Cheap Life Insurance

On our website you will find information about cheap life insurance, and a list of the best sites for affordable life insurance.

With access to the Internet, locating cheap life insurance is far easier than in the past.  Let’s first define “cheap” as finding a life insurance policy that meets your needs, from a quality carrier, at the lowest possible premium.

To start the search process, you will need to do some preparation.  The following provides some guidelines:

1.   Determine whether you need pure life insurance or a combination of life insurance and annuity program.  Pure life insurance simply insures against a loss; in this case, the lost wages or earnings that would occur upon your death.  If all you want is to insure against lost income, then look at Term Life Insurance policies which provides various pure insurance options at the least cost.  It is also fairly easy to perform comparisons across carriers.

If you would like to combine life insurance with some form of retirement income (an annuity), or you would like to be insured for life and not have to make any further payments after age 65, then you should consider Whole Life Insurance.  There are many options available with this model, so your research will be far more extensive.  Just keep in mind that Whole Life Insurance is far more costly for a given level of coverage than Term Life Insurance (typically 10x more expensive).  Because of the number of options, and the complexity of the models, the cost will initially be much higher per $1,000 of coverage, and then decline over the years.  Comparing Whole Life Insurance policies is much more difficult, as well, since each carrier has policy differences that are unique.

2.   Determine what you can afford.  You should consider only spending a percentage of your income on life insurance (typically 5% for term insurance).  Do not try to purchase more than you can afford simply to lock in a low rate.  (In reality, your rate already incorporates age over the years, so buy what you can afford.) 

      In later years, as your income increases, you can always increase your coverage (assuming you remain insurable).  The insurability issue should be addressed prior to purchasing a policy to determine whether you are guaranteed the right to increase coverage in the future regardless of health. 

3.   Determine how much insurance coverage you need.  A good starting point is to estimate how much income you will generate over your working career; let’s assume to age 65.  If you have 40 years of employment at $50k annual salary, then you will earn approximately $2 million of potential income.  Now, adjust for expected increase in wages of 7%, and you are now at $2.14 million. 

      If you plan to purchase a whole life insurance policy, you will need to factor in the amount of annuity you want to receive after retirement.  Here you will need to consult with the insurance agent for help, since each policy will estimate the annuity differently (due to differences in the policies).  There will be a tradeoff between insurance coverage and the growing equity in the policy.  Add any additional items like payment of debt, college funds, etc. to this base figure.  Given this figure, you can now balance the amount you can afford with the amount of insurance needed.  This information will be quite helpful to the insurance agent you will work with online.

You are now ready to comparison shop on the Internet.  It is advised that you search the Internet for broker sites, which represent a large number of carriers. They can provide expert support, and price comparisons of comparable policies.

Here is a quick overview of the types of policies that are available for consideration:

Term Life Insurance

This type of life insurance policy pays the beneficiary upon the death of the insured.  For this to occur, the policy must be active and premium payments current.  This type policy has the following plans:

·    Level Term: the premium paid remains unchanged throughout the term of the policy, as does the death benefit.

·    Annual Renewable Term (ART): the term of the policy is one year with a guaranteed renewable.  The premium will increase each year upon renewing, while the death benefit remains unchanged.  This is popular amongst those who anticipate converting to whole life later in the future.

·    Decreasing Term: the premium remains unchanged over the term of the policy, but the death benefit declines each year.  Many have used this plan to cover debts (ex: mortgage, car loans, personal debt) to avoid any burdens to the family.

Whole Life Insurance

This type of life insurance combines insurance with some type of investment program.  The term is for the life of the insured.  At some point, the value of the death benefit will increase to reflect the earnings from the investment portion of the policy.

Universal Life Insurance

This type of insurance allows you to adjust the premium and the length of term to accommodate your future needs.  The term of the policy will reflect the cash value available to cover the premiums in the future.

Variable Life Insurance

This type of policy provides the insured with various investment options.  Options range from very low risk investment vehicles (like CDs, triple A bonds, etc.) to more aggressive vehicles (like stocks, mutual funds, etc.).  The term will be affected by how successful the investments are.

Armed with this information, and having followed the preparatory steps, you should be successful in locating a life insurance policy that meets your needs, and at the lowest possible life insurance rates.