Affordable life insurance: How to find the cheapest life insurance

Our take

Investing in life insurance is a smart financial decision that provides peace of mind and financial security for your loved ones. While it may seem like an added expense, the benefits far outweigh the costs, especially when considering the financial protection it offers in the event of an unexpected death.

Term life insurance, in particular, offers an affordable option for robust coverage. For example, a 10-year term life insurance policy with $100,000 in coverage is about $9 a month for a healthy 30-year-old male and about $7 for a healthy 30-year-old female. This low cost can provide substantial financial support, covering expenses such as mortgage payments, children's education, and daily living costs, ensuring that your family maintains their standard of living if you're no longer there to support them.

Term life insurance is generally very affordable and provides excellent value for the coverage it offers. By paying a small premium, you can achieve significant peace of mind, knowing that your family's financial future is safeguarded. Whether you're just starting a family, buying a home, or planning for long-term financial stability, term life insurance is a cost-effective way to provide the protection your loved ones deserve.

What is the most affordable life insurance policy?

For most people, the cheapest type of life insurance is term life. That’s because a term life insurance policy covers you only for a specified period of time, rather than for your entire life, reducing the risk that the company will need to pay a claim.

According to the most recent Insurance.com analysis, a 10-year, $100,000 term life insurance policy can be found for less than $7 a month.

Term life insurance is designed to provide affordable protection when you need it most, such as during the years when you have children at home, and then end when you no longer need it. Different term lengths and coverage amounts allow you to find the right policy and price for your budget and needs.

Dr. Siwei Gao, professor of risk management and insurance at Eastern Kentucky University, says: “Term life insurance would be most suitable for a tight budget. It provides the basic protection against premature death without the saving features. It is most attractive to young parents who have dependents and are at the beginning of their careers.”

It’s possible to get affordable whole life insurance as well, but to get a good rate it’s even more vital to buy when you’re young. Even then, you'll usually get more coverage for your money with a term life policy.

The most affordable life insurance companies

On top of the underwriting factors listed above, one of the biggest keys to finding affordable life insurance is comparing multiple companies. While all companies use the same factors, they don’t all weigh them the same way. That means one company might offer a much lower life insurance quote than another.

So which companies offer the most affordable life insurance? Take a look at some average life insurance rates by company below. 

Monthly life insurance rates by company for 30-year old male vs. female, 10-year term, $100,000 death benefit

Monthly life insurance rates by company for 50-year old male vs. female, 10-year term, $100,000 death benefit

As you can see, the cheapest life insurance company for a male at either age is different from the cheapest option for a female. Of course, your rates will vary based on personal factors and will go up with age.

You can still get affordable life insurance over 50, and term life remains a cheap option. However, as you age, you will eventually find that you don’t qualify for standard term life. Affordable life insurance for seniors over 65 is harder to find, although there are companies that cater to the senior market.

Is life insurance worth the cost?

If your budget is tight, it can be hard to justify fitting in a monthly premium payment for life insurance. But if you have people who depend on your income, or who would be left in debt if something happened to you, a small monthly life insurance payment can help secure their financial future.

A young couple with children, for example, have a lot of financial obligations to worry about. Providing for those children if the worst should happen isn’t easily accomplished through investments or savings at that stage of life. “Life insurance is invaluable for everyone who has dependents,” Dr. Gao says.

How to get the cheapest life insurance policy

The first step to finding affordable life insurance is to figure out how much life insurance you need. There are a number of ways to calculate that amount. The easiest way is to use a life insurance calculator, but you can also do the math yourself. Here are two easy ways:

• Multiply your annual income times 10, then add $100,000 for each child that will need to go to college.
• Employ the DIME method (debt, income, mortgage, and education.) How much debt do you have, what is your annual income and how long will it be needed, how much do you owe on your mortgage, and what do you need for the education of your children?

Once you know how much coverage you need, consider how long you’ll need it. This is different for everyone but can be the number of years left on your mortgage, or the years until your kids are independent. This will tell you the term length you need.

With the term length and coverage amount in mind, you can start gathering and comparing quotes to find the best price. So how can you make sure you get the most affordable life insurance plan? Consider these points:

• Buy term life. Term life insurance is the most affordable option for young adults, but it’s also cheaper for almost everyone.
• Buy when you’re young. Waiting to buy life insurance will only ensure you pay higher premiums.
• Get the correct amount of coverage. When you’re going through the steps above to select a coverage amount, make sure you look into the future and account for any foreseeable needs in addition to the coverage you need right now. It’s cheaper to buy more coverage now than to try to add coverage later.
• Speak with an independent agent. An agent can help you with the math and can also provide you with information about various companies.
• Get multiple quotes. It’s easy to get free quotes online, so compare as many companies as you can to find the most affordable life insurance plans.
• Check company reviews and ratings. As you’re looking at those affordable life insurance quotes, make sure they’re coming from solid companies. Check up on each company’s reputation before you buy.
• Choose the best company for your needs. You may want a company that lets you buy online or want a company that lets you add a rider you think you need. Narrow down your choices by your particular needs.
• Go through the medical exam. If you have no health concerns, you'll get a better rate if you go through a medical exam than if you choose a no-medical exam life insurance option.

Factors that affect the cost of life insurance

Life insurance rates are calculated based on the risk that the insurance company will have to pay out. Essentially, they’re based on your life expectancy. Life insurance companies will calculate that using:

• Age
• Gender
• Health history
• Lifestyle risks like smoking or alcohol use
• Occupation and hobbies

You will usually need to complete a medical exam, including a blood test, as part of the application process. While there are affordable life insurance policies with no medical exam out there, if you’re healthy you’ll find you get lower life insurance rates if you go through the full underwriting process, including the exam.

Finally, the amount of coverage you choose and the type of policy will also have an impact on rates.

How to lower the cost of your life insurance policy

If you’re still having trouble finding a really affordable life insurance policy, there are a few ways you can get that rate down. They may take some effort on your part, however.

Unlike home and auto insurance, there isn’t much in the way of life insurance discounts. The best way to lower the cost of life insurance is to improve your life expectancy and lower your risk level. Some of the best ways to qualify for a better rate are to:

• Quit smoking
• Reduce or eliminate alcohol
• Lose weight
• Give up dangerous hobbies
• Change your diet to reduce cholesterol and improve heart health

And, of course, you can save on life insurance by shopping around to compare rates from several companies.

Methodology

Insurance.com analyzed rates provided by Compulife from multiple life insurance companies for a 30-year-old male and female, as well as a 50-year old male and female, based on $100,000 and a 10-year-term policy. Rates were quoted in California for a non-smoker in the Preferred Plus health category. Average rates are the median rate across all companies quoted.