Life insurance quotes made easy

There’s no better time to get a life insurance policy. The cost generally increases with age, so the sooner you apply the better. Start comparing options from our partners today.

Sept. 3, 2021

Buying a life insurance policy can be quick and easy. Unsure of where to start? We’ll walk you through the whole process, so you can compare life insurance quotes and choose the right coverage for you and your family.

What is life insurance?

A life insurance policy is a contract with an insurance company. In exchange for regular premiums you pay over time, life insurance pays out after your death to the people you choose as beneficiaries — usually children, a spouse or other family members. It’s an important safety net if anyone depends on you financially. A life insurance payout can be used for debts such as a mortgage, to replace your income, or provide funds for college tuition.

Types of life insurance

There are two main types of life insurance: term and permanent. Within these two categories there are various types of policies. Understanding which type is right for you can help you build a robust life insurance plan.

Term life insurance covers a limited time period, such as 10, 20 or 30 years, and doesn’t build cash value. If you die within the term, your beneficiaries receive the payout. When your term life insurance expires, you can buy a new policy or reassess your options.

Permanent life insurance costs more than term but offers additional features like cash value that you can borrow against, which grows over time. Whole life is the best-known form of permanent life insurance. Other types include universal, variable and variable universal.

What’s the best life insurance policy for you?

Term life insurance costs less than permanent insurance, and you can choose a term that matches the years when people depend on you financially. By the time the term ends, you may no longer need life insurance: Your house will be paid down, your kids will be grown and you’ll have some money in the bank. Term life is sufficient for most families. In some cases, you can buy term life insurance online without completing a medical exam. Online life insurance is typically available to healthy individuals, and may include questions about your medical history.

However, whole life insurance and other forms of permanent coverage can be useful if you want to provide money for your heirs regardless of when you die. A permanent life insurance policy can also be useful if you want to spend your retirement savings but still leave an inheritance or money for final expenses, such as funeral costs.

 

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How to get life insurance

There are a few ways to buy a life insurance policy:

Directly from the insurer. If you’ve done your own research and know exactly which policy you want, you can often buy directly from the insurer.

Through an agent or broker. Need a little help choosing a policy? That’s where a life insurance agent or broker comes in. An agent or broker can help you navigate your options, find a policy that suits your budget and gather all the documents you need to apply for coverage.

Compare policies online. Most insurance companies support online quotes. This makes it easy to shop around for the best coverage at the right price.

5 things to know about buying life insurance

Life insurance might sound complicated, but it’s really a simple product. It’s there to ease the financial burden on your loved ones when you die.

Here are a few things you may not know about life insurance:

  1. It’s cheaper than you might think. The average life insurance rate for a 40-year-old in excellent health can be as little as $26 a month for a 20-year term policy with $500,000 in coverage, according to Quotacy, a life insurance brokerage.
  2. Rates can vary among insurers — sometimes significantly. When setting your rate, each life insurance company weighs factors like your health, lifestyle and driving record differently. Some are more lenient than others, which is why it’s important to compare quotes from several insurers.
  3. The earlier you apply, the better. No matter which insurer you go with, two of the main factors that affect your life insurance premium are your age and health. So the younger and healthier you are, the better your rate is likely to be.
  4. You might not need a medical exam. Most major companies offer no-exam life insurance policies, such as guaranteed issue and simplified issue life insurance. However, if you’re healthy, saying yes to a medical exam could actually lower your rate. That’s because the insurer has a complete picture of your health.
  5. With many insurers, you can apply online and get an instant decision. Need life insurance ASAP? Many insurance companies offer instant life insurance, which means you’ll typically get an answer within minutes of submitting your application. If you’re approved, your coverage could go into effect the same day.

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Life insurance buying guide

Life insurance isn’t a purchase you make often, so you may not know where to start or how to get life insurance quotes. Here’s how to build a life insurance plan and get the coverage you need.

1. Determine how much life insurance you need

Although you may have some life insurance through your job, it’s generally a good idea to have your own policy in addition to the life insurance provided by your employer. The policy through your workplace likely isn’t enough to meet your family’s financial needs and typically ends if you leave the job.

To figure out the amount of life insurance to buy, think about your financial obligations. Then, aim to take out a policy to match.

These are some expenses to consider:

  • Outstanding debts, such as a mortgage, personal loan or credit card balance.
  • Everyday living expenses, including child care, utility bills, groceries and car insurance.
  • Future expenses, like funeral costs and college tuition.

Another way to crunch the numbers is to multiply your annual income times 10, and use that as a rough estimate.

Debt and income replacement calculators can help you decide how much life insurance you need before you get quotes.

2. Evaluate life insurance companies

When you’re assessing life insurance companies, look at these three factors:

Financial strength ratings. These determine an insurer’s ability to pay out claims in the future. You can check out insurers’ financial strength through ratings agencies such as A.M. Best or Standard & Poor’s. NerdWallet recommends avoiding insurers with an A.M. Best rating of B or lower, if possible.

Complaint ratios. Ideally, you want to choose a company with a strong track record for customer service. NerdWallet’s ranking of the best life insurance companies favors companies that have fewer complaints to state regulators.

The following life insurers scored 5 out of 5 stars:

Policy options. Not all companies sell the same types of policies, and some focus on specific products, such as life insurance policies for children. Narrow your choices by reading life insurance reviews and knowing the type of coverage you want before you begin comparing life insurance quotes.

3. Gather info you need

Collect the information you need to apply for term life insurance or a permanent policy before you start the application process. You’ll likely need to provide information about your current and past health conditions, as well as your family’s health history. The insurer may need your consent to get medical records and ask you to take a life insurance medical exam. Insurers also check other data sources, such as MIB Group, which collects data on medical conditions, your driving record and hazardous hobbies.

You’ll need to choose beneficiaries who will receive the payout when you die. Be sure you have their Social Security numbers and dates of birth.

You also may have to answer questions about criminal convictions and driving violations, such as a suspended driver’s license or DUI, particularly if they happened within the past few years.

4. Compare life insurance quotes

The best way to save on a life insurance policy is to compare all your options. To find the best policy for you, be sure to compare life insurance quotes from several companies. Prices can vary widely, depending on the life insurance plan you choose and personal factors such as your age, gender and health.

Expert tip: If you can, apply for life insurance as soon as you see a need for it.

Life insurance companies use life expectancy as the basis for determining rates. Anything that could shorten your life expectancy could lead to a higher price.

So it’s smart to buy a life insurance policy as early as possible, when you’re young and healthy. If you wait, your life insurance quotes will increase solely because of your age. If new health problems arise, your rates could go up even more.

You can still get life insurance if you have a medical condition. Insurance companies vary in how they view pre-existing conditions, and some types of life insurance don’t require a medical exam.

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Common life insurance terms

You might come across these terms when you’re shopping for life insurance. Here’s what they mean.

Beneficiary: The person or people you select to get the life insurance payout when you die.

Carrier: Another name for a life insurance company.

Cash value: Permanent life insurance policies typically have an investment portion that increases in value over time. This is known as the cash value account, and once you’ve accumulated enough cash value, you may be able to borrow against your policy.

Death benefit: The amount of money the insurer will pay out to your beneficiaries, generally tax-free, when you die.

Dividend: Some insurers are mutual companies, which means they’re partly owned by their policyholders. They may pay out a sum of money to some policyholders each year based on the company’s financial performance. These are dividends.

Exclusions: The circumstances in which your life insurance policy won’t pay out, such as death from a risky activity like skydiving. Exclusions vary among insurers and are listed in the policy documents.

Face value: The basic death benefit of the policy. For example, if you purchase a $500,000 policy, its face value is $500,000.

Policyholder: The person who owns the life insurance policy.

Premium: The amount of money you’ll pay to keep your life insurance policy active. With most policies, you have the option to pay monthly, quarterly, semiannually or annually.

Rider: A life insurance rider is an optional add-on that allows you to customize your coverage.

Underwriting: The process an insurer uses to gather information about you and set your life insurance rate.


NerdWallet is a free tool to find you the best credit cards, cd rates, savings, checking accounts, scholarships, healthcare and airlines. Start here to maximize your rewards or minimize your interest rates. Lisa Green

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