Cheapest Life Insurance Companies of 2024 | Bankrate (2024)

PROS

• Advertises term life insurance for as little as $1 per day, though rates will vary based on your unique profile

• Term life insurance may be able to be converted to whole life insurance before the policy’s expiration

• Policyholders are able to make payments and track spending habits with the Northwestern Mutual mobile app

• Available in all 50 states

  CONS

  • Does not offer guaranteed acceptance life insurance

  • Cannot quote or purchase life insurance online

  • Can make phone payments 24/7, but customer service only open during normal business hours

Cheapest for

Term life insurance

State Farm review

Why we chose State Farm

State Farm won the 2024 Bankrate Award for Best Term Life Insurer for the third year in a row thanks to its exceptional J.D. Power customer satisfaction score, availability in most states and A++ (Superior) AM Best financial strength rating. State Farm’s term life policies go the extra mile by providing coverage that is renewable up to age 95, while most competitors restrict coverage after you turn 80.

State Farm review

State Farm sells standard life insurance policies, including term life, universal life and whole life insurance.

The company’s unique Instant Answer term policies provide $50,000 in term life coverage up to age 50, or a maximum of 10 years. If you qualify for an Instant Answer policy, you may not have to take a medical exam. State Farm also offers a multi-policy discount on auto insurance if you purchase life insurance, which could help you save some money.

In terms of customer reviews, State Farm receives fewer complaints than expected for its individual life insurance as reported by the NAIC. However, keep in mind that final expense policies with State Farm have a maximum death benefit of only $10,000.

The cheapest types of life insurance policies

For those looking to stretch their dollar further in the life insurance market, term life insurance often stands out as a cost-conscious choice. The core of term life insurance lies in its simplicity and time-bound nature, offering coverage typically from 10 to 30 years. This makes it particularly appealing for:

• Lower costs: The premiums for term life are generally more budget-friendly compared to lifelong policies. This affordability is because the insurance is only active for a set period. However, it's important to keep in mind that as you age, premiums could increase due to higher risk factors.
• Time-specific coverage: Many opt for term life insurance to cover specific periods of financial vulnerability, such as the years spent raising a family or paying off a home loan. This targeted protection can make term life a sensible option for those with clear coverage timeframes in mind.
• Flexibility to upgrade: One advantage of term life insurance is the potential to switch to a permanent policy later on, often without a medical exam. This option offers a safety net, allowing policyholders to adapt their coverage as life circ*mstances change.

While term life insurance can offer savings, especially for younger or healthier individuals, it's not a one-size-fits-all solution. Premiums can be spendier if you wait until you’re older to buy, and the policy's expiration might leave some seeking more permanent coverage solutions. Understanding these traits of term life insurance can help guide your decision toward the most fitting and financially smart option for your situation.

Compare types of life insurance available at top cheap insurance companies

How to get cheaper life insurance

The cost of a life insurance policy varies from person to person, as rates are highly dependent on your age and health. In general, younger, healthier policyholders pay lower premiums than older, at-risk applicants. If you’re hoping to get the best life insurance rates, these steps may help you shave a few dollars off your monthly premium.

1. Consider purchasing a policy when you’re young. Life insurance generally becomes more expensive as we get older, so it may be beneficial to purchase a policy when you’re young for lower rates.
2. Avoid dangerous activities. Risky hobbies like skydiving and rock climbing may increase your life insurance premium significantly. Swapping out a risky activity for safer habits, such as hiking or cross-country skiing, could indicate a safer lifestyle to an insurer.
3. Manage the parts of your health that are in your control. This could include healthy habits like eating well-balanced meals, exercising daily and getting enough sleep.
4. Cut out smoking and/or other nicotine products. Smoking can trigger long-term health problems, which is why insurers typically have much higher life insurance rates for smokers. Striving to quit can be difficult but could provide long-term health benefits, along with lower rates.
5. Evaluate employment benefits. Life insurance provided through employers sometimes offers lower rates because they benefit from group pricing. Keep in mind, these policies will typically end if you leave your employer or retire.
6. Consider a ladder strategy: A life insurance ladder is a strategy where you buy several term life insurance policies with different coverage levels and expiration dates. For example, a young family may have a need for higher coverage while they still have a mortgage and children in the household. Once the mortgage is paid off, their need lowers, and once the children are out of the household, their need lowers again. Buying different policies that expire as your needs change might help you save on life insurance in the long run. You may want to work with a licensed life insurance agent before committing to this strategy, as it does require you to have a very firm grasp of your financial needs and how they could change over the years.
7. Reevaluate your coverage level. Once you’ve paid off your mortgage and your kids have moved away from home, you may not need as much life insurance coverage. Reevaluating your coverage and choosing a policy with lower premiums and a lower death benefit may be right for you. You may want to consult with a licensed agent or financial professional before adjusting your coverage.

Group and free life insurance

When considering life insurance options, many find valuable opportunities through their workplace benefits. Employers often provide group life insurance as part of their compensation package, usually offering a basic level of coverage at no additional cost to employees or any medical underwriting. This kind of insurance is particularly useful for those looking for a simple layer of financial protection without the need for a more comprehensive plan.

The benefit provided by such employer-sponsored insurance typically covers a basic amount, which might be sufficient for individuals with limited insurance needs or those seeking just a basic safety net. While there's often the possibility to enhance this coverage, doing so would likely incur extra premiums for any amount exceeding the basic coverage provided.

It's important to note that the coverage provided by group life insurance is generally in effect only as long as you are employed with the company. Some policies might offer portability, allowing you to keep the coverage after leaving the company, but this usually comes with increased premiums. Additionally, group life insurance plans may offer limited flexibility in terms of policy customization and additional benefits, which might not meet the specific needs or preferences of all individuals.

What factors affect my life insurance premiums?

Life insurance rates, like all insurance rates, are based on risk. With life insurance, the risk is mainly centered around your likelihood of passing away during the policy period, and how much money the insurance company will pay to your beneficiary. These are some of the rating factors that life insurance companies may use to rate your policy:

• Age: Age is one of the strongest predictors of mortality; older individuals are more likely to pass away than younger ones, which means life insurance quotes will typically get more expensive as you age. Getting a policy when you’re young may help you get lower rates.
• Gender: Your gender might statistically impact the likelihood of getting certain diseases, the riskiness of your lifestyle or your overall life expectancy, all of which may affect life insurance rates.
• Health: Your health also plays a role in determining how much you’ll pay for life insurance. Those who experience health problems are likely to face higher premiums.
• Family history: Your family medical history could predispose you to certain ailments, which means you could pay more for life insurance.
• Coverage type: Term policies tend to be cheaper, especially for younger individuals, because there is a chance you’ll outlive your policy and the company will not have to pay your death benefit. Comparatively, permanent policies are designed to stay in place for your entire life, which means at some point the company will have to pay your beneficiary after your death, provided the terms of the policy are met. This leads to higher average premiums.
• Death benefit amount: More coverage generally means higher rates, since the life insurance company will be responsible for paying a higher amount to your beneficiaries upon your passing.
• Lifestyle: Lifestyle encompasses a broad range of factors, including your job, hobbies and health habits. Those with risky jobs or hobbies may pay more for life insurance, and unhealthy habits like smoking also tend to increase rates.