Comparing Life Insurance Quotes
Where to buy life insurance
There are a few ways to buy a life insurance policy:
1. Directly from the insurer. If you’ve done your own research and know exactly which policy you want, you can often buy directly from the insurer.
2. Through an agent or broker. Need a little help choosing a policy? That’s where a life insurance agent or broker comes in. An agent or broker can help you navigate your options, find a policy that suits your budget and gather all the documents you need to apply for coverage.
3. Compare policies online. Most insurance companies support online quotes. This makes it easy to shop around for the best coverage at the right price.
When you’re assessing life insurance companies, look at these three factors:
1. Financial strength ratings. These determine an insurer’s ability to pay out claims in the future. You can check out insurers’ financial strength through ratings agencies such as AM Best or Standard & Poor’s. NerdWallet recommends choosing insurers with an AM Best rating of B+ or higher, if possible.
2. Complaint ratios. Ideally, you want to choose a company with a strong track record for customer service. NerdWallet’s ranking of the best life insurance companies favors companies that have fewer complaints to state regulators.
3. Policy options. Not all companies sell the same types of policies, and some focus on specific products, such as life insurance policies for children. Narrow your choices by reading life insurance reviews and knowing the type of coverage you want before you begin comparing life insurance quotes.
Comparing life insurance quotes
To get the best price possible, compare life insurance quotes from various insurers before you buy. Make sure to compare policies with the same level of coverage, and take note of any additional features offered for free. For example, some insurers may include an accelerated death benefit rider at no extra cost, while others may charge extra for it to be added.
Insurers may provide quotes for different payment intervals, such as monthly or annual plans. Additional administrative fees are sometimes added to monthly payments, making annual plans slightly cheaper.
Life insurance quotes are estimates and do not typically match the final price of a policy. The actual cost of your policy is determined once you submit a full application and complete any necessary health requirements like a medical exam.
Once you have found the right policy, be as honest as possible when applying. In some cases, an insurer may not pay the death benefit to your beneficiaries if you have lied on the application.
How to apply for life insurance
Collect the information you need before you start the life insurance application process. You’ll likely need to provide details about your current and past health conditions, as well as your family’s health history. The insurer may need your consent to get medical records and ask you to take a life insurance medical exam. Insurers also check other sources, such as MIB Group, which collects data on medical conditions, your driving record and hazardous hobbies.
When you choose life insurance beneficiaries — the people who will receive the payout when you die — be sure you have their Social Security numbers and dates of birth. You may also have to answer questions about criminal convictions and driving violations, such as a suspended driver’s license or DUI, particularly if they happened within the past few years.
With some insurers, you can apply online and get instant life insurance. If approved, your coverage could go into effect the same day.
Common life insurance terms
You might come across these terms when you’re shopping for life insurance. Here’s what they mean.
1. Beneficiary: The person or people you select to get the life insurance payout when you die.
2. Carrier: Another name for a life insurance company.
3. Cash value: Permanent life insurance policies typically have an investment portion that increases in value over time. This is known as the cash value account, and once you’ve accumulated enough cash value, you may be able to borrow against your policy.
4. Death benefit: The amount of money the insurer will pay out to your beneficiaries, generally tax-free, when you die.
5. Dividend: Some insurers are mutual companies, which means they’re partly owned by their policyholders. They may pay out a sum of money to some policyholders each year based on the company’s financial performance. These payments are called dividends.
6. Exclusions: The circumstances in which your life insurance policy won’t pay out, such as death from a risky activity like skydiving. Exclusions vary among insurers and are listed in the policy documents.
7. Face value: The basic death benefit of the policy. For example, if you purchase a $500,000 policy, its face value is $500,000.
8. Policyholder: The person who owns the life insurance policy.
9. Premium: The amount of money you’ll pay to keep your life insurance policy active. With most policies, you have the option to pay monthly, quarterly, semiannually or annually.
10. Rider: A life insurance rider is an optional add-on that can be used to customize your coverage.
11. Underwriting: The process an insurer uses to gather information about you and set your life insurance premium.