The 4 Best Cheap Life Insurance Companies
Protect your wallet and your loved ones
As with all insurance, it’s impossible to say which provider is best since prices will always vary from person to person, or how “risky” it is to insure you. To make our recommendations we evaluated availability, financial stability, coverage details, and pricing quotes from 63 companies, and each of them is a great place to start your search. But to find the best cheap life insurance for you, you’ll ultimately need to compare quotes from them all.
TIAA Life: Some of the cheapest life insurance quotes we got, plus the option to convert your term policy into a permanent one at any time.
New York Life: You can choose a term limit at any length between 10 and 20 years.
Transamerica: Sample quotes were up to $10/month cheaper for smokers than our other top picks.
Amica: A 24/7 live chat feature is great if you're new to life insurance.
There are a few things that will always factor into what makes a cheap life insurance policy the best, no matter your age or situation. First, it will be a “term” policy (the cheaper of the two major kinds), meaning that it covers you only for a set term — the years when it’s most needed — as opposed to your whole life. And that policy will be from a financially stable company, with the option to extend your coverage if you end up needing insurance for longer than the term you planned.
Our favorite provider is TIAA Life, which consistently had the cheapest quotes and has the option to convert a term policy into a whole life policy at any time without requiring a second medical exam — an option that is pretty much unheard of. But even though we had consistently low quotes with TIAA Life, the only real way to find the cheapest policy for you is to compare quotes.
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How We Found the Best Cheap Life Insurance
Price isn’t everything, even if you are trying to find life insurance on the cheap. Your policy should be able to meet your needs when you need it most — or else, what’s the point? All our recommendations had to fulfill our minimum standards for a good life insurance policy:
Financial stability. You never want to worry about your insurance company’s ability to pay out should the need arise. Our top picks all get excellent financial strength marks from the major independent insurance rating agencies: A.M. Best, Standard & Poor’s, and Moody’s.
Availability. We only considered companies that write term life insurance in at least 40 states, with no special eligibility requirements. This means we left out some that might be great for certain people, such as USAA, which is only available to servicemembers and their families. (If you are eligible for USAA, you should absolutely get a quote.)
Conversion option. While the best cheap life insurance will always be a term policy, the option to convert it to a permanent or “whole life” policy can be invaluable, especially if you’re diagnosed with a terminal illness. In this (admittedly grim) scenario, it’s conceivable that your diagnosis could make it impossible to get a new life insurance policy after your current one expires, leaving your dependents vulnerable if you outlive your term. We made sure all our top picks guarantee the option to convert your policy to preserve the death benefit for your dependents.
Guaranteed renewability. Sometimes it makes sense to extend the term by just a year or two, rather than convert to a permanent policy (maybe you refinanced your mortgage and now owe payments for longer than you originally planned). In these cases, term life insurance can be “renewed” for an extra year at a time. Granted, this extension will likely include a steep price increase, since renewal is typically only used when the insured’s poor health prevents them from getting a new policy to replace the one that’s expiring. But even though it’s expensive to use, guaranteed renewability is crucial if your health declines, but your dependents still need the protection of insurance.
Six nationwide providers nailed these basics.
We dug into the policies of TIAA Life, Transamerica, New York Life, Amica, State Farm, and Lincoln Financial to evaluate coverage, and got quotes from each to do a little price-comparison shopping.
Lincoln Financial has decent coverage and excellent financial strength, but requires a minimum death benefit of $250,000, which is more than some buyers will want (one way to save money is to decrease your coverage limits).
State Farm is also rock-solid financially, but isn’t as flexible as our top picks with its policy conversion options and also turned around the most expensive quotes of all six providers, no matter the term length, death benefit, or age of customer. It’s still worth it to grab a State Farm quote while you’re shopping around, but chances are it’s not going to be your cheapest option.
Amica Life Insurance
New York Life
|Profile A: Female, 25, Nonsmoker|
|Profile B: Female, 30, Smoker|
|Profile C: Female, 40, Nonsmoker|
|Profile D: Male, 25, Nonsmoker|
|Profile E: Male, 30, Smoker|
|Profile F: Male, 40, Non-smoker|
One of our sample quotes based upon a $250,000 policy over 20 years for six basic profiles. A 20-year term limit is currently the most popular choice on the market.
Our Picks for Best Cheap Life Insurance
Best Overall — TIAA Life
TIAA Life offers its term life insurance limits in five-year increments from 10 to 30 years (although there is, oddly enough, no 25-year term), and while TIAA and Transamerica both consistently offered us the cheapest quotes across different term limits, profiles, and coverage amounts, TIAA Life’s conversion allowance gives it the edge. TIAA is the only one of our top picks that lets its term policyholders convert to any of its permanent policies at any time during the term. All other providers restrict either the window during which you can convert (like New York Life and Amica), or the permanent policies that are eligible to convert to (Transamerica).
In those cases, if conversion is your only option (maybe you develop a terminal illness, or you have a special-needs child who will need extended care), you could end up being forced to convert to a more expensive permanent policy — if you’re still able to convert at all. That unrestricted conversion eligibility puts TIAA Life on top.
Most Flexible Term Lengths — New York Life
Even though New York Life’s convertible term insurance was a tad more expensive in our quotes than TIAA and Transamerica, it could actually end up being cheaper in the long run for certain people. It allows term lengths of any number of years between 10–20, so if you know your need for the insurance will end after 16 years (say, when your last child graduates college), you can buy a 16-year term policy and pay less in premiums per year than you would with a 20-year term policy.
New York Life’s policy-conversion opportunities are where things get a little sticky. If you want the option to convert to a permanent policy after the first 10 years, New York Life requires that you purchase a separate rider at the beginning of your initial term — which will chip away at your premium savings. A more cost-efficient method might be taking advantage of New York Life’s Policy Purchase Option, which allows for opting into a new term policy at specific dates without requiring a second medical exam. Timing is everything — those specific dates might not coincide with the major life events that would force you to re-up your policy, but if they do, that might be your cheaper option.
Most Tobacco-Tolerant — Transamerica
Based on our quotes, Transamerica appears to generally charge slightly less for young people and slightly more for older customers than TIAA, but the differences are so small ($1–$3 per month) that they’re hardly significant. The major standout for Transamerica was, instead, its pricing for tobacco users, which came out significantly lower than any of our other top picks. (Smoking is one of the biggest red flags for insurers, and will immediately slot you into a “higher risk” category.)
Amica Life Insurance
New York Life
|Female, 30, Smoker|
|Female, 40, Nonsmoker|
|Male, 30, Smoker|
|Male, 40, Nonsmoker|
The biggest downside: Transamerica has a limited number of permanent policies that customers can convert to should the need arise, meaning you could end up paying a lot more down the road than you would with a provider like TIAA Life.
Best Web Customer Service — Amica
Amica was quite competitive in our quote comparison, generally matching TIAA and Transamerica in most situations, although it loses major points for not allowing you to convert your policy after the first 10 years at all — there’s not even a rider to make up for it like with New York Life. (Speaking of riders, though, Amica does offer a unique one: the option to adjust the policy’s death benefit to account for inflation.)
Where Amica really stands out is that it’s a “direct writer” for its insurance products, rather than issuing them through a network of insurance agents. While direct writing doesn’t necessarily mean a cheaper premium, it does eliminate incentive for a rep to push a more expensive policy to get a higher commission. We particularly love the Amica website’s “Live Chat” option too; it offers 24/7 answers to individual policy questions without the need to wait on hold or leave a message.
3 Takeaways from Our Quote Comparisons
It’s worth repeating again and again: The actual price of a life insurance policy is heavily dependent on you, the individual being insured. To really know which provider will give you the best price, you’ll have to shop around and go through the quote process yourself.
That said, we wanted to get a benchmark for what to expect from our top providers that met our basic policy requirements. Online quotes aren’t super-detailed, but we could still compare price estimates for a set of broadly defined profiles. We used each company’s online quote calculator and adjusted for three basic characteristics (age, gender, and tobacco usage), and six different policy options: a $100,000 policy, a $250,000 policy, and a $500,000 policy, for both 10 and 20 years.
Coverage gets cheaper as you buy more of it.
For both 10- and 20-year terms, the coverage cost per dollar goes down as the death benefit goes up. For example: A 40-year-old nonsmoking male with a 20-year term pays (on average) $18.40/month for $100,000 of coverage, or 0.000184 cents per dollar of coverage. But increase his coverage to $250,000, and the price per dollar drops to 0.000107 cents. Up the coverage to $500,000, and the price per dollar drops again — to 0.000091 cents. This general trend holds true across the board, for both smokers and nonsmokers, and for 10- and 20-year terms.
Young people get the most bang for their buck.
The premiums for 25-year-olds are significantly lower than those for 30-year-olds or 40-year-olds. The average monthly premium across all five providers for a 25-year-old male’s 20-year, $500,000 policy was $27, compared to $46 for a 40-year-old.
While there are always exceptions, in general, the younger you are, the healthier you are, and life insurance companies are willing to insure you for less. Since most term policies these days have level premiums (meaning that the premium stays the same throughout the course of the term), buying early also allows you to offset more of your future insurance cost by rolling it into your early-year premiums.
The price hike for people who smoke is major.
In many cases, the premiums for 30-year-old smokers are roughly double what they are for 40-year-old nonsmokers, even though they’re 10 years younger. (Heads-up guys: You’ll pay even more!) This difference is even more striking when you consider that the insurance company’s overhead cost (which accounts for part of the premium) stays constant.
Did You Know?
The amount of coverage you need depends on your dependents.
You might have heard to multiply your annual income by 10 to find the right death benefit amount, and that’s a decent rule of thumb. But a more accurate determination should take into account how much your spouse and children will need to maintain their standard of living, pay off debt, and cover future expenses like college. That might be 10 times your annual income, but it also may be higher — or maybe even lower.
A little bit of life insurance is still better than none at all.
If your budget forces you to choose between a longer term and a higher death benefit, opt for the longer term first. This way you lock in at least a minimum amount of insurance for as long as you know you’ll need it. But as soon as you can, you should buy another policy to increase total coverage to your desired amount, since it’s only going to get more expensive as you age.
There are other ways to save on premiums.
Insurance companies price their policies according to all sorts of risk factors — things like age, physical build, medical history, driving record, and even “risky” hobbies. While there’s nothing you can do about your age or your genes, losing weight or quitting smoking before you apply for life insurance can dramatically reduce your premiums. Improving your credit score will also help, as will paying your premiums annually instead of monthly.
Beyond improving your health and credit, the best way to save money on life insurance is to shop around for the same coverage from different companies. Each company has its own unique formula for calculating risk (and therefore price). Start by comparing quotes. Overwhelmed? An experienced financial advisor can save you time by comparing only those companies that favor your particular profile.
Compare rates from the top providers
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