How to Buy Term Life Insurance

To get the best term life insurance quote, you need to compare quotes from different life insurance companies. Don’t purchase a policy from the first life insurance company that provides you a quote, even if it seems like a good deal at the time.

Term life insurance quotes can vary widely, even if they have the same coverage length and death benefit amount. For example, the table below has quotes from different life insurance companies for the same term policy.

You should also check each life insurance company’s A.M. Best rating when comparing term quotes. A.M. Best’s rating is based on financial strength, which determines if the life insurance company is able to pay claims, debts and other financial obligations in a timely manner.

While you want the best term life insurance rate, you must also ensure that you’re buying your policy from a trustworthy and capable life insurance company. You can confirm each life insurance company’s financial strength on A.M. Best’s website.

There are four main methods to get term life quotes: from a broker, agent, online or directly from the life insurance company. How you choose to get your term life quotes could influence if you’re getting the best premium rate.

According to the 2022 Insurance Barometer report, more people are getting quotes and purchasing life insurance online. This is partially due to the COVID-19 pandemic and recent advances in technology.

There are pros to getting quotes online. The process is typically fast and easy to get a term quote online.

However, know that all online term quotes may not be entirely accurate. There are many factors that influence life insurance costs. If you’re provided a quote only after one or two questions, it could be a wide estimate.

Brokers and agents both act as a middleman to help you find a term policy that suits your needs. If you find getting quotes by yourself online too confusing, a broker or agent could assist you.

There is a primary difference between brokers and agents. An agent represents one or more insurance companies. A broker would only represent you as their client.
While both brokers and agents can get term quotes on your behalf, only an agent can finalize a purchase.

Make sure you check that your broker is licensed before hiring them. FINRA has an online database to check your brokers licensing and experience.

The National Association of Insurance Commissioners (NAIC) has a database to confirm financial regulation information for insurance agents.

You’re likely to get an exact quote with additional information if you receive it directly from the life insurance company. Afterall, the life insurance company overlooks the overwriting process and binds the term policy itself.

They are also in charge of paying out your claim. If you have any detailed questions to ask with your quote, you may want to consider contacting the life insurance company for information.

Make sure to check the life insurance company’s A.M. Best rating before getting a quote or purchasing from them.

The length of coverage you choose, coverage amount and policy riders all affect your premium rate. The longer your term length, and the larger the coverage amount is — the more expensive your premium will be.

Some life insurance companies, such as Foresters Financial Life Insurance, offer specific riders at no cost. However, most riders aren’t free, and will increase your premium rate.

You should also consider your age. For example, with Progressive, a 10-year term policy with $250,000 of coverage is $13.48 for a healthy 20-year-old man. The same policy for a healthy 60-year-old man is now $74.82. If you delay purchasing a term life insurance policy, your premiums will increase each year.

To better understand how term length and coverage amount can fluctuate your premium rate, refer to the table below. Two life insurance companies, Progressive and Transamerica, are comparing premium rates with different term lengths and coverage amounts.

Even though each rate is estimated for women around the same age, there is a large difference between the premium rates. Because your coverage amount and term length influence your premium rate, you should determine the coverage needed for your term policy before getting a quote.

The DIME Rule can help you determine how much coverage you need with your term life policy. DIME is an acronym that stands for debt, income, mortgage and education.

Account for any outstanding debt and remaining mortgage costs. If you have children, you should also consider college tuition costs. As for your income, Progressive suggests multiplying your current salary by five to 10 to provide your loved ones with coverage for years to come.

There are four main types of term life policies — level term, decreasing term, yearly renewable and return of premium. According to the Insurance Information Institute, most buy level term life insurance.

Riders give your life insurance policy additional benefits. While some companies offer riders as free add-ons, most companies will increase your premium.

If a rider is free, it wouldn’t hurt to add it to your term policy. However, if the rider increases your premium, and you don’t think you need it, don’t take on the extra coverage.

Make sure you choose a term policy with an affordable premium. Most choose a level term life insurance policy, meaning you have set premiums throughout your entire term.

If you cannot afford your premium in the future, your coverage will lapse. If you pass away while your term policy is lapsed, your beneficiary won’t receive a death benefit.