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Is Cheaper, Really Better With Life Insurance?

by Scott G on September 1, 2013 · 9 comments

Cheap life insurance 2016 better

Is Cheaper, Really Better in Life Insurance in 2016?

In today’s economy everyone is looking to save a buck but not at the expensive of quality.  The good news when it comes to purchasing life insurance is that you will not have to decide between the two.  Life insurance is one of those products where it’s best to shop mainly on price since the quality and security of the product are so heavily monitored and regulated by the state governments.

So is cheaper, better when it comes to buying life insurance? The short answer, in most cases is yes.  Life insurance, unlike other insurances is not subjective. If your car was stolen the auto insurance company may value your car differently than you would.  Life insurance is different.  A life insurance policy is a straightforward contact between you and the insurance company.  It states in layman terms, if you pass away as defined the terms in the policy then your beneficiary will receive the full face amount of the policy.  It is so safe in fact it is often said that a valid claim has never went unpaid!

How Secure Are The Life Insurance Companies?

The insurance industry is one of the most highly regulated industries in the country.  Every life insurance company has to put a certain amount of money aside to pay out future claims.  In addition, all investment activity an insurance company is allowed to make is highly regulated as well. 

Another safety net for all life insurance policy holders is the fact that each state will guarantee up to a specific dollar amount if your company were to become insolvent.  To learn more about your state guarantee funds in the event an insurer fails you can visit NOLHGA.

Rule of Thumb

Make sure the companies you are shopping have an “A” (Excellent) rating or better by the leading independent rating agency A.M. Best.  This will give you the peace of mind that your insurance company is financially strong with an excellent ability to meet their ongoing insurance obligations.

How Cheap is Life Insurance?

To see how cheap insurance is right now, take a look at the rates for a 38-year old female for a $250,000 20-year term policy below:

AgePreferred PlusPreferredStandard PlusStandard
38 Female$15 month$18$22$28

Wrap Up

With most purchases you usually “get” what you pay for.  However, life insurance is the exception to this rule.  Since life insurance is so highly regulated and every policy will payout a valid claim, shopping based on price is typically the best way to decide.  Just make sure the companies you are considering have an “A” (Excellent) rating or better by A.M. Best so you can be assured you’re choosing the top company for you and your family.

See How Cheap Your Life Insurance Will Be-Choose Your State Below

    *Rates as of 09/01/2013. The information in this post is for informational purposes only and is not a guarantee of rates and insurability.  Rates and eligibly are subject to the underwriting guidelines of the insurance companies and state in which you live.

    peter paul September 7, 2013 at 5:46 am

    Nice post!
    Yes it is better if we are getting a good insurance policy with lots of benefit and without investing a huge amount . But having a good insurance policy is not an easy task and we have to be very careful for selecting a cheaper but better life insurance policy.
    life insurance

    Brian September 7, 2013 at 8:07 am

    Thanks Peter!

    Christopher James September 7, 2013 at 10:20 am

    Cheaper BUT better..

    Brian September 7, 2013 at 10:52 am

    Cheaper but better it true!

    Ronald September 16, 2013 at 4:21 am

    Life insurance is an essential part of financial planning. One reason most people buy life insurance is to replace income that would be lost with the death of a wage earner. The cash provided by life insurance also can help ensure that your dependents are not burdened with significant debt when you die. When you buy life insurance, you want a policy which fits your needs without costing too much. Your first step is to decide how much you need, how much you can afford to pay and the kind of policy you want. Then, find out what various insurance companies charge for that kind of policy. If you compare Surrender Cost Indexes and Net Payment Cost Indexes of similar competing policies, your chances of finding a relatively good buy will be better than if you do not shop.

    Caleb October 3, 2013 at 8:10 am

    Cheaper is not always better when it comes to any type of insurance. You need to work with someone that will find a plan that works for you and meets your needs. It is not best to take shortcuts just to save a little money when it comes to insurance. There is a plan that will work for you and is affordable.

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