Term vs whole life insurance. The Best Cheap Life Insurance for 2018,

How we chose the best cheap life insurance

Availability

We looked for companies that we could recommend to anyone, which meant setting some initial standards for availability. We only considered providers that write term life insurance in at least 40 states with no special eligibility requirements. That meant cutting out a few popular companies, including USAA, which earns high praise for its insurance but is only available to US armed service members and their families. Our top picks are accessible to just about everyone, regardless of who you are or where you live. Cheap life insurance.

Financial stability

We also checked in to make sure that all of our finalists have rock-solid financials. This is a crucial step, as strong ratings guarantee a provider’s ability to pay out on your claim if need be. We set the bar high: an “Excellent” score or better from A.M. Best (which specializes in insurance ratings) as well as top marks from a second source. We accepted A’s or higher from S&P Global or Moody’s, two of the largest independent agencies.

Conversion option

While the best cheap life insurance is always term, the option to convert your term policy to a permanent or “whole life” policy is invaluable if life throws a curveball. Say you’re diagnosed with a terminal illness; some insurers may deem you too “risky” to re-insure and refuse a policy renewal or conversion, leaving your dependents with the unexpected weight of medical expenses. We made sure that all of our top picks guarantee the option to convert to permanent insurance. By doing so, you have the ability to lock in a death benefit payout for your beneficiaries if need be.

Guaranteed renewability

All of our top picks offer a period of guaranteed renewability. During that set time (which may be as late as age 95, depending on your provider) you cannot be denied the right to purchase additional coverage. This is a great option if you’d like to extend your term by just a year or two, rather than convert to a permanent policy.

When is renewability important? Maybe you refinance your mortgage and now owe payments for longer than you originally planned. Since life insurance coverage aims to keep dependents out of tight spots — like being saddled with mortgage payments they can’t afford — it would make sense in cases like this to purchase an extra year at a time. This annual extension usually comes with a steep price hike. But should the unexpected happen, it’s still cheaper than letting your policy lapse prematurely.

Policy riders

In its most basic form, life insurance provides a death benefit to your beneficiaries. But with the right add-ons or “riders,” it can help to protect you during life as well, providing financial aid in case of disability, terminal illness, long term care needs, and so on. We put together a list of the 16 most common riders and checked in with our contenders to see who had the best selections. All of our top picks offer a great array by industry standards.

Quote comparison

Four nationwide providers nailed our basic criteria: TIAA Life, Transamerica, New York Life, and State Farm. Our final test was an apples-to-apples quote comparison to find the lowest prices. We strove for a holistic sample set, collecting estimates for both sexes, a variety of ages, and differing health levels. Unfortunately, New York Life doesn’t offer quotes online, so you’ll have to call an agent directly to see how its prices stack up.

Between the providers that did offer us quotes, TIAA Life came out on top with consistently low premiums across the board. State Farm, on the opposite end, rang in highest for most people. Our other major takeaway? Tobacco use almost always means a big price hike — generally around two times what a non-smoker would pay.

Premium prices vary by company, so be sure to compare quotes before buying

The 4 best cheap life insurance providers

TIAA Life — Consistently Low Premiums

Transamerica — Best Range of Policy Sizes

New York Life — Most Flexible Term Lengths

TIAA Life: Consistently Low Premiums

Why we chose it

Low premiums across the board

TIAA took home the gold in our quote showdown, consistently offering the lowest monthly prices for men and women alike. Premiums as low as $10 per month make it affordable for just about anyone to get term coverage and protect their loved ones financially. Of course, it’s important to remember that quotes are personal. You’ll have to check in with more than one company to be sure that you’re getting your best price. But we highly recommend throwing TIAA into the mix — it’s likely to be a competitive option.

Auto insurance claim

Outstanding conversion policy

TIAA’s term-to-permanent conversion policy is unparallelled. At any time during your original term, you have the option to convert to any of its permanent policies. All other providers restrict either the window during which you can convert (like New York Life) or the permanent policies that are eligible for conversion (Transamerica). TIAA policyholders can rest assured that, should they need to continue coverage, their options will never be limited — regardless of their current age or changes in health.

Easy sign-up

We’re big fans of TIAA’s Life Wizard tool, which walks you through life insurance shopping from end to end. The site helps you choose the right type of policy, determine a fitting death benefit, view sample quotes, and apply for coverage — all in one place and with just a few simple questions. Most of our other top picks offer online quotes as well, with the exception of New York Life. But we find TIAA’s to be the most comprehensive and streamlined of the lot; quote tools from State Farm and Transamerica don’t include the step of helping you choose the right policy and death benefit.

Points to consider

Fewer rider options

TIAA’s policies are a bit less customizable than those from our other top picks. It offers only eight of the 16 popular policy add-ons we looked for, compared to 11 from our other contenders. The biggest omission here is a selection of living benefits. TIAA doesn’t offer a Disability Income rider, Critical Illness rider, or Long Term Care rider, to name a few — options that can be a huge help if the insured falls ill or gets injured. If your term policy will be with you late in life (or if you think you may end up converting to permanent insurance) we suggest starting with a company that offers a wider coverage selection.

Inflexible term lengths

TIAA Term insurance comes in 10-, 15-, 20-, or 30-year packages. While these options are fairly standard for the market, they don’t leave you with a ton of wiggle room. Some customers may prefer a more tailored term: say, exactly 18 years of coverage until your child moves out of the house. For more options to customize your term length, we recommend New York Life. It lets you select terms in single year increments, up to 20 years.

State Farm: Best Customer Service

Why we chose it

Top customer ratings

2017 marks State Farm’s fourth year as J.D. Power’s top-rated life insurance company. The survey, which polled more than 6,000 insurance customers in 2017, measures policyholders’ satisfaction with their provider. Policy options, customer service, price, billing, and statements are all taken into account — and State Farm earned top marks in every category. Although this company was slightly pricier than our other finalists, a couple extra dollars every month may be worth it if you put high stock in customer service. State Farm is more likely than our other finalists to make the insurance process painless from beginning to end.

Flexible extension options

While TIAA tops the charts for conversion flexibility, State Farm comes in a close second. Most term insurance customers have the option to convert to a permanent policy at any point before age 75 — without taking a second medical exam. That means that even if you’ve developed a serious illness during the initial term, you can’t be denied for a policy with a guaranteed payout. This is exceptionally lenient, especially when compared to companies like New York Life, which only let you convert within the first ten years of your term. Note that conversion varies by state, so be sure to talk to an agent about the rules where you live.

Not ready to take the leap on a permanent policy? State Farm also gives term customers the opportunity to renew their policy on an annual basis through age 95. Of course, premiums will go up if you do so — but not nearly as much as they would if you bought a new policy and took another medical exam.

Variety of Term Life plans

State Farm offers four separate term life plans, meant to fit a variety of financial goals and coverage needs. Most people will likely choose its Select Term Life Insurance: a standard, affordable policy that lasts for 10, 20, or 30 years. If your needs are a little more specialized, though, we recommend checking out State Farm’s alternative term policies.

Mortgage Term Life Insurance, for example, covers you for 15 or 30 years, with premiums that shrink over time as your mortgage does. Return of Premium Insurance is a little more expensive, but it has one big perk: All of the premiums that you’ve paid in get returned to you if you outlive the term. For those who don’t wish to complete a medical exam, State Farm also offers Instant Answer Term Insurance — a quick and easy way to get up to $50,000 of coverage.

Points to consider

Pricier coverage

A quick disclaimer: By “pricier” coverage, we’re generally only talking about a few dollars per month. That said, State Farm’s prices did tend to be slightly higher than our other contenders’ in almost every category. The difference was most obvious for our 40-year-old sample profiles, who were quoted around $12 more per month with State Farm than other providers. Our suggestion? Snag a quote from State Farm when you’re comparing options. The online process is quick and easy, and since quotes are individual, there’s always a chance State Farm could be your best bet.

Limited term lengths

State Farm’s basic term life policy, “Select Term,” is inflexible as far as term lengths go; you can only opt for 10, 20, or 30 years of coverage. That’s about as limited as options get. Other companies, like TIAA, at least offer five-year increments, allowing you to choose a policy length that better fits your needs. If you’re looking for even more customization, check out New York Life. There, you can choose any coverage period between 10 and 20 years.

Fixed term insurance policy

Transamerica: Best Range of Policy Sizes

Why we chose it

Flexible death benefits

With Transamerica Term Life, you can select a death benefit anywhere from $25,000 to $2 million. That’s a wide enough range to cover most people’s needs, whether they’re small (say, funerary expenses alone) or extremely large (a single parent financing multiple college tuitions). While our other top picks carry policies on the pricey end, none offer a small, affordable option like Transamerica. Most set the bar at $100,000. State Farm — the closest competitor — only goes as low as $50,000. That makes Transamerica the best bet for customers with limited death benefit needs.

Plenty of policy riders

Shoppers looking to customize their term life policy will find a lot to love with Transamerica. This company offers 11 of the important coverage options we looked for: a selection on par with New York Life and State Farm (and a step above TIAA). Included in that list are financial protections for accidental death, disability, critical illness, and long term care, among others. If life throws you an expensive curveball, there’s likely a Transamerica life insurance rider that can help pick up the slack.

Helpful customer resources

Life insurance is complex, so we appreciate that Transamerica goes out of its way to help shoppers navigate the landscape. First off, its FAQ lives right at the bottom of the life insurance webpage — making it easy to find answers to common questions like “How does term life insurance work?” or “What does term life insurance cover?” By comparison, companies like New York Life force you to go digging to find these answers.

The other resource we loved was Transamerica’s Financial Glossary. This list covers not only life insurance, but a broad range of need-to-know financial terms. If it’s your first time around the insurance block, this source is a helpful go-to.

Points to consider

No short term option

Transamerica only sells term insurance for 15-, 20-, 25-, or 30-year periods. By comparison, all of our other top picks offer a shorter, 10-year policy. Keep in mind that the shorter your term is, the less you’ll ultimately pay for your insurance. That means that if your needs are truly limited to less than 15 years, one of our other top picks may save you a chunk of change.

Relatively tobacco intolerant

Transamerica quoted some of the highest premiums when we answered “yes” to current tobacco use — especially for older customers. Profiles 40 years and older that answered positively for smoking were charged up to $13 per month more with Transamerica than our other contenders. That’s a difference of over $100 per year. Those looking for a more tobacco-tolerant life insurance policy may have better luck elsewhere.

New York Life: Flexible Term Lengths

Why we chose it

Tailor your term

New York Life’s Level Premium Convertible Term Insurance is truly unique in one way: It lets you choose any term length between 10 and 20 years. That means you could choose to pay for the exact time frame you need covered — say, 13 years until your mortgage is paid off — and not a day more. By comparison, our other top picks sell term insurance in increments of five or 10 years. If your needs fall somewhere in between, you’ll either have to skimp on coverage by a couple years or pay for a little more than you need. Only New York Life lets you select the precise number of years you’re comfortable paying for.

Great coverage selection

New York Life offers a full roster of policy riders, making its insurance highly customizable to your individual needs. A few standout options are the Spouse Insurance rider, which extends coverage to your partner for an additional fee (not offered by TIAA) and the Long Term Care rider, which helps cover care and medical bills should you develop a terminal illness during your policy (not offered by State Farm or TIAA).

Unique policy renewal options

If you’re looking to extend your coverage but aren’t ready to commit to an expensive whole life policy, New York Life has the answer. Its Policy Purchase Option rider guarantees approval to renew your term policy at nine different points in life: Every three years from ages 22 to 46. While this is a bit less flexible than State Farm’s policy, which allows renewal anytime before age 95, it still gives you plenty of opportunities to opt for more coverage.

Those three-year markers are likely to fall close to major mid-life events — marriage, buying a home, having a child — and will give you the chance to reevaluate your insurance needs at those times. Plus, renewal is guaranteed without a second medical exam. Prices will still go up, but that increase will be much smaller than if you had waited out the policy and gone through full underwriting later.

Points to consider

No long term option

New York Life is our only top pick that doesn’t offer a longer 25- or 30-year term. So, while its term insurance is highly customizable, it’s not the best choice for anyone looking for long-lasting coverage. If your term insurance needs surpass the 20-year limit, we recommend starting your search with one of our other top providers instead.

How to get life insurance policy

No online quote tool

New York Life is our only top pick that won’t give you a term life quote online. To get a price estimate, you’ll have to call the company and walk through the application process with an agent. Of course, speaking with an agent isn’t inherently a bad thing; they gather more information than an online quote tool and can offer more personalized service. But we prefer companies that let you get the ball rolling with an online quote. That way, you have leeway to compare pricing and options before getting on the phone with a sales rep.

Limited conversion period

With New York Life’s Level Premium Convertible Term Insurance, you have the right to switch to a whole life policy at any time during the first ten years. After that window, though, you may only do so if you purchase a separate Extension of Conversion Period rider. If you’re looking for a more lenient policy, try State Farm, which lets you convert through age 75, or TIAA, which allows you to convert at any point during the original term — at no extra cost to you.

Guide to life insurance pricing

How to get the coverage you need at the lowest price point

Understand the underwriting process

Before any company issues you a life insurance policy, you’ll have to go through underwriting. During this evaluation stage, a specialist looks at your age, health, family history, occupation, etc. and determines the “risk” of insuring you (read: the likelihood that the company will have to pay out on your policy). The riskier you are, the higher your premiums.

Shop around for your best offer

So what’s the trick to finding cheap life insurance? It’s all about comparison shopping. Every company’s underwriting process is a little different, and some may be more forgiving of certain “risk factors” than others. For this reason, we always recommend comparing quotes from a handful of companies before settling on a policy.

Be aware that age and sex will always affect price

It’s always worth it to shop around for the best price on life insurance. As you do so, though, keep in mind that there are a few pricing factors you can’t change. The two biggest? Your age and sex. Regardless of health, an older customer will always pay more for life insurance than a younger one. And across all of our picks, men were quoted slightly higher prices than women.

Life insurance prices are higher for males and older customers

But you do have control over some pricing factors

Age and sex aside, tobacco use is the single biggest factor that affects your life insurance premium. Every company’s quotes were around twice as expensive for smokers, compared to a second, non-smoking profile that was otherwise identical.

Smokers generally pay about twice as much for life insurance

Consider springing for more coverage

A bigger policy always means bigger premiums. That said, when you opt for a larger death benefit, you’ll actually be paying less per dollar of coverage; the average cost to upgrade from $100,000 of coverage to $250,000 is only about $5 per month. Spending a little more on the front end can help ensure that your beneficiaries are better taken care of, should they need to live off your death benefit.

The more coverage you buy, the cheaper it gets

Cheap life insurance FAQs

The best cheap life insurance: Summed up

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