How to Find Cheap Term Life Insurance

While none of us enjoy thinking about the unlikely event of an early death, it’s something to consider if you have dependents counting on you and your income. This is where life insurance comes into play – and if you don’t want to pay an arm and a leg in monthly premiums, then cheap term life insurance can come in handy.

Keep reading to learn more about term life insurance, which term length is right for you, and how to find cheap term life insurance!

What is Term Life Insurance?

There are two main kinds of life insurance – term and whole. Term life insurance will cover you for a fixed amount of time, like 5, 10, 20, or 30 years. If you die during this fixed period of time, your beneficiary will receive the benefits. However, if you outlive the term and the coverage ends, your beneficiary will not receive any type of benefit.

Most policies are level-term life policies, which means that insurance premiums and the death benefit will stay the same throughout the term. However, some policies are a decreasing term life policy, meaning that the death benefit gets smaller while the premiums remain the same over the length of the term.

In contrast, whole life insurance is a permanent form of life insurance costing more than term life policies. Many term policies offer coverage that matures late in life, which also coincides with the age at which you are most likely to die. Whole life insurance has a guaranteed benefit no matter when you pass away, with a cash value that grows over time. Because the benefit is guaranteed, it makes sense that this type of coverage is more expensive than term life insurance.

At this point, you might be wondering why you would choose the term life over whole life, but there are several reasons. First, not everyone can afford whole life insurance, which is significantly more expensive than term life. Term life insurance is also more flexible than whole life – you can end your policy whenever you need to. It’s also a great option if you want to be covered for a specific length of time, like while your kids are still in the house or as you are paying off your mortgage.

For example, let’s say that Mike and Ellen have three kids, ages 5, 8, and 10. Their youngest won’t be out of the house for another 13 years. Mike is the primary breadwinner; if anything ever happened to him, the family wouldn’t be able to pay the mortgage. Ellen and Mike want their kids to be cared for in any situation, including an unlikely early death.

That’s why they decided to take out a 15-year term life insurance policy on Mike, since it would replace his income for the family if he ever passed away unexpectedly. The policy will pay Mike’s beneficiary, Ellen, $1 million in the unlikely event of his early death. This will replace his income for several years so that the family can stay afloat as they grieve his death.

Which Term Length is Right For You?

There are many different term lengths to choose from, but here are some of the most common options:

Annual renewable term life policy: This option will cover you for one year at a time, and is guaranteed to renew for a set number of years. If you have some short-term financial obligations or want to cover a gap in employment before getting a new job with a life insurance benefit, this could be a good choice.
5-year term life insurance policy: If you have a student loan or other debts that need to be paid off in the next few years, a 5-year term might be right for you.
10-year term life insurance policy: For people with dependents or children still living in the house or in the last stretch of their careers before retirement, this term length could help you cover your bases.
20-year term life insurance policy: This is the most popular term length and is an excellent option for newlyweds or new parents who want to cover their income as their family grows.
30-Year Term Life Insurance Policy: You might want a 30-year term if you have a hefty financial obligation, like a mortgage or significant college debt. This could also be a good choice for young applicants who want to protect their income for the majority of their careers.

Choosing the Right Term Length

If you can’t decide how long you want your term length to be, consider the following factors:

What is the length of your mortgage? A mortgage is usually the driving factor when people buy life insurance. They want to make sure that if their family ever loses their income, they will still have a place to live. Think about how many years you’ve got on your mortgage before choosing a term length. For example, if you have a 20-year mortgage, you don’t want to get a 10-year life insurance term, leaving you unable to pay your mortgage for another decade.
How long until your children are out of the house? Another big reason people buy life insurance is to ensure their children are financially cared for. After all, kids are expensive – they need food, clothes, and education, not to mention summer camps, music lessons, and electronics. How many years before your kids can support themselves? For many, it’s not until after college or around age 22.
How many years until you retire? Many people have built a nest egg by the time they hit retirement age. In the meantime, you’ll want to be able to replace your income during your working years. After retirement, life insurance becomes less important once you’re living off your savings and investments.

Pros and Cons of Short vs. Long-Term Life Policies

Pros of a short-term life policy:

With only a 5 or 10-year term life policy, you’ll have much lower premiums than a longer policy.
If your financial situation changes within the next few years, this option gives you more flexibility and freedom to adjust your coverage as your budget changes.
This is ideal for people needing coverage for just a few years, like if you are about to pay off a loan or your kids are finishing college.

Cons of a short-term life policy:

With a short policy, like a 5-year term, you’ll only have coverage for a brief period of time. If something happens after the term period ends, you won’t have any coverage, and your beneficiaries will not receive any benefits.
You’ll need to renew your coverage after the term ends, and many times, you must renew at a higher rate.
This option isn’t great for long-term planning – it’s just a quick fix.

Pros of a longer-term life policy:

A 30-year rate will lock in your coverage for a much longer time frame, giving you consistent coverage without having to renew at a higher price.
This option is excellent for people with long-term financial obligations, like paying off a mortgage, paying for their children’s college education, or keeping them covered through retirement age.
Overall, this policy option will give you more peace of mind for an extended period. You won’t have to worry about your policy ending in a few years or shopping for different coverage – a 30-year term will likely last for most of your career.

Cons of a longer-term life policy:

Unfortunately, a longer-term policy has higher rates since the coverage is extended.
You may be paying for more coverage than you need as your financial situation changes throughout your life.
This option usually has less flexibility – you’ll be locked into this coverage for 30 years, meaning you could miss out on better rates or coverage options in the future.

How to Find Cheap Term Life Insurance

Several factors will impact the cost of your term life insurance – here are a few of them:

Age: Life insurance is significantly less expensive for younger people. This is because, in general, older people are more likely to have serious health issues, increasing their risk of death. The longer you wait to buy life insurance, the more you will pay in premiums!
Gender: Because women live five years longer than men, on average, life insurance tends to be cheaper for females.
Smoking: If you’re a smoker, life insurance will cost you more. This is because smoking increases your risk of several health problems and early death.
Health: Chances are, you’ll need to undergo a medical exam in order to receive life insurance coverage. If you are in good health, you’ll pay lower premiums. This means that if you have diabetes or high cholesterol, you should work on getting that in check before signing up for life insurance.
Family medical history: People with a family history of cancer, stroke, or heart conditions will likely pay more for life insurance since they have a higher chance of getting those conditions.
Lifestyle: If you work in a dangerous profession, like as a police officer or firefighter, you could pay more for life insurance. Likewise, people with risky hobbies like rock climbing or scuba diving will also pay more.
Driving record: Most insurance companies will look at your driving record before granting you life insurance coverage. If you have had an accident or a ticket in the last three to five years, these will carry the most weight for your premium cost.

Tips for Finding Cheap Life Insurance

Quit smoking: Tobacco and smoking are linked to several chronic health conditions, like cancer, lung disease, and heart issues. Because of this, smokers will always pay more for life insurance. If you can quit smoking, not only will your health improve, but your insurance premium will be less expensive!
Work on your health: People in better health will have lower life insurance rates. Before signing up for a term policy, start eating healthy, working out daily, and drinking less. This will improve your blood work results and BMI score, leading to cheaper term life insurance.
Take the medical exam: When you apply for term life insurance, many insurance companies will give you the option to take a medical exam during your application. If you opt not to take the exam, you’ll definitely pay for it in higher premiums.
Manage preexisting medical conditions: Although people with preexisting medical conditions often pay more for life insurance, managing these conditions can mitigate the potential cost. For example, you may be able to prove to the insurance company that you are managing your conditions by keeping up-to-date on doctor’s appointments, taking your prescribed medications, and following your doctor’s recommendations.
Buy a policy as soon as possible: The sooner you buy one, the better. Life insurance rates tend to increase with every year you get older since your life expectancy gets shorter as you age.
Shop around: Over 800 life insurance companies are in the United States. By comparing terms and premiums, you may be able to find a great deal on a life insurance policy!

Conclusion

Term life insurance is vital for people with spouses, children, or other dependents. Your policy could potentially save your family’s financial future in the event of an unlikely early death.

Ultimately, the length and extent of your term life insurance policy will depend on your lifestyle, circumstances, career, and overall financial situation. With a bit of shopping around, improving your health, and proactive measures, you should be able to find a cheap life insurance policy that fits within your budget and future needs.

If you’d like to learn more about term life insurance and see if it’s right for you, contact Think Life today – we’re here to help you find the right coverage no matter what life stage you’re in!

Frequently Asked Questions

What is the cheapest way to buy life insurance?

Term life insurance usually has the most affordable premium prices compared to other types of life insurance.

What is the best length for term life insurance?

If you have a family that depends on your income, a 20-year term life policy is usually the best option.