How To Get Affordable Life Insurance

The best way to get the most affordable life insurance is to buy it when you’re young and healthy. Shopping around for the best life insurance fit for your needs and goals will also help you find affordable life insurance. There are other, more complex strategies to consider as well.

Terry Turner, Financial writer for Annuity.org
  • Written By
    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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    Stephen Kates, CFP®
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    Stephen Kates, CFP®

    Expert Contributor

    Stephen Kates is a Certified Financial Planner™ and personal finance expert specializing in financial planning and education. Stephen has expertise in wealth management, personal finance, investing and retirement planning.

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  • Updated: November 21, 2022
  • 8 min read time
  • This page features 5 Cited Research Articles
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APA Turner, T. (2022, November 21). How To Get Affordable Life Insurance. Annuity.org. Retrieved December 6, 2022, from https://www.annuity.org/life-insurance/buy/how-to-get-affordable-life-insurance/

MLA Turner, Terry. "How To Get Affordable Life Insurance." Annuity.org, 21 Nov 2022, https://www.annuity.org/life-insurance/buy/how-to-get-affordable-life-insurance/.

Chicago Turner, Terry. "How To Get Affordable Life Insurance." Annuity.org. Last modified November 21, 2022. https://www.annuity.org/life-insurance/buy/how-to-get-affordable-life-insurance/.

What Type of Life Insurance Is Least Expensive?

Typically, term life insurance is the least expensive type of life insurance.

It’s possible to buy individual term life policies for less than $30 a month if you are 25 years old. The cost increases as you get older.

If you buy an individual policy, you select a specific term — or number of years of coverage. These may range from 10 to 30 years. As long as you keep paying your premiums, you are covered for that exact amount of time. If you stop paying — or you outlive the policy’s term — you lose coverage and what you’ve put into the policy.

Unlike permanent life insurance, term life does not build cash value and you can’t borrow from the policy or cash it out.

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To find the best policy for you and your family, research and comparison is a necessary step. Although it may take longer, speaking with multiple companies and representatives about their company’s benefits will help you understand whether a given policy will meet your needs. If you need additional help, hiring a licensed broker to work on your behalf can make the process less stressful.

Comparing Your Coverage to Your Employee Benefits

Term life insurance is also the type of life insurance you may purchase through your employer — or receive from your employer as an employee benefit.

Life insurance purchased through your job typically does not provide as many advantages as an individual term life policy you purchase outside of work.

If you receive term life through your employer, it ends when you leave your job. Most employer-based life insurance policies tend to offer less coverage than you can get through an individual policy. You may also get a break on individual life insurance if you are younger and healthier than the overall workforce at your job.

Life Insurance and Retirement Planning

Term life — whether through your job or through an individual policy — pays your beneficiaries a death benefit if you die before the term expires.

But permanent insurance — whole life and universal life insurance — offer more long-term protection. They can stay in effect for as long as you live — so long as you continue paying premiums. Both build cash value through investments and can be structured so that you can tap into them if you need to while still alive.

For instance, adding a long-term care rider allows you to use the value of your policy to pay for long-term care if you need it later in life. An accelerated death benefit allows you to tap into your policy to pay for treatment if you are diagnosed with a terminal or critical illness.

Along with retirement savings accounts — IRAs and 401(k) plans — and annuities, a permanent life insurance policy can be an important part of your retirement plans.

Is Life Insurance Less Expensive When You’re Younger?

It is much less expensive to buy life insurance when you are younger. The insurance rates you pay are based on your life expectancy — so your age is a major factor in their cost.

On average, premiums tend to rise by about 10% for every year you age. But that’s average. As you get older, you have less life expectancy, so the price starts rising faster and faster every year you wait.

Actual increases can depend on the insurance company and policy — as well as your own personal factors. But typically, rates may increase only 2% to 5% a year until you’re 30 or 40. Once you hit 50, it could increase more than 10% every year and hit more than 90% a year after 60.

Also consider the type of policy. With term life insurance, your premium is set in stone when you buy the policy. Your premium never changes — but it’s based on your age at the time you purchase it.

With a whole life insurance policy, the expected cost of the premium rises with age until you buy the policy. Once the policy is established, the premiums are unchanging for as long as the policy is in effect. So premiums for whole life do not change for an in force policy, but do increase with age.

How Can a Healthy Lifestyle Change Your Life Insurance Costs?

Insurers that offer various healthy living discounts claim they can save you anywhere from 8% to more than 40% on your premiums over a 30-year term life insurance policy.

Some insurers offer specific discounts to people who keep active, eat well and practice an overall healthy lifestyle.

Healthy Lifestyle Habits That May Earn Discounted Life Insurance Premiums
  • Avoiding a risky lifestyle — safe driving record, avoiding high-risk activities or occupations
  • Eating healthy
  • Losing weight
  • Not smoking (whether you quit or never smoked)
  • Staying active or physically fit

Your current health conditions when you buy life insurance — along with your personal and family medical histories — play a major role in how much you will have to pay for life insurance.

Living a healthy lifestyle is associated with lower risks for heart disease, type 2 diabetes and early death. Since premiums are based on mortality rates and life expectancy, having a healthy lifestyle may make buying a policy less expensive.

Can Laddering Get You More Coverage for Less?

Laddering is a way to make certain financial investments in steps — like a ladder — to avoid fluctuations in prices while maximizing your return. It’s a strategy that applies to annuities and CDs — and that works with life insurance as well.

In the case of life insurance, you purchase multiple policies at the same time that anticipate how your obligations change over the course of your life.

Examples of Changing Obligations Covered by Laddering
  • Childcare costs
  • Current education costs (day care through high school)
  • Future education costs (college)
  • Mortgage
  • Other debt
  • Replacing your income
  • Covering income of your spouse if they have to leave work
  • Retirement plans
  • Final expenses (medical costs, funeral, burial)

Some of these obligations expire relatively quickly — certain debts and childcare for instance. Once they expire, you no longer need to cover their costs. The policies have different terms, staggered to expire as the coverage is no longer needed.

Life Insurance Laddering Example
  • $250,000, 10-year term policy to cover your student loan debts and childcare
  • $250,000, 20-year term policy to cover college costs for children
  • $250,000, 30-year term policy to cover your mortgage and income for your spouse if you die.

You start out with $750,000 coverage in this example. After 10 years, coverage drops to $500,000 — but you have fewer financial obligations. You’re also paying less for coverage. There’s another step down on the ladder when the 20-year term policy expires.

This can be cheaper than buying a 30-year term life policy with $750,000 in coverage outright. Or starting with new term life policies every 10 years.

You can still convert your 30-year term policy to permanent life insurance — though you’ll pay higher premiums.

Shopping Around for Different Rates

Life insurance is a long-term commitment so you should shop around for the best bargain. Be sure to compare quotes from multiple life insurance companies before deciding on what works best for you.

5 Steps for Shopping for the Best Life Insurance Rate
  • Pick the policy type that’s best for you: term or permanent life insurance.
  • Determine your amount of coverage. Make sure it’s enough to cover your beneficiaries’ needs.
  • Compare different insurance companies’ underwriting and approval process — and how your health conditions and history may affect your approval chances or rates.
  • Compare payment schedules. You may get a discount for paying quarterly or annual premiums instead of monthly payments.
  • Check rider options. These add-ons will typically cost you more, but can give you flexibility in your coverage options that may be a better fit than the basic policy you’re considering.

Also compare the companies’ history and financial soundness. Rely on independent insurance rating firms — such as A.M. Best, Fitch, Standard & Poor’s, Moody’s or Kroll Bond rating — to gauge the financial health of the insurance companies you’re considering.

Reassess Your Coverage Over Time

Your life insurance needs will change over time, so it’s important to reassess your coverage to make sure it keeps up with changes in your life.

You should reconsider whether you have the right amount of coverage following major changes in your life and adjust your coverage accordingly. Typically, the more financial obligations you have, the more life insurance you need.

When To Reassess Your Coverage
  • When you get married
  • Whenever you have a new child
  • Buying a new home — and having a new mortgage
  • Buying or selling your business
  • Significant changes in your income — make sure you have enough coverage to make up for your lost income if something happens to you
  • Sudden changes in your health
  • Taking on a new debt
  • Nearing retirement

Some financial professionals recommend that you reassess your life insurance coverage every year to keep it aligned with your changing financial situation. Others recommend that you do it every three to five years.

Since rates rise as you get older, reassessing your insurance needs sooner rather than later can save you money on premiums if you do need to make changes.

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

5 Cited Research Articles

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  1. Texas Department of Insurance. (2022, June 14). Life Insurance Guide. Retrieved from https://www.tdi.texas.gov/pubs/consumer/cb018.html
  2. 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
  3. Minnesota Commerce Department. (n.d.). Buying Life Insurance. Retrieved from https://mn.gov/commerce/consumers/your-insurance/life-annuities/buying-life-insurance.jsp
  4. 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
  5. New York State Department of Financial Services. (n.d.). Life Insurance. Retrieved from https://www.dfs.ny.gov/faqs/consumer_faqs/life_insurance