Types of Term
  When to Buy Term
  When Not to Buy
  Level Term Protection
  Term vs Universal
  Term vs Whole Life
  What is Universal Life
  Credit Life/ Disability

Life Ins Definitions

  Life Insurance FAQs
  Cost of Life Insurance
  Life Company Ratings
  Get a Life Quote Now

Insurance Calculator

Life Insurance: How Much Does It Cost

get a comparison cost quote »

Many life insurance shoppers do not realize that when they are urged to compare costs, what they may actually be doing is unwittingly comparing the cost of term life with that of whole life. Of course, the former will come off radically cheaper, and to the uninformed may thus seem like the preferred purchase. Like most things that seem unbelievably “cheap,” you often get what you pay for.

If you want to compare life insurance policies, the first step is to make sure you are comparing apples to apples. That is, compare one company’s TERM policies to the term policies of another company. Don’t try to compare a term to a universal or whole life, a whole life to a universal, or even a whole life to a modified whole life or a graded whole life.

How will you know what’s what? You have to ask the agent to tell you exactly what type of insurance he or she is offering. Begin by using our site to educate yourself about the different types of life insurance. Then, when you compare two or more different whole life policies, for example, you will find that, without adding riders, a standard policy for a non-smoking male differs very little from one company to another—possibly no more 10 or 15 dollars, a difference often created by the difference in annual policy fees.

Term policies also are very similar from one company to another when considering the same criteria—i.e. same gender, age and health conditions. The actual cost of a life insurance policy is governed largely by the mortality rate—that is, the average age to which people born during a certain time frame are expected to live. The older a population lives, the less expensive it is to provide life insurance as the company has more time to invest premium and earn a profit from your money. The mortality rates are determined by the government which also sets the maximum premium per $1000 of coverage that a company can charge. While companies set their own premiums within the government guidelines, virtually no company charges the highest allowable cost of insurance as they couldn't compete if they did.

The policy fee widens the costs a bit more than the cost of insurance. It is an expense charge which contributes to agent commissions and other overhead of the company. Some companies have very low annual fees—less than $20.00 while others charge $50.00 or more per year. A few companies advertise “no load,” meaning you may not have an annual fee, but may also have either no agent at all or may have to pay the agent directly at the time of the sale.

Perhaps the largest price variations in policies of the same type occur among universal policies. That’s because Universal life is an interest sensitive product with premiums that can be changed over time. If priced for the best benefit, a universal will endow at age 100 and your premium is likely to remain unchanged during your lifetime. However, an agent just trying to get your business may offer you a much lower premium and just let you find out for yourself that the premium may need to be increased a few years down the road. Always ask for an illustration showing how the universal is projected to run in the “assumed” future.

Regardless of the type of policy you wish to compare, you can use our user friendly site to request quotes from several companies. Then just be sure to ask the contacting agent which type of insurance he or she is offering and make your comparisons among the same types of policy.

Home | About | Contact | Terms of Use | Privacy Policy

Copyright © 1998 - All Rights Reserved