How to Compare Life Insurance Rates

When purchasing life insurance, you may want to compare rates and quotes from different companies to make sure you’ve found the best policy. Common points of comparison are the policy type, the costs and payment schedule, the amount of coverage and the rating of the company. Comparing different quotes gives you the best chance of finding a policy that fits your situation.

Christian Simmons, writer and researcher for RetireGuide
  • Written by
    Christian Simmons

    Christian Simmons

    Financial Writer

    Christian Simmons is a writer for RetireGuide and a member of the Association for Financial Counseling & Planning Education (AFCPE®). He covers Medicare and important retirement topics. Christian is a former winner of a Florida Society of News Editors journalism contest and has written professionally since 2016.

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    Lamia Chowdhury
    Lamia Chowdhury, editor for RetireGuide.com

    Lamia Chowdhury

    Financial Editor

    Lamia Chowdhury is a financial content editor for RetireGuide and has over three years of marketing experience in the finance industry. She has written copy for both digital and print pieces ranging from blogs, radio scripts and search ads to billboards, brochures, mailers and more.

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  • Financially Reviewed By
    Eric Estevez
    Eric Estevez, Independent Licensed Life Insurance Agent

    Eric Estevez

    Licensed Independent Insurance Broker

    Eric Estevez is a duly licensed independent insurance broker and a former financial institution auditor with more than a decade of professional experience. He has specialized in federal, state and local compliance for both large and small businesses.

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  • Published: April 26, 2022
  • Updated: August 10, 2022
  • 5 min read time
  • This page features 3 Cited Research Articles
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How to Cite RetireGuide.com's Article

APA Simmons, C. (2022, August 10). How to Compare Life Insurance Rates. RetireGuide.com. Retrieved September 25, 2022, from https://www.retireguide.com/life-insurance/buy/compare/

MLA Simmons, Christian. "How to Compare Life Insurance Rates." RetireGuide.com, 10 Aug 2022, https://www.retireguide.com/life-insurance/buy/compare/.

Chicago Simmons, Christian. "How to Compare Life Insurance Rates." RetireGuide.com. Last modified August 10, 2022. https://www.retireguide.com/life-insurance/buy/compare/.

What Goes into a Life Insurance Quote or Rate?

Different companies calculate rates and quotes in different ways, but your personal information and history play a major role in determining how much you will pay when you buy life insurance.

When developing a quote, companies may want your basic health information as well as your family medical history to essentially get a sense of the risk they are taking on by allowing you to purchase a policy.

What Impacts Your Life Insurance Quote?
  • Age
  • Height and weight
  • Health history
  • Family health history
  • Career and hobbies

You will likely get a more expensive quote if you are in poor health or have a family history of illness. On the flip side, you are likely to get a cheaper quote if you are young or healthy.

Life insurance companies may also use aspects of your lifestyle to generate a quote. According to the U.S. News & World Report, your career and hobbies may also play a role, especially if they are unusually dangerous. If they are, your quote may increase.

How to Compare Life Insurance Quotes

It’s important to compare multiple quotes from separate companies before selecting a life insurance policy to give you a good sense of the options available and to find a quote that best fits your needs.

There are several key areas to focus on when comparing life insurance quotes.

Selecting a Policy Type

Make sure when you are comparing two quotes that they are for the same policy type. Life insurance comes in many forms. If two quotes seem dramatically different, it may be because they are not for the same type of policy.

Comparing quotes also may give you the chance to see which type of policy makes the most sense for you.

Defining the Amount of Coverage You Need

Figuring out how much coverage you need or want will play a major role in comparing quotes. You can also compare death benefits as part of this process when selecting a quote. Knowing how much coverage you are looking for when you receive your quotes will make it easier for you to find your best option.

Underwriting Process and Approval Type

The underwriting process is essentially the company determining how much risk they are taking on by allowing you to purchase a policy. The main comparison point for life insurance quotes is that companies may assess risk in different ways.

For example, policies may vary in what information they will ask you for, such as if you will need to undergo a medical examination.

Payment Schedule

The payment schedule is when and how you will pay for your policy. Some types of life insurance may want a lump sum payment up front, while others will have you pay a monthly premium.

It’s important when comparing plans to not just compare total costs, but also to look at when and how you will have to pay that money.

Riders

Riders are basically add-ons to a life insurance policy, that allow you to carve out certain additional points or contingencies in your contract. For example, a rider could be included that lets you get a chunk of the benefit from your policy while you are still alive if you were diagnosed with a terminal illness.

When comparing quotes, check the available rider options from each company, especially if there is something in particular you are looking for.

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How to Compare Life Insurance Companies

When you receive life insurance quotes, one of the most natural things to do is to compare the differences in cost. Depending on your circumstances, this may be the most important factor to you.

But you should also compare the payment schedule to determine when and how you will pay, as well as the ability of the policy to be customized, such as by adding riders.

Financial Ratings

Another major point of comparison when deciding between two companies is their financial ratings.

Your life insurance policy is only as safe and sound as the company that provides it. This is important to consider if you are looking into smaller or lesser-known companies. Financial ratings offer you an easy way to compare.

Independent Agencies That Rate Insurance Companies
  • A.M. Best
  • Fitch Ratings
  • KBRA
  • Moody’s
  • Standard & Poor’s

These ratings can help you compare companies and make sure they are reputable. A quote may look very attractive, especially if it is cheaper than your other options, but it could be from a riskier or less reputable company.

How Accurate Are Life Insurance Quotes?

Life insurance quotes are generally as accurate as the information you put into them. The more in-depth personal information you offer, the more accurate the quote will be.

Fast quotes that you can receive online, like an online calculator, for example, may ask you for only basic information. This can lead to a less accurate quote.

It can be frustrating to go through a long process, especially if you’re hoping to compare multiple quotes, but a thorough process will help ensure that the quote is as close to your actual policy as possible.

Not all companies generate their life insurance quotes in the same way, so there will naturally be some differences in the levels of accuracy of the quotes you receive.

Last Modified: August 10, 2022
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3 Cited Research Articles

  1. U.S. News & World Report. (2022, January 6). Life Insurance Quotes. Retrieved from https://www.usnews.com/insurance/life-insurance/quote
  2. Huddleston, C. (2021, November 11). How To Compare Life Insurance Quotes. Retrieved from https://www.forbes.com/advisor/life-insurance/life-insurance-quotes/
  3. Insurance Information Institute. (n.d.). How to assess the financial strength of an insurance company. Retrieved from https://www.iii.org/article/how-to-assess-the-financial-strength-of-an-insurance-company