Comparing cheap life insurance quotes, rates, policy term options and companies is now simpler and friendlier than ever. Have a proper life insurance comparison, find your next life insurance in a few seconds, read customer experience based reviews and ratings of life insurance companies, compare life insurance quotes from the best rated life insurance companies and purchase life insurance online with ease from the best providers.
Life insurance can be simple, although there are many different types of life insurance policies offering users a wide range of options to choose from, which can make finding the ideal life insurance policy not only tedious but confusing. Insuranks simplify this for you.
Before you decide what plan is right for you, it is important that you understand the nuances of life insurance, as well as the different plans you can purchase. As you read through the varying policies, think about your life insurance needs. What benefits are you looking for? Which factors aren’t as important to you?
Take note of the pros and cons of each type and plan as they apply to you.
Let’s get started…
What is Life Insurance?
Life insurance is a contract between an insurance company and a policyholder, in which, while the policyholder pays a premium, the life insurance company pays the selected beneficiaries a specific amount of money in return for the premium upon the death of the policyholder. The beneficiaries are mostly family members. This practice dates all the way back to 1706, with the first insurance company offering life policies in London. Life insurance is a significant safety net when you have financial dependents. Life insurance payment can cover debts such as mortgage, tuition fees, personal loans, medical debts and income replacement.
Whole vs Term Life Insurance Cost Per Month Average Rates
| Customer Type | Coverage Amount | Whole Life Cost | 20 Year Term Life | 30 Year Term Life |
|---|---|---|---|---|
| 30 year old male | $250,000 | $180 | $12 | $19 |
| 30 year old male | $500,000 | $355 | $19 | $31 |
| 30 year old male | $1,000,000 | $700 | $31 | $54 |
| 30 year old female | $250,000 | $160 | $11 | $16 |
| 30 year old female | $500,000 | $310 | $16 | $26 |
| 30 year old female | $1,000,000 | $620 | $25 | $44 |
| 40 year old male | $250,000 | $266 | $17 | $28 |
| 40 year old male | $500,000 | $530 | $29 | $50 |
| 40 year old male | $1,000,000 | $1,050 | $49 | $90 |
| 40 year old female | $250,000 | $229 | $15 | $23 |
| 40 year old female | $500,000 | $449
|
$24
|
$39
|
| 40 year old female | $1,000,000 | $899
|
$42
|
$75 |
| 50 year old male | $250,000 | $415 | $39 | $67 |
| 50 year old male | $500,000 | $825 | $70 | $125 |
| 50 year old male | $1,000,000 | $1649 | $133 | $242 |
| 50 year old female | $250,000
|
$355 | $29 | $49 |
| 50 year old female | $500,000
|
$709
|
$54
|
$92
|
| 50 year old female | $1,000,000
|
$1399
|
$99
|
$175
|
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Different Types of Life Insurance Policies Explained
There are different types of life insurance policy plans. We will cover as many different types of life insurance policies, coverage and products to help make you smarter and more educated insurance shoppers.
The two main types of life insurance are term life insurance vs whole life insurance (also named permanent life insurance ). These operate exactly like you think they would. Some will claim that they are also the best types of life insurance.
Term Life Insurance
Term life insurance covers a limited period of time, that can be 10, 20 or 30 years, some life insurance companies even offer coverage for up to 35 and 40 years. It doesn’t build cash value but is rather a fixed rate of the stated death benefit. In the unfortunate occasion of the insured person’s death during the policy’s duration, it pays that benefit to the designated beneficiaries. When the term life insurance expires, it can either be renewed by the policyholders for another term, converted for a permanent policy or terminated.
Read more: Best Term Life insurance: Quotes & Guide
Whole life insurance is a general name for life insurance policies that never expire. Whole life insurance policies costs are higher than the costs of term life insurance policies however it provides extra benefits such as cash value, the savings element of permanent life insurance, which can be loaned against the policy by policyholders to use for large expenses, grows and builds value over time.
Permanent life insurance is the most familiar permanent life insurance form. Whole life insurance lasts for the entire life of the policyholder. It similarly has a death benefit, but it functions as a tax deferred savings account. Essentially, the death benefit accrues interest at a fixed rate. Every month, some of the money you are paying for the policy goes into the savings account. As a result, the actual value of your policy grows over time. This is the main reason why whole life insurance can be so much more expensive, up to 15 times as much as a term life insurance policy. A whole life plan will exist for whatever duration of time you wish (and pay for). It is important to note, however, that associated taxes and fees make whole life insurance pretty complicated. If you do need or believe you will benefit from the growing cash value, this policy may be a good choice for you.
There are more types of life assurance policies and types of life insurance products other than term and whole life insurance, and within these two broad classes of life insurance policies there are many subcategories to choose from. These include:
- Universal life insurance
- Variable life insurance
- Variable universal life insurance and others
Universal Life Insurance
Similar to a whole life insurance policy, universal life insurance has a cash value. The premiums you pay will go towards both that value as well as the death benefit. The key with universal life insurance is that policyholders can actually alter both the premium and death benefit amount within the same policy.
Essentially, if you are not limited by the cash value, you can actually use it to pay off the monthly premium, making money off of your accrued interest. One thing to note, though, is that the cash value of a universal life insurance policy has a varying interest rate related to the market interest rate.
In terms of the death benefit, it is flexible but may cause increased underwriting and fees. This policy type is beneficial if you have a fluid financial situation. Based on your current and projected needs you can create your own, optimized insurance plan.
Overall, the flexibility of the universal life insurance plan is what is appealing to many who choose to purchase it. However, for others, this concept of fluidity and change is very confusing and unnecessary and thus many choose to take a different path. Remember to think about your specific needs. Create a list or outline of what it is you are looking for when it comes to a life insurance plan. Is flexibility important to you?
Variable Life Insurance
Another type of whole life insurance is variable life insurance . With a whole life insurance policy, the cash value functions as a savings account with a guaranteed minimum interest rate. On the other hand, a variable life insurance cash value is like an investment. The money you pay goes into multiple mutual fund-like accounts that will grow more over time. However, this carries a risk as you can lose money if the market enters recession. The value of your policy lies in the value of the stock market.
Although variable life insurance is a better investment than whole life insurance policies, your investment options are very limited. You only have a select number of mutual funds available at your disposal.
While fees are often lower with a variable life insurance policy than a whole life policy, this type of insurance plan comes with great risk. Managing it requires a deep understanding of investing and enough time to analyze your current plan and make changes. As such, a variable life insurance policy has many limitations.
Simplified Issue Life Insurance
The last type of insurance we will cover in great depth is simplified issue life insurance . This is a type of term life insurance.
When you apply for a life insurance policy, you normally go through a medical exam as part of the underwriting process so the insurer can assess the “value” of your risk. From this exam, your premium rate is determined. If you are looking to avoid this process, a simplified issue life insurance is the one for you. The hallmark of this type of plan is the “no exam policy.” In place of the exam, your risk would instead be determined through a health questionnaire.
This “no exam policy” mainly benefits healthy individuals who are looking to quickly purchase a plan.
Unfortunately, people in poor health may still be subjected to a medical exam and also may be denied an insurance plan.
If you do determine that a simplified issue life insurance policy is the one for you, it is important to consider another factor: the cost . This type of plan tends to be more expensive than others. Under other policies, a medical exam would determine a lower rate for a healthy individual compared to other people, but without this health check, you may be paying more than you otherwise would.
Other Forms of Life Insurance
Group Life Insurance
Group life insurance covers a number of different people under one contract. This is typically found in workplaces.
Mortgage Life Insurance
While we wish you a long and healthy life. If you pass away, a mortgage life insurance plan will cover the remaining balance of your mortgage payments. This may take some of the burden off of your beneficiaries who would otherwise have to pay it off. This plan typically requires no medical exam .
Credit Life Insurance
Accidental Death and Dismemberment Insurance
Joint Life Insurance
Level Term Life Insurance
This is often found just as term life insurance; however, they are not synonymous. Level term life insurance is a type of term life insurance in which the premium and the death benefit do not change throughout the time period of the plan.
Direct Life Insurance
This is a life insurance product in which the buyer does not need to deal with an agent and can instead work directly with the insurance company.
Help others make better decisions
Underwriting and What It Means for Your Life Insurance Policy
Often when looking for any insurance policy the term underwriting appears quite frequently. In the terms of a life insurance policy, underwriting refers to the life insurance company’s determination of your risk (meaning how risky of a policyholder are you). Your life insurance risk is directly correlated to your health, gender, age, profession, and other relevant factors. An insurance company must protect itself from policyholders who are predisposed to frequent hospital visits, injuries, and have a higher risk of death. This makes sense from an economic standpoint. Insurance companies make money when you do NOT need their help. Essentially you are paying them a premium for nothing. However, as soon as something does happen, the best insurance companies are incredibly useful in providing you the funds and help you need.
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Best Life Insurance Companies & Services
Fabric: 5/5
Fabric is another fully online term life insurance company that provides fast, easy online term life and accidental death insurance in affordable rates to its shoppers. You can find $100k to $5m policies with 10, 15 and 20 year terms starting from as little as $6 a month and get covered in less than 10 minutes.
Best for: Those who want to get great term life insurance online fast and affordable; No brokers, no agents and no medical exam term life insurance online
Bestow: 4.5/5
Bestow provides a unique term life insurance experience that is built for this day and age. Applications are done online with no medical exams or paperwork. Coverage up to $1,000,000. Plans start from $16 a month.
Best for: Millennials
Ladder: 4.5/5
Ladder is another technologically advanced life insurance company that reinvents term life insurance and provides affordable and flexible policies online. It offers $1,000,000 term life insurance policies from $25 a month, provides a fully online experience, many times with no medical exam required.
Best for: Flexibility with term life insurance policies of $100,000 to $8,000,000 yearly face value
Northwestern Mutual Life Insurance: 4.5/5
Northwestern Mutual is known for its flexibility. They offer five different types of plans, and these plans are either whole life, term, or universal life policies. At any point, a term life policy can become a whole life policy without you going in for a medical exam. In addition, the company offers affordable rates and excellent customer service
Prudential Life Insurance: 4/5
Prudential is another popular life insurance company. They are known for their high coverage limit and their customizability. They do NOT offer whole life insurance policies, however, which is one con if that is something you are looking for. They offer three variable policies called PruLife Custom Premier II Permanent Variable Universal Life, VUL Protector Permanent Variable Universal Life, and PruLife SVUL ProtectorSM Permanent Variable Universal Life. Additionally, their term policies are offered in a variety of different terms, the largest being 30 years.
One complaint with Prudential is that they offer so many different types of plans with very complex names that it can be difficult to manage without the help of one of their workers.
State Farm Life Insurance: 4/5
State Farm is another popular company with solid customer ratings. Like the others, they offer a number of different whole life, term, and universal policies. However, their premiums are typically higher than average, and they don’t have many term-length options. If you are looking for a cheap life insurance plan, this may not be the one for you. Regardless, they are known for their stability and reliable customer service.
Wrapping Up
You may be overwhelmed by the specificities of life insurance and that is okay! If there are a couple of takeaways you should keep in mind from this article, here they are:
1. Term life insurance lasts for a duration of time while whole life insurance carries with you for your entire life. Term life policies are typically less expensive.
2. Universal life insurance plans allow policyholders more flexibility.
3. Most plans, other than the simplified issue life insurance, will require a medical exam to determine your risk.
4. The cost of a plan will depend on many different factors such as your age, health, and history.
Expect to pay more if you have health complications or if you are older. If you are healthy and/or young, you are considered a lower risk to insure and will likely pay less.
Understanding how life insurance works can be very tricky, and purchasing a plan is certainly not something that you should rush. Take some time to analyze each of these types of plans in more depth, compare them to your needs, and then get started.
