Cheapest Life Insurance

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

Given the current economic crisis, many are looking for less expensive insurance coverage; especially life insurance.  It is not surprising, then, that a highly sought term on the Internet is: Cheapest Life Insurance.

“Cheapest” is a misleading term since there are other factors to consider other than life insurance rates, such as: coverage terms, payout, exclusions, riders, insurer history, insurer viability (no small consideration given the financial crisis).  Therefore, when selecting a carrier and a life insurance policy, price should not be the only consideration.

When initiating your search for low cost life insurance, it is best to start with considering Term Life Insurance versus Whole Life Insurance. Both plans provide comparable life insurance, but at vastly different prices. Let’s look at the Term insurance plan, which is the cheapest type of life insurance.

Term Insurance 

When the insurance industry first emerged, all policies were Term policies. It is pure life insurance, and fits the plan that most everyone envisions.

Term insurance only pays the beneficiary upon the death of the insured.  Often called (in the past) death insurance, the primary purpose of Term insurance: is to pay for the lost revenue (or earning power) of the insured in case of death.  This occurs for as long as the policy is active.  Once the policy is cancelled or its term expired, there will be no payout upon death.

It is simple; it is straight-forward; and, it is the cheapest form of insurance. Term insurance functions in a manner similar to most other forms of insurance (health, property, etc.), in which a payout occurs when a claim is submitted for a long as the premiums are current and the policy is in force.

The most basic form of Term insurance is the One Year Renewable (or Annual Renewable Term, ART).  This means the term of the policy is for only one year, with the option to renew.  Each time you renew for another year (or longer), the cost of the policy is increased to reflect your increasing age (you are now one year older, and closer to a demise).  Because of the short term, the use of this type policy is low; most people prefer longer terms to lock in a low rate over the life of the policy.

A bigger problem with the annual renewable plan is that you have to (in most cases) be insurable at the time of the renewal.  If you become terminally ill and your renewal comes up, you might not be approved (you would be considered uninsurable).

A more common version of Term insurance is called the annual renewable term (ART).  This model guarantees that you will be able to renew each year.  Your premiums will be higher for this assurance.  Term guarantees may run from 10 years to 30 years, and up to age 95.  Each carrier has various versions that you can choose to best fit your needs.

ART has a guaranteed renewable term, usually ranging from 5 years to 30 years; and up to age 95. Most insurance carriers will provide a selection of terms and maximum age, and the premiums will vary accordingly.  Buying a long-term policy is also a way to maintain insurability. 

The most popular form of Term insurance is the Guaranteed Level Premium Term life insurance.  With this plan, the premium remains fixed for a given term: generally 5, 10, 15, 20, or 30 years.  Most level premium policies include a renewal option upon expiration, and at a guaranteed max higher rate.  You will need to confirm whether the guaranteed insurability clause is included.

Studies conducted by the insurance industry have shown that the probability of filing a claim with a Term insurance policy is as low as 1%; significantly lower than for Whole Life insurance policies.  This accounts for the very low premiums (typically less than one-tenth of Whole Life policy premiums).

Given the considerably lower premiums, Term life insurance provides the cheapest form of life insurance.