LIFE INSURANCE
Life insurance provides a tax-free lump sum of money to your loved ones after your death so you can make sure they’re able to pay everyday bills, children's college costs, or final expenses. A life insurance policy provides affordable financial protection — and invaluable peace of mind — to people with friends or family who rely on them.
Life insurance basics:
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You choose how many years your policy will last (the term) and the coverage amount that will be paid out if you die (the death benefit).
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You pay for the policy in the form of monthly or annual premiums. You can compare quotes from multiple life insurers to see the different monthly rates they charge for a policy.
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If you die while your life insurance policy is in effect, its death benefit is paid out to your chosen beneficiaries, who can use the money to pay off debts, cover expenses, like your monthly mortgage or rent payments, and more.
Types of life insurance
At the end of the day, most people will choose between two different types of life insurance: term life insurance, which lasts for a set amount of time before expiring, or whole life insurance, a type of permanent life insurance that has an investment-like cash value component and stays in effect for as long as you make the premium payments.
Whole life insurance can be good for people with complex financial situations or estate planning needs, but term life is the right choice for most shoppers because it’s the cheaper and more straightforward option.
There are even more types of life insurance with their own benefits, drawbacks, and unique properties. Talk to an expert before choosing a more complex policy – a term life policy will work best in most cases.
Life insurance with living benefits can help to cover medical bills and other expenses.
Average cost of life insurance
According to an annual study by nonprofit organization Life Happens and industry group LIMRA, more than half of people think term life insurance is at least three times more expensive than it actually is.
In truth, a term policy can provide a large death benefit at an affordable cost. A healthy 30-year-old man can get a $250,000, 20-year-term policy starting at around $16 a month.
The following factors go into determining the cost of your life insurance policy:
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Your policy — The type of policy you choose, along with the term length and coverage amount, will help set the base cost of your policy.
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Your health — Life insurance is all about risk, so the healthier you are, the cheaper your policy will be.
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Your age — The cost of a life insurance policy increases at a rate of 8-10% each year you put off buying one.
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Your hobbies — Dangerous hobbies, like skydiving and scuba diving, may raise your life insurance rates.
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Your gender — In general, men pay more than women for comparable policies.
Each life insurance company will weigh factors differently. Policygenius can help you easily compare life insurance quotes from multiple carriers to make sure you’re getting the best rates.
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Life insurance with living benefits can help to cover medical bills and other expenses ask us about it.
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Who needs life insurance?
A 2019 report by the U.S. Federal Reserve Board showed that nearly 40% of adults would have trouble paying a $400 emergency expense, and 12% "would be unable to pay the expense by any means." Life insurance helps protect anyone who depends on your income or services from such emergencies.
Life insurance policyholders commonly include:
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Students — Did you know that your parents may be on the hook for your debt if they cosigned your student loans? Anyone with cosigned debt should consider life insurance, even if you’re young.
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Spouses — Marriage complicates finances, and you’ll feel better if you know your significant other is taken care of regarding any shared debt or future financial plans.
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Parents — Whether it’s diapers or tuition, kids are expensive. A life insurance policy ensures their costs are taken care of from cradle to college.
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Homeowners — Mortgages are the biggest, longest-lasting debt most people will take on. A good rule of thumb is to have a life insurance policy that lasts as long as your mortgage. It's not uncommon for a policy to last 20 or 30 years.
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Business owners — A smart business owner will have an insurance policy so their partners can keep the company going even after you’re gone.
You might consider life insurance even if you don’t fall into one of those buckets. For example, you can use a death benefit to leave behind a charitable gift to a museum or foundation.
I have group life insurance through my employer. Do I still need a private insurance policy?
Group coverage is a popular workplace perk but often falls short in two ways: It limits the benefit amount and isn't transferable between employers. A private insurance policy allows you to customize your coverage and stay protected for as long as you need it.
Already have group life insurance? Let our agents help you find the right supplemental policy to complete your coverage.
Getting started with life insurance.
Ready to start shopping for life insurance? Even if you’re not ready to buy, you can take some commitment-free steps to compare life insurance quotes and see what your options are – no email or phone number required.
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Get the right documentation. You’ll need basic information about your finances and health history to get the most accurate quotes. Later in the application process the insurance company may need more medical information but for now you'll just need information on things like if you're a smoker or have a family history of heart disease.
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Determine how much life insurance you’ll need. Take into account any assets, debts, dependents, and future expenses to get an idea of your family’s coverage gap. A good starting point for the death benefit is an amount 10-12 times your salary so your family can cover their costs for many years into the future. Still not sure? Try our free life insurance calculator.
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Compare quotes online instantly. You can save up to 40% by comparing rates and making sure you’re getting the most affordable deal. Policygenius allows you to do this in one place for an apples-to-apples comparison of over a dozen insurance companies. We'll recommend the best policy for you, or a licensed agent can walk you through your options and help you choose the best policy.
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Life insurance company reviews
Here’s a secret: For most people, the cheapest life insurance policy is the best one.
But some insurers differ in how they treat people of different ages or with different health conditions. So which insurance company will offer you the most affordable option?
Don’t worry — we’ve done the heavy lifting and reviewed the best life insurance companies in America.