How to Find Low-Cost Life Insurance

Most Reasonably Priced Life Insurance Policies

While life insurance prices will vary depending on your specific health and risk profile, term plans are often the least expensive type of coverage because they only payout if you die within a specific time frame (the "term" of the policy).

However, if you are searching for permanent insurance to ensure that your family members can cover expenditures linked with your death, last expense insurance is an affordable alternative as well.

Life Insurance (Term)

Term life insurance provides coverage for a certain length of time, and if you die during that time, the beneficiary will make a claim to get the policy's death benefit. Because the coverage isn't permanent and you can't borrow against it, it's usually the cheapest life insurance package.

A 20-year level term insurance with a face value of $500,000 would cost $277 per year on average for a 30-year-old guy in excellent health.

When looking for term life insurance, the term duration and death benefit are the two most important policy factors that will influence premiums. Term lengths can range from one year to 35 years, and the suitable duration is usually determined by your financial condition.

For example, if you've recently had a kid and want to ensure that their college tuition is paid, you'd probably select a term of 20 to 25 years. Similarly, the death benefit of a policy may be tailored (the amount can range from $50,000 to more than $1 million) and should match your family's financial circumstances if you died.

Learn more about the many types of term life insurance policies

Insurance For Final Expenses

Final expense insurance is often a perpetual insurance policy with a low face value (commonly $5,000 to $25,000) since it is meant to cover only a tiny portion of the costs connected with your death. It's frequently sold to seniors, but it's also applicable to younger people because the typical cost of a funeral is generally about $10,000, which most families don't have on hand in case of an emergency.

Final expenditure insurance differs from similar-sounding products such as funeral insurance in that the death reward can be utilized how your beneficiary sees fit. A kid or spouse named as your beneficiary, for example, may use the payout to pay for your burial, arrange travel for relatives, or even pay off a modest loan. Funeral insurance, on the other hand, often pays the death benefit to the funeral service provider to cover a predefined set of burial fees, such as the casket and service.

According to CSG Actuarial, an industry consulting organisation, the average premium for a last expenditure insurance in 2014 was $711. When looking for coverage, bear in mind that "final expense insurance" is offered by hundreds of firms, and how a policy works may differ depending on the insurer, so we recommend double-checking that a certain product matches with your expectations before purchasing.

Life Insurance Policies That Are The Most Expensive

Certain life insurance products are constantly more expensive and, as a result, are more aggressively advertised. However, they are frequently not the greatest solution for the majority of individuals, so it is critical to understand whether they would be appropriate for your needs.

Life Insurance That Is Permanent

Permanent life insurance comes in a variety of forms, including whole life insurance, universal life insurance, and variable life insurance. Because they provide lifelong coverage and contain a cash value component, all of these plans are much more expensive, easily ten times the cost of term insurance.

The cash value of a policy is the amount of money you would get if you surrendered the policy to the insurer, and it can be borrowed against or used to pay premiums. Depending on the type of permanent coverage you purchase, the cash value may grow over time:

•In the case of full life insurance, at a fixed rate.

•In the case of universal life insurance, either at the rate of the insurer's portfolio or at a minimum guaranteed rate.

•In the case of variable life insurance, at a rate established by the portfolio of sub-accounts (basically, mutual funds) in which you choose to invest the money. If your chosen portfolio performs badly, the cash value of your variable life insurance policy may also fall.

If you're wanting to just obtain financial coverage for your family in the event that you pass away, a permanent policy is usually not the best option, as term coverage will provide the same death benefit with significantly cheaper premiums. Because of the high expenses, these plans often require you to use the cash value component of the account or use the policy as part of an estate plan in order for the investment to make sense.

Assume a 30-year-old guy was wanting to get life insurance with a $500,000 death benefit to offset his family's lost income in the event he died. Even though his rates climbed dramatically when he purchased a new policy, he may save $45,144 over the course of 40 years by acquiring term insurance.