How to Shop for Life Insurance

Lauren Ward
Lauren Ward
Contributing Writer

When it’s time to shop for life insurance, it’s smart to weigh all of your options before choosing a policy. The most important part of the process is to evaluate where you are in your life today and where you think you’ll be in the years to come. People often purchase life insurance to help their families in the event they unexpectedly pass away. Common uses include covering funeral costs, paying for your children’s future college tuition or leaving enough to pay off existing debt to help ease a spouse’s financial burden.

There are a number of ways to find the right policy. The most traditional route is using an agent. They may have restrictions on what companies they work with, but they can help you evaluate your personal situation to pick the best type of policy. Shopping for life insurance online is becoming increasingly common and can help you quickly compare offers from multiple carriers. 

Choose a policy: term, universal, or whole-life

There are several different types of policies to choose from. Term life insurance, which covers you for a certain period of time ranges from 10 years up to 30 years commonly. The younger you are, the less you’ll pay for a premium each year. Additionally, you can choose how much coverage you’d like, which also impacts the cost of your policy. If you don’t end up using your death benefit within the policy’s term, you won’t receive any money but may be able to renew (albeit at a higher rate since you’ll be older).

Universal life insurance is another low-cost option but comes with the ability to invest your premiums in order to accrue cash value. Part of your premium pays the cost of insurance while part of it is invested. If your cash value earns enough, you can tap into that money without impacting your death benefit.

Whole life insurance is a type of permanent life insurance. Rather than lasting for a specified term, your premium and your death benefit typically don’t change throughout the duration of your policy. When you’re younger, you’ll likely pay a higher premium than you would with a term life policy. But as you get older, you won’t face costly price increases, especially when you’re more likely to need the policy. Like a universal policy, whole life also accrues cash value.

A term life insurance policy is ideal if you have a young family and want an inexpensive policy to cover certain costs in case you unexpectedly pass away before your kids move out on their own. Universal life insurance is better for individuals who want an affordable policy later in life. Whole life is best suited for people who want to use their policy both as an insurance policy and a long-term financial planning tool.

Bottom Line

Now that you know how to shop for life insurance, think about the stage you’re in and how long you’d like to have a policy in place. Term life insurance is typically the cheapest option with a death benefit that can financially help your family. Universal and whole life add an investment element, which could be better for a long-term strategy. 

Our Life Insurance Reviews

We’ve been reviewing life insurance companies for a while now. Check out our in-depth reviews below for more detailed information about individual insurers:

About the Authors

Lauren Ward

Lauren Ward Contributing Writer

Lauren Ward is a personal finance writer who regularly covers consumer insurance products. Her work has appeared in a variety of online publications, including Bankrate and The Simple Dollar. She graduated from Georgetown University with a BA in Japanese.