How To Compare Life Insurance Quotes

Companies provide life insurance quotes as estimates of how much you may have to pay for coverage. Quotes are not a promise of how much you will pay for your actual premiums or that you qualify for coverage. But you can use life insurance quotes to compare costs of different policies.

Terry Turner, Financial writer for Annuity.org
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    Terry Turner

    Terry Turner

    Senior Financial Writer and Financial Wellness Facilitator

    Terry Turner is a senior financial writer for Annuity.org. He holds a financial wellness facilitator certificate from the Financial Wellness Foundation and the National Wellness Institute, and he is an active member of the Association for Financial Counseling & Planning Education (AFCPE®).

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    Savannah Hanson, financial editor for Annuity.org

    Savannah Hanson

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    Savannah Hanson is an accomplished writer, editor and content marketer. She joined Annuity.org as a financial editor in 2021 and uses her passion for educating readers on complex topics to guide visitors toward the path of financial literacy.

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  • Updated: November 21, 2022
  • 6 min read time
  • This page features 6 Cited Research Articles
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APA Turner, T. (2022, November 21). How To Compare Life Insurance Quotes. Annuity.org. Retrieved December 6, 2022, from https://www.annuity.org/life-insurance/buy/how-to-compare-quotes/

MLA Turner, Terry. "How To Compare Life Insurance Quotes." Annuity.org, 21 Nov 2022, https://www.annuity.org/life-insurance/buy/how-to-compare-quotes/.

Chicago Turner, Terry. "How To Compare Life Insurance Quotes." Annuity.org. Last modified November 21, 2022. https://www.annuity.org/life-insurance/buy/how-to-compare-quotes/.

What Determines Life Insurance Quotes?

Life insurance quotes are estimates of how much you will have to pay in premiums for a specific amount of coverage. Life insurance companies create quotes based on information you provide about yourself.

Information Companies Use To Determine Life Insurance Quotes
  • Age
  • Gender
  • Health
  • Smoking status
  • Coverage amount
  • Type of policy (term or permanent)
  • Length of term (if you choose term life insurance)
  • Whole or universal life (if you choose permanent life insurance)
  • Riders (add-ons you can choose for an extra cost)
  • Payment schedule (annually, semi-annually, monthly)

Each company uses its own formula for determining how this information translates into an estimate of your yearly or monthly premiums.

5 Steps To Compare Life Insurance Quotes

It’s important to know what your life insurance needs are before comparing quotes. This will allow you to compare policies that all address the type and amount of policies that meet your needs and goals.

Here are five steps to help you narrow down your options before comparing quotes.

Step 1: Pick Your Policy Type

There are two basic types of life insurance policies — term life and permanent life insurance. Permanent life also has two types — whole and universal. These different policy types have very different functions, features and rates that can vary widely.

Types of Life Insurance Policies
Term Life
Term life insurance is purchased for a specific number or years — the term. If you die within that term, the insurance company pays a death benefit to your beneficiaries. If you outlive the term, you receive nothing. This tends to be much cheaper than permanent life insurance.
Whole Life
Whole life insurance is permanent life insurance. It stays in effect for as long as you live. It also has a cash component that allows you to accumulate cash value in the policy. The amount you must pay towards the premium could fluctuate based on dividends or cash value contribution towards the premium, but the required premium won't rise over time.
Universal Life
Universal life insurance is a type of permanent life insurance combining a cash value component with life-long protection. Your premiums are guaranteed to never increase.

Choosing the right type is critical when buying life insurance — and when getting quotes.

You want to choose a policy type before asking for quotes so that you’re actually comparing quotes for similar coverage. Otherwise, you won’t get a good comparison on coverage or cost.

Step 2: Determine How Much Coverage You Need

It’s important to determine how much life insurance you need. This will be the coverage amount your policy provides.

You’ll want to compare different policies that provide the same coverage.

In some cases, a policy that provides more coverage will actually have lower premiums. This is because some companies offer discount rates if you buy the higher coverage. Consider this when comparing quotes.

Step 3: Weigh the Policies’ Underwriting and Approval Process

Familiarize yourself with each company’s underwriting and approval process. These can derail your insurance application if they don’t go in your favor.

Underwriting is the company’s process of determining its risk in insuring you. This often means a medical exam and requiring other information to better estimate your life expectancy.

The insurer will want information on existing medical conditions, your blood pressure, cholesterol levels, medications you’re taking and other risk factors.

You may also have to provide family medical histories of heart disease, cancer, diabetes or other serious conditions.

Step 4: Compare Payment Schedules

You may be able to get lower premiums if you pay your premiums once a year or once every quarter rather than monthly.

Insurance companies may have several payment schedule options. Monthly premiums may be more convenient for you, but they may cost you more.

Ask about discounts for different payment options and consider how those affect your bottom line.

Step 5: Check Rider Options

Riders are add-on features to a basic life insurance contract. They provide extra coverage or options — and they typically come at added cost.

Examples of Life Insurance Riders
  • Accelerated death benefits — allows you to access your death benefits while you’re still alive if you are diagnosed with a terminal or serious medical condition.
  • Accidental death (double indemnity) rider — typically doubles your death benefit if you die in an accident covered by the policy.
  • Child term benefits — pays a death benefit if your child dies within a specific term during which the rider is in effect.
  • Long-term care rider — allows you to access the death benefit while still alive to pay for long-term care.
  • Waiver of premium — waives your premiums if you are disabled or critically ill and can no longer work or pay premiums as a result.

How To Compare Life Insurance Companies

You should consider the history and financial strength of an insurance company before buying a policy. Life insurance promises a pay out years or decades into the future. You want to make sure the company will be around.

There are five independent agencies — AM Best, Moody’s, Standard & Poor’s, Kroll Bond rating and Fitch — that rank insurance companies based on their financial strength.

You can check with these firms to see how they rate different insurers — don’t rely on what a company says about its rating from them. Each company has different rating systems. Check with each to see what its best and worst ratings are — an A+ rating from one may be less than an A+ rating from another.

Contact the Independent Insurance Rating Agencies
NAME & WEBSITEPHONE NUMBER
AM Best908-439-2200
Fitch Ratings1-800-753-4824
Kroll Bond Rating Agency (KBRA)646-731-2368
Moody’s212-553-0300
Standard & Poor’s Insurance Rating Service212-438-2000
Source: Insurance Information Institute

You will have to register to use the Moody’s and Standard and Poor’s websites, but each provides free services.

J.D. Power — the consumer research, data and analytics firm — also produces an annual report on select life insurance companies based on customer satisfaction. Though this tends to be a short list of some of the larger insurance companies.

Are Life Insurance Quotes Accurate?

Because there are so many variables — age, gender, health, family medical history and so on — it’s difficult to determine how accurate a life insurance quote will be.

It will likely be less accurate with a simple online calculator than with a life insurance agent or broker who can ask you more detailed questions about your personal situation.

Either way, remember that a quote is simply an estimate. It is not an offer or a guarantee of exactly how much life insurance costs.

You may be required to provide additional documented information and a medical exam. Your actual cost may differ from the quote you receive, but you can still use a quote as a starting point for comparing costs.

Please seek the advice of a qualified professional before making financial decisions.
Last Modified: November 21, 2022

6 Cited Research Articles

Annuity.org writers adhere to strict sourcing guidelines and use only credible sources of information, including authoritative financial publications, academic organizations, peer-reviewed journals, highly regarded nonprofit organizations, government reports, court records and interviews with qualified experts. You can read more about our commitment to accuracy, fairness and transparency in our editorial guidelines.

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  2. Texas Department of Insurance. (2022, June 14). Life Insurance Guide. Retrieved from https://www.tdi.texas.gov/pubs/consumer/cb018.html
  3. Louisiana Department of Insurance. (n.d.). Consumers Guide to Life Insurance. Retrieved from https://www.ldi.la.gov/docs/default-source/documents/publicaffairs/consumerpublications/life-insurance-guide.pdf
  4. Minnesota Commerce Department. (n.d.). Buying Life Insurance. Retrieved from https://mn.gov/commerce/consumers/your-insurance/life-annuities/buying-life-insurance.jsp
  5. New York State Department of Financial Services. (n.d.). The Cost of Life Insurance. Retrieved from https://www.dfs.ny.gov/consumers/life_insurance/the_cost_of_life_insurance
  6. New York State Department of Financial Services. (n.d.). Life Insurance. Retrieved from https://www.dfs.ny.gov/faqs/consumer_faqs/life_insurance?page=1