How to Buy Term Life Insurance
You can purchase term life insurance from an agent, broker, directly from the life insurance company or entirely online. Depending on your financial needs, one method of purchasing term life insurance will likely suit you better than another. Having a guide to help you compare term quotes along with your coverage needs can help you get the best quote.
- Written by Lindsey Crossmier
Lindsey Crossmier
Financial Writer
Lindsey Crossmier is an accomplished writer with experience working for The Florida Review and Bookstar PR. As a financial writer, she covers Medicare, life insurance and dental insurance topics for RetireGuide. Research-based data drives her work.
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Lamia Chowdhury
Lamia Chowdhury
Financial Editor
Lamia Chowdhury is a financial content editor for RetireGuide and has over three years of marketing experience in the finance industry. She has written copy for both digital and print pieces ranging from blogs, radio scripts and search ads to billboards, brochures, mailers and more.
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Eric Estevez
Eric Estevez
Owner of HLC Insurance Broker, LLC
Eric Estevez is a duly licensed independent insurance broker and a former financial institution auditor with more than a decade of professional experience. He has specialized in federal, state and local compliance for both large and small businesses.
Read More- Published: September 30, 2022
- Updated: May 23, 2023
- 6 min read time
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Comparing Term Life Quotes
To get the best term life insurance quote, you need to compare quotes from different life insurance companies. Don’t purchase a policy from the first life insurance company that provides you a quote, even if it seems like a good deal at the time.
Term life insurance quotes can vary widely, even if they have the same coverage length and death benefit amount. For example, the table below has quotes from different life insurance companies for the same term policy.
| Life Insurance Company | Average Quote for a 35-Year-Old Woman |
|---|---|
| Haven Life | $81.16 |
| AIG | $46.91 |
| Mutual of Omaha | $61.28 |
| State Farm | $54.79 |
You should also check each life insurance company’s A.M. Best rating when comparing term quotes. A.M. Best’s rating is based on financial strength, which determines if the life insurance company is able to pay claims, debts and other financial obligations in a timely manner.
While you want the best term life insurance rate, you must also ensure that you’re buying your policy from a trustworthy and capable life insurance company. You can confirm each life insurance company’s financial strength on A.M. Best’s website.
- State Farm
- A++
- Mutual of Omaha
- A+
- AIG
- A
- Haven Life
- A++
Methods for Getting Term Life Quotes
There are four main methods to get term life quotes: from a broker, agent, online or directly from the life insurance company. How you choose to get your term life quotes could influence if you’re getting the best premium rate.
Online Quotes
According to the 2022 Insurance Barometer report, more people are getting quotes and purchasing life insurance online. This is partially due to the COVID-19 pandemic and recent advances in technology.
There are pros to getting quotes online. The process is typically fast and easy to get a term quote online.
However, know that all online term quotes may not be entirely accurate. There are many factors that influence life insurance costs. If you’re provided a quote only after one or two questions, it could be a wide estimate.
Broker or Agent
Brokers and agents both act as a middleman to help you find a term policy that suits your needs. If you find getting quotes by yourself online too confusing, a broker or agent could assist you.
There is a primary difference between brokers and agents. An agent represents one or more insurance companies. A broker would only represent you as their client.
While both brokers and agents can get term quotes on your behalf, only an agent can finalize a purchase.
Make sure you check that your broker is licensed before hiring them. FINRA has an online database to check your brokers licensing and experience.
The National Association of Insurance Commissioners (NAIC) has a database to confirm financial regulation information for insurance agents.
Directly from a Life Insurance Company
You’re likely to get an exact quote with additional information if you receive it directly from the life insurance company. Afterall, the life insurance company overlooks the overwriting process and binds the term policy itself.
They are also in charge of paying out your claim. If you have any detailed questions to ask with your quote, you may want to consider contacting the life insurance company for information.
Make sure to check the life insurance company’s A.M. Best rating before getting a quote or purchasing from them.
What to Consider When Shopping for Term Life
The length of coverage you choose, coverage amount and policy riders all affect your premium rate. The longer your term length, and the larger the coverage amount is — the more expensive your premium will be.
Some life insurance companies, such as Foresters Financial Life Insurance, offer specific riders at no cost. However, most riders aren’t free, and will increase your premium rate.
You should also consider your age. For example, with Progressive, a 10-year term policy with $250,000 of coverage is $13.48 for a healthy 20-year-old man. The same policy for a healthy 60-year-old man is now $74.82. If you delay purchasing a term life insurance policy, your premiums will increase each year.
To better understand how term length and coverage amount can fluctuate your premium rate, refer to the table below. Two life insurance companies, Progressive and Transamerica, are comparing premium rates with different term lengths and coverage amounts.
| Life Insurance Company and Term Length | Progressive, 10-Year Term Policy | Transamerica, 20-Year Term Policy |
| Coverage Amount | $250,000 | $1 Million |
| Age and Gender of the Individual Getting Insured | 40-Year-Old Woman | 35-Year-Old Woman |
| Estimated Premium Rate | $15.22 | $57.62 |
Even though each rate is estimated for women around the same age, there is a large difference between the premium rates. Because your coverage amount and term length influence your premium rate, you should determine the coverage needed for your term policy before getting a quote.
How Much You Need
The DIME Rule can help you determine how much coverage you need with your term life policy. DIME is an acronym that stands for debt, income, mortgage and education.
Account for any outstanding debt and remaining mortgage costs. If you have children, you should also consider college tuition costs. As for your income, Progressive suggests multiplying your current salary by five to 10 to provide your loved ones with coverage for years to come.
Types of Term Life
There are four main types of term life policies — level term, decreasing term, yearly renewable and return of premium. According to the Insurance Information Institute, most buy level term life insurance.
- Level Term
- Your premiums and death benefit are set.
- Decreasing Term
- Your premiums and death benefit can decline over time.
- Yearly Renewable
- You can renew your policy when the term ends, no matter how your health changes, but your premiums will increase. Yearly renewable is no longer very popular, according to the Insurance Information Institute.
- Return of Premium
- The return of premium can be a type of term policy, or an add-on. With return of premium, you get your premiums back if you outlive your policy. Return of premium rates are typically more expensive than other term polices, according to the Insurance Information Institute.
Policy Riders
Riders give your life insurance policy additional benefits. While some companies offer riders as free add-ons, most companies will increase your premium.
- Waiver of premium
- Accidental death benefit
- Accelerated death benefit
- Guaranteed insurability rider
If a rider is free, it wouldn’t hurt to add it to your term policy. However, if the rider increases your premium, and you don’t think you need it, don’t take on the extra coverage.
Premiums
Make sure you choose a term policy with an affordable premium. Most choose a level term life insurance policy, meaning you have set premiums throughout your entire term.
If you cannot afford your premium in the future, your coverage will lapse. If you pass away while your term policy is lapsed, your beneficiary won’t receive a death benefit.
- Special focus on content about life insurance, Social Security, Medicare and certificates of deposits (CDs)
- Research-based data drives her work
- Bachelor’s degree in English from the University of Central Florida
8 Cited Research Articles
- Threewitt, C. & Delfino, D. (2022, July 25). Haven Life Insurance Review. Retrieved from https://www.usnews.com/insurance/life-insurance/haven-life
- Wood, S. & et al. (2022, April 25). 2022 Insurance Barometer. Retrieved from https://www.limra.com/en/research/research-abstracts-public/2022/2022-insurance-barometer/
- Threewitt, C. & Lobb, J. (2022, January 6). Life Insurance Quotes. Retrieved from https://www.usnews.com/insurance/life-insurance/quote
- Foresters Financial. (n.d.). Term Life Insurance. Retrieved from https://www.foresters.com/en/financial-solutions/life-insurance/term-life-insurance/your-term
- Insurance Information Institute. (n.d.). What Are the Different Types of Term Life Insurance Policies? Retrieved from https://www.iii.org/article/what-are-different-types-term-life-insurance-policies
- Progressive Casualty Insurance Company. (n.d.). When Should I Get Life Insurance? Retrieved from https://www.progressive.com/answers/when-to-get-life-insurance/
- Progressive Casualty Insurance Company. (n.d.). How Much Does Life Insurance Cost? Retrieved from https://www.progressive.com/answers/how-much-is-life-insurance/
- A.M. Best. (n.d.). Rating Services. Retrieved from https://web.ambest.com/home
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