When shopping for insurance, most people want to find the best policy for their needs at the best price. But which insurance is the cheapest and will it provide for your family? We’ll examine the best way to shop for inexpensive life insurance.
Most people who are looking for a low cost life insurance should go with a term life insurance policy. This is by far the cheapest type of insurance. The reason is that you are paying only for the insurance. There are no hidden fees and costs as with other types of insurance. There are certainly commissions paid to the agent who sells you the policy, but they are generally much lower than with a whole life policy for example.
When you buy a term policy, you are purchasing a benefit of some amount, say $100,000 for a fixed amount of time, for example twenty years. So if you as the insured person die within that time, your beneficiary will receive $100,000, the face value of the policy. Should you live beyond the time the policy is in effect, your beneficiary will receive no money as your policy will no longer be in effect.
When you purchase term insurance, you have a choice of getting either a level term or annually renewable policy. The premium, the amount you pay to the insurance company each year, stays the same with a level term policy. So on a twenty year policy for example, if you pay $500 the first year, you will still be paying $500 on the twentieth year; the premium remains the same each year.
However for an annually renewable policy, the amount of the premium will go up as you get older. Typically an annually renewable policy will be lower in the early years of the policy, but it will get more expensive as you get older. For example instead of paying $500 per year as in our level term example above, you might only pay $300 the first year. But on the twentieth year, instead of paying just $500, you might be paying $900.
For most people, a level term policy makes the most sense since there are no surprises when your premium jumps in price and as such you are less likely to cancel the policy because of a big price hike.
There are many insurance comparison sites on the web will allow you to price compare different policies. Keep in mind that the prices you see on the web sites are rarely the prices you will actually pay. The insurance companies like to show you teaser rates to entice you to call or click, but when it comes time to actually price your plan, there are invariably health or age issues that will bump up the cost of your premium.
