Getting life insurance quotes can be a great way to determine how much you would pay for an insurance policy. Your individual preferences should be top of mind to find the right life insurance policy for your needs and budget. But not all life insurance companies offer the same types of policies, so understanding your needs and knowing how to compare quotes can be a helpful tool. Here, Bankrate’s insurance editorial team walks you through the basics of life insurance, helping you learn about different policy types, how to choose coverage, and how to get and compare quotes. Our guidance could help you feel confident when shopping for life insurance.

What is life insurance?

Life insurance is essentially an agreement between you (the insured) and a life insurance company. You pay a life insurance premium in exchange for a coverage amount provided to your beneficiaries by the insurer if you die during the coverage period. Your beneficiary — the person or persons you designate to receive the funds — will receive the face amount of the life insurance policy upon your death (assuming the policy is still active). The face amount, also called a death benefit, is the amount payable to the beneficiary or beneficiaries at the time of the loss. Depending on the type of policy you have, coverage will either be guaranteed for your lifetime or expire at the end of your chosen policy term.

How much life insurance do I need?

If you’ve found yourself asking “How much life insurance do I need?” at the start of your shopping journey, you’re in good company. Determining the level of coverage to purchase is one of the first steps to buying a policy, but there isn’t a clear-cut answer. The amount of coverage you need will vary based on a number of circumstances, including how much debt you have, what you want your death benefit to cover for your loved ones and if you want to leave a financial gift for your beneficiary or a charity.

One way to decide how much coverage to buy is to use a life insurance calculator. A calculator can help you decide how much coverage you need by taking into account a variety of factors, such as your current debt level, funeral costs, how many years of income you want to provide for a spouse or loved one, if you have children and if you want to leave behind a one-time financial gift. If you’re still unsure how much coverage to buy, working with an agent might be helpful.

How to compare life insurance quotes

If you’re in the process of getting life insurance quotes online, by phone or in an agency, you may be wondering how you can compare the options to find the right fit for you. Here are some strategies you can use to make sure you find a provider and policy that works for your needs.

1. Assess your needs

Your life insurance needs depend on your circumstances. Do you only want coverage until your children graduate from college? If so, a term life insurance policy might be right for you. Are you dealing with serious or long-term health concerns? You may want to look into companies that offer no-medical-exam policies. Do you use tobacco and/or nicotine products? You may want to compare premiums from companies that offer life insurance for smokers to find a more affordable price. An insurance agent can help you pin down any specific needs that you might have and recommend a policy type.

2. Research multiple life insurance providers

After determining your specific financial and coverage needs, you’ll need to find life insurance companies that offer the policies you want. An insurance agent can help you learn more about a company if you’re having trouble locating the information you need on the insurer’s website. Once you have a list of life insurance companies that offer the policy type you need, you may want to compare each based on customer satisfaction and financial strength ratings from third-party agencies, such as J.D. Power and AM Best.

3. Organize your information

You may find it helpful to create a spreadsheet or list containing the names of the insurance companies, the types of policies that you discussed and the key features of each option. Take note of the different riders or perks that policies may offer. For example, a policy may have an option to include an accelerated benefit rider that allows you to access a portion of the death benefit while you’re still living to pay for medical or long-term care expenses. This could greatly add to the value of the policy.

4. Compare your choices

Once you have all of this information organized, you can conduct a side-by-side comparison to see which policies give you the best value. For example, depending on your needs, an indexed universal life policy with an accelerated benefit rider may be worth the higher cost when compared to a term policy that doesn’t have living benefits. Your financial advisor can also look over this information and give you some insight or advice on what will work best for you.

Learn more: How to buy life insurance

Types of life insurance

There are multiple types of life insurance policies to choose from. The option that you choose will be based on your financial situation and what financial goals you are trying to accomplish. Because not all insurers offer each policy type, it may be helpful to understand what each policy has to offer before obtaining a quote.

Term life insurance policies

Term life insurance is a popular option and is generally the least complex in its function and features. This type of life insurance policy exclusively provides coverage in the form of a death benefit and has no cash value buildup. For this reason, it is usually the cheapest form of life insurance available. But coverage only lasts for the term that is specified in the policy; once the term ends, the coverage expires, unless you have purchased a policy that has the option to renew or convert to a whole life insurance policy. Term life insurance quotes may be popular with younger families with small children who may depend upon a single or primary financial contributor. It’s also a good choice if you only want coverage for a shorter amount of time, like as you pay off a mortgage.

Learn more: Best term life insurance companies

Whole life insurance policies

A whole life insurance policy is a type of permanent life insurance that builds cash value over time. Whole life insurance policies are designed to remain in force until the death of the insured. These policies also accrue cash value over time. Part of your premium is put into a cash-value account, which will grow at a guaranteed rate on a tax-deferred basis. You can access this cash value via a policy loan or withdrawal, but accessing the funds can affect the death benefit amount your beneficiaries receive in the future. It’s also worth noting that the cash value is typically only accessible while you’re living and won’t be included in your death benefit. Whole life insurance quotes are simple, but these policies are generally more expensive than term coverage since they last your entire lifetime in most circumstances.

Learn more: Best whole life insurance companies

Universal life insurance policies

Universal life insurance is a form of permanent life insurance with cash value and flexible premiums. The death benefit may also be flexible, which allows you to adjust your coverage as your needs change. Universal life policies accumulate interest on the cash value of the policy, and the rate of that interest will fluctuate in tandem with current interest rates.

Learn more: Best universal life insurance companies

Variable life insurance policies

Variable life insurance is a type of policy where the cash value is kept in a portfolio of mutual funds that invest in stocks, bonds, real estate and commodities. Because of this, your cash value amount can increase or decrease based on the market’s performance. It is also possible to get a higher rate of return with this type of policy than with another type of policy. Because these policies have the greatest risk, you will have to work with a financial advisor who is licensed to sell variable life insurance.

Final expense life insurance policies

Final expense life insurance is a specific type of permanent life insurance policy that is designed to pay for end-of-life expenses like funeral and burial costs. Many of these policies do not require medical underwriting, but coverage limits are relatively low and the premiums may be comparatively higher than other types of coverage.

What type of life insurance policy is right for me?

Before shopping for life insurance quotes, consider what type of financial need you want the policy to cover. Some needs may be temporary, such as paying outstanding debts like student loans or a mortgage. But some needs could be longer-term, like growing wealth or paying for funeral costs.

If you have both temporary and permanent needs for life insurance, you might consider purchasing a term policy that has the option to convert to a permanent policy later. Alternatively, you may prefer to purchase both a term policy and a permanent policy with different coverage amounts.

For example, let’s say you need $300,000 in coverage to help your spouse pay off your mortgage if you pass away. However, you still want coverage for your funeral costs even after the mortgage is paid. Getting a quote for a $300,000 term policy to cover your mortgage commitment and a smaller amount in permanent life insurance for your end-of-life expenses may be better than choosing just one policy. If you have money saved or prepaid for your funeral, term life insurance may be all you need. Discuss your situation with a financial planner or life insurance agent to learn what approach may be best for you.

What lifestyle factors affect my life insurance quotes?

Life insurance quotes take multiple aspects of your life into account to determine your rate. For example, age is one of the biggest life insurance rating factors and may also limit you on the type of coverage you can buy. Life insurance for seniors is generally more expensive, since it’s more likely that an older insured will pass away early in the policy term. While you can’t do anything about how old you are, there are other lifestyle factors that affect your life insurance quotes and rates:

  • Tobacco use: If you smoke or use chewing tobacco, buying life insurance may cost more than for a non-smoker. Smoking increases the risk of mortality, which means insurance companies will charge more for life insurance coverage.
  • Health conditions: If you have any major health conditions, you may pay a higher cost for your policy. Pre-existing conditions, such as high blood pressure, cancer, heart disease, lupus, diabetes, lung disease and liver cirrhosis may result in more costly premiums. If you are a particularly high-risk applicant getting life insurance quotes, no-medical-exam coverage may be a good option, although you should keep in mind that policies that do not require a medical exam are more expensive.
  • Prescriptions: A major health condition may not affect eligibility or premiums as significantly if the condition is well managed. Have a complete list of your medications, including over-the-counter drugs, for reference as you apply for a policy. The insurance company will most likely need to know dosage amounts, how often the medication is taken and how long you have been taking it.
  • Family medical history: Most insurers want to know a bit about your family’s medical history as well. If your family has a history of heart disease, high cholesterol or other major health ailments, it could be more likely that you’ll develop these conditions too.
  • Budget limitations: Your budget may determine how much life insurance coverage you can purchase. Paying premiums once a year may help you avoid installment fees, but not everyone will have the financial means to pay an annual premium. Discussing your payment options with the agent during the quote process may help you decide what works best for your situation.

How to save money on life insurance quotes

Life insurance can be an important part of your overall financial plan, but it can be expensive depending on the coverage limit you need, the policy type you choose and the riders you add. And, unlike auto and home insurance, life insurance does not offer discounts to help offset the cost. Here is a list of steps you can take to possibly earn a lower premium:

  • Quit using tobacco: Many life insurers offer cheaper rates to non-smokers than smokers. If you have a year or more of non-smoking history, you may be able to get better life insurance quotes.
  • Maintain a healthy weight: A primary risk factor life insurers use to determine premiums is your health index, which accounts for weight. Those who fall in the overweight or obese range may pay more for life insurance, as it may be associated with a greater risk of diseases which can affect mortality. By staying within what doctors consider to be a healthy weight range, you may find that life insurance is more affordable.
  • Manage your health conditions: If you have health conditions requiring medications, take them as prescribed. If lifestyle changes could help improve your condition, consider those habits as well. This may demonstrate to the life insurance company that you are actively working to manage your health condition based on your doctor’s treatment plan.
  • Consider different policy types: Term life insurance typically costs a fraction of what permanent policies cost, as the coverage spans a shorter time and a death benefit is not guaranteed. Just remember that this coverage is temporary. For some, this may be ideal, but term coverage might not be available for older individuals.
  • Consider buying life insurance sooner: The older you are, the more life insurance will probably cost. Some term policies may offer the option to convert to a permanent policy later without re-qualifying for coverage.

Learn more: Cheapest life insurance companies

Frequently asked questions