of how rates might look with a standard $250,000 policy amount:

Women

Age 20-year term 30-year term Whole life
30 $133 $191 $1,904
40 $180 $280 $2,766
50 $364 $616 $4,262

Men

Age 20-year term 30-year term Whole life
30 $150 $223 $2,145
40 $210 $340 $3,191
50 $465 $811 $4,990

 

As you can see, the longer you wait to purchase life insurance, the higher premium you’ll be stuck with. Once you purchase a policy, however, you’ll pay the same premium every month.

 

How to Buy Life Insurance

Buying life insurance doesn’t need to be a complicated process. If you’ve read this far, then you’re already familiar with the essentials; like the different coverage options, how it works, a quick glance at prices, and even a few recommended brands.

Here are the next steps:

  • Decide which type of policy best suits your needs—term or permanent.
  • Research multiple life insurance carriers to see what policy options they offer, prices, and ratings.
  • Once you’ve found a handful of solid life insurance companies, request quotes from each of them to get the best deal.
  • Once you choose a company, fill out the application. You will need to provide your personal information, social security number, and driver’s license. You will also need to submit an Attending Physician Statement (APS) to verify your medical history.
  • Some insurance companies require a phone interview to confirm the information provided and additional details, so prepare for that.
  • Schedule a medical exam for life insurance. Most companies will require this from applicants before approving them for coverage.
  • Wait and see if you’re approved. Since there’s a lot to consider in the application process, it can take several weeks or even a month to get approved.

 Final Thoughts

Choosing the right life insurance plan and knowing your family will be financially secure after your death will give you peace of mind. Determine what type of life insurance coverage is best suited to your needs, compare companies, and start getting quotes today.