The cost of life insurance might be lower than you think. Find affordable or low cost life insurance options for almost any budget.
One of the most common reasons why people put off life insurance is because they think it's too expensive, according to the "2018 Insurance Barometer Study."1
However, when asked how much a $250,000 term life policy would cost a healthy 30-year-old, nearly half of millennials overestimated by five times the actual amount. The average cost for such coverage is lower than you might think.
That means they could be missing out on the protection they need for all the wrong reasons.
In this article, we'll dispel some of the myths about the cost of life insurance, give you insight into which policies are most affordable or lower in cost, and help you find simple ways to make room in your budget.
Misconception About the Cost of Life Insurance
You have a set amount of income from your paycheck — and a lot of priorities vying for a piece of it. There's the car payment, rent or mortgage payment, and, of course, those student loan payments that seem to stick around long after your last day on campus.
So, you tell yourself you can't afford life insurance, and push it off for another day.
But, when you think about what could happen if you passed away, the real question is: Can you really afford to go without life insurance?
If you passed away, a number of expenses might get passed along to the people you care about most. First, they would likely be covering the cost of your funeral out-of-pocket, which can run nearly $2,100, just for a basic viewing and burial.2 Second, if a relative or significant other co-signed on your house, car or student loans, those debts may become their burden to bear. With the average student debt per graduate reaching $16,900 for public and private four-year institutes,3 that's a hefty tab to pick up.
The money from a life insurance policy could help to offset these costs, allowing your loved ones to focus on overcoming their emotional grief, instead of adding financial grief to it.
Tips for Finding Cheap Life Insurance
You see the ads everywhere - "Cheap Life Insurance for Pocket Change Per Day." But are these life insurance rates real?
Simply put, the answer is yes AND no. Life insurance rates vary significantly, depending on how much coverage you want and your individual risk factors. But good quality, rock-bottom cheap life insurance policies do exist. That said, don't be fooled by a quick life insurance quote form. It doesn't guarantee affordable life insurance. It's just an estimate. Finding the cheapest ife insurance policy for your may require that you speak with a licensed agent. They may also require more detailed information, including a medical exam.
The quick or affordable life insurance quote forms can be useful, however. They're a good place to start shopping for low cost life insurance. A few things to keep in mind:
- Life insurance rates aren't locked in until the application process, including the medical exam, is complete. Only then can the life insurance company place you in the appropriate rate class. Your cheap life insurance will be worth the wait!
- If you don't get the affordable life insurance that the quick quote form estimated, consider the value to you and your loved ones. A few dollars more might not be a deal breaker. But you can always talk to your life insurance agent. It costs nothing to talk things through and see if there are other life insurance options available.
- If an advertisement promotes cheap life insurance without a medical exam, it may not actually be the cheapest. Life insurance medical exams are the only way for life insurance carriers to accurately assess your health and award you with the most affordable life insurance rates.
- When possible, work with a company that represents multiple life insurance carriers. These companies aren't biased and trying to shoe-horn you into their company's life insurance products. Some companies specialize in covering specific situations (for example, tobacco usage), so shopping multiple carriers may give you greater access to good rates.
To get "too good to be true" (yet real!) life insurance rates, talk to a licensed agent. This might prove your quickest route to affordable life insurance.
Options for Affordable Insurance
Out of all of the different types of life insurance, term life insurance is generally the most affordable and often can be a low cost life insurance. However, universal life insurance offers the greatest flexibility in terms of how much you pay per month (i.e. your "premium"). After you find a policy that fits your needs, make sure it will also fit into your budget.
Term life insurance
Term life insurance allows you to buy life insurance protection during the years you need it most (i.e. your "term"). Once the term ends, so does your coverage. Depending on your unique situation, you may be able to get a term life insurance policy at an affordable rate for less than you thought.Learn More
Universal life insurance
Universal life insurance is another affordable life insurance policy. It's a type of whole life insurance that can provide coverage for up to a lifetime. However, unlike traditional whole life policies, it allows you to adjust the amount of your premium, which is ideal for those on a tight budget. For example, if you're healthy and seeking coverage, you might be able to get a policy that is affordable and meets your budget. It's important to note, however, that the amount and timing of your premium payments can impact how long coverage can continue.Learn More
Accidental Death and Dismemberment Insurance (AD&D Insurance)
To get approved for a term or universal life insurance policy, you generally need to take a medical exam and complete a health questionnaire. If you're looking for an option that doesn't require either one, you might consider Accidental Death Insurance (AD&D Insurance). It's designed to help protect you and your family if you are seriously injured or killed in a covered accident.
Although it's not a life insurance policy, it does provide some level of coverage for those who might otherwise have none, due to a health issue. Some people even opt to buy it in addition to a traditional life insurance policy.
One of the reasons they're able to do that is because AD&D Insurance is typically more affordable than term or whole life insurance and is an alternative low cost life insurance.Learn More
Making Room in Your Budget for Life Insurance
There are a number of ways to make room in your budget for a low-cost life insurance policy. Here are five simple steps to help you get there.
Track your spending
Before you can start saving your money, you have to know where you're spending it. There's no shortage of budgeting tools and apps, but there's one that stands a cut above the rest: Mint.
The mobile applications automatically update and categorize your transactions, which provides you with a snapshot of your spending in real-time. You can also receive alerts when a bill is due, when your account balance is low, if one of your accounts gets charged a fee, or for any unusual activity.
One of our favorite aspects of the app, however, is that it lets you experiment to see how future financial decision might impact your budget. If you're thinking about buying life insurance, for example, you can easily see how it would fit into your budget — without making any commitments.
Assess your income
Consider your salary (after taxes), as well as any money that gets automatically deposited into a savings or retirement account. Try not to factor in earnings that aren't guaranteed, such as a work bonus or an inheritance.
Then look at your average monthly spending, based on the tool you're using to track it. Are you spending more than you're making?
If so, this may be a good opportunity to take a step back and look for ways to live within or below your means. Then you can use that money toward the things that really matter to you.
Find creative ways to cut back
Savvy spending doesn't mean going without. By taking a closer look at where your money is going, you can make small changes that might result in big savings.
Need some ideas to get started?
- Cut the cable. Consider replacing cable with a streaming service, such as Netflix or Hulu, which might be less expensive.
- Use cold water. Choose the "cold water" setting when you're doing laundry. It's good for your wallet and the planet, as it conserves energy.
- Get a membership for a bulk grocery store. Keep track of the items you buy on a recurring basis and how often you're replacing them. Then buy those items in bulk, which will save you money and trips to the store.
- Pack a lunch. Eating out adds up. Try bringing lunch to work or on your weekend excursions, which can also help to encourage healthier eating choices.
- Cancel email and text alerts for sales. Have you ever bought something on a whim after receiving a sales alert? It's happened to the best of us. By hitting "unsubscribe," you'll be less tempted to buy things you may not really need.
- Shop used before new. Books, toys and clothes are just some of the items you might consider buying used. You can find gently used items in consignment stores and on resale sites, such as eBay or Letgo.
- Save before you buy. Before buying something you like, save up for it first. By delaying our gratification, we can avoid impulse purchases — and even develop a greater sense of gratitude.
Think Ahead When Planning for Life Insurance
Now that you've freed up some of your finances, you can use that money to plan for the future.
Life insurance is one way to do just that, giving you the peace of mind that your loved ones would have the financial protection they needed if you passed away.
Term life insurance is typically one of the most affordable or low cost life insurance options. For example, you can get a Term Life Insurance policy through AIG Direct with up to $250,000 of coverage for as low as $14 per month.
The amount you pay for your policy (your "premium rate") depends on a number of factors, including your age, health and lifestyle. As a result, you can often find more affordable life insurance when you buy it early on in life.
By taking charge of your finances, you'll be empowered to save up for the things that really matter and add value to your life.
Ready to get started? Get a free, instant quote for term life insurance in just a few minutes.
1 "2018 Insurance Barometer Study"; Life Happens and LIMRA
2. Median price for adult funeral with viewing and burial; "National Median Cost of an Adult Funeral with Viewing and Burial: 2017 vs. 2014;" National Funeral Directors Association; Web; Accessed July 2018 (http://www.nfda.org/news/statistics)
3. "Average Cumulative Debt Levels in 2016 Dollars: Bachelor's Degree Recipients at Four-Year Institutions, 2000-01 to 2015-16"; The College Board; Web; Accessed July 2018 (https://trends.collegeboard.org/student-aid/figures-tables/cumulative-debt-bachelor-degree-recipients-four-year-institutions-over-time)