Understanding Your Life Insurance Policy Options

Compare online the range of life insurance quotes to protect you and your family.
Get free online life insurance quotes today.
Please enter valid zip

Compare Your Life Insurance Options

Life insurance companies offer multiple types of life insurance policies. The two overarching types are term life and permanent life. Under the permanent life, insurance umbrella is whole life, universal life, and variable universal life insurance, which all offer lifetime coverage.

Best Life Insurance Companies by age

Insure’s Best Insurance Companies found differences in insurers’ popularity varied by age. AIG was tops for millennials, while Generation X ranked New York Insurance Company highest and Baby Boomers chose Prudential.
American General (AIG) 1. American General (AIG)
AAA Life Insurance 2. AAA Life Insurance
Globe Life Insurance 3. Globe Life Insurance
New York Life 1. New York Life
AAA Life Insurance 2. AAA Life Insurance
American General (AIG) 3. American General (AIG)
Prudential 1. Prudential
AAA Life Insurance 2. AAA Life Insurance
Globe Life Insurance 3. Globe Life Insurance

Best Life Insurance Companies by Region

The top life insurance companies varied by region in the U.S. Prudential was ranked number one in the northeast, AIG got the top spot in the south, New York Insurance Company gained the best marks in the midwest and AAA Life Insurance Company was tops in the west.
Prudential 1. Prudential
Globe Life Insurance 2. Globe Life Insurance
American General (AIG) 3. American General (AIG)
New York Life 1. New York Life
Globe Life Insurance 2. Globe Life Insurance
AAA Life Insurance 3. AAA Life Insurance
American General (AIG) 1. American General (AIG)
New York Life 2. New York Life
AAA Life Insurance 3. AAA Life Insurance
AAA Life Insurance 1. AAA Life Insurance
Prudential 2. Prudential
MassMutual 3. MassMutual

Best Life Insurance Companies

Insure.com’s Best Life Insurance Companies asks consumers their thoughts about their insurers in the areas of price, customer service, website/app, and whether they recommend the company. Our most recent survey found that AAA Life Insurance Company, American General (AIG), and Prudential received the highest marks. AAA Life Insurance Company received the highest marks for price and customer service. AIG got the best scores for website/app.
Coverage calculator icon
Life Insurance Coverage Calculator
How much life insurance do you need? If you are looking for:
Get Started

Life Insurance Advisor

Answer a few simple questions on your current life insurance coverage and the Life Insurance Advisor will identify what coverage you may need to have a well-rounded life insurance portfolio. Start Using Life Insurance Advisor

Frequently Asked Questions About Life Insurance

What is life insurance?

Life insurance helps your loved ones financially when you die. A policy provides coverage to help replace income, pay for final expenses, pay mortgages, and cover other debts.

You make premium payments during the life of the policy with the understanding that your beneficiaries will receive a death benefit when you die. An insurance company typically pays the death benefit as a lump sum.

You can also add riders to a life insurance policy that provides benefits while you’re still alive, such as critical illness and long-term care riders.

Who needs life insurance?

Anyone who is the primary breadwinner in a family — or who simply contributes income that is crucial to the well-being of loved ones — should consider purchasing life insurance.

Also, even those who don’t bring in a salary may want life insurance. For instance, a parent who cares for children but doesn’t have an income. If that parent dies, money will likely be needed for childcare.

Life insurance also can make sense for people who want to:

  • Leave money behind to pay for the deceased’s funeral expenses
  • Pay a mortgage and children’s future education
  • Provide a way to pay off the deceased’s debts after he or she is gone
  • Build a financial legacy for loved ones or provide money for favorite charities
  • Protect business partners from financial harm resulting from one partner’s death

How does life insurance work?

Life insurance pays your beneficiaries a death benefit when you die. The size of the death benefit depends on the policy.

Beneficiaries need to notify the life insurer when their loved one passes. If you’re not sure of the insurer, check the person’s checks and credit card bills to see if there were any payments to a life insurance company.

Life insurance companies typically pay a death benefit to beneficiaries as a lump sum.

What are types of life insurance?

Life insurance comes in different kinds of policies, such as permanent life, and term life insurance policies. Term life is for a period, such as 20 years, and is usually more affordable than permanent life. A permanent life policy includes whole life, universal life, and variable universal life. 

Permanent life policies are for life as long as you make your premium payments and have a cash value component that lets you tap into the policy while you’re alive. 

What are life insurance riders?

Life insurance policies may allow you to add additional coverage, which is called a rider. Riders include waiver of premium, disability income, critical illness, and accelerated death benefit rider, which can let you create a policy that goes well beyond life coverage. Riders, often found in permanent life policies, may increase the life insurance costs.

How much life insurance do I need?

Determining how much insurance you need is vital to properly protect your loved ones. You want to figure out your income that would be lost, debts, mortgage, future child’s college education, your funeral and burial costs, and any other things that your loved ones would need to pay off.

If you prefer more of a DIY approach — or simply want another option — go to the Insure.com life insurance calculator, plug in a few numbers, and figure out your life insurance needs.

How do you qualify for life insurance?

Life insurance policies may allow you to add addition. Most people qualify for life insurance. The issue is how much a policy may cost you. People who pay more for life insurance are those who are older, in poor health, or smoke. If you have trouble finding a policy because of your health or age, you can apply for a no exam life insurance policy that doesn’t require a medical exam. Those policies cost more than standard life policies, but they may be the only option for people in poor health or who are senior citizens.

How much does life insurance cost?

Many different factors influence the cost you will pay for life insurance. For example, your age and health status play a large role in the cost of your premiums. Unlike other types of insurance, a person’s ZIP code doesn’t influence life insurance quotes.

The type of policy that you buy also matters. Term insurance tends to be less expensive than permanent life insurance policies like whole life. The amount of coverage you need, the length of the policy, even your gender can impact costs.

What are things to know before buying life insurance?

The most important thing to know about life insurance before buying a policy is the difference between term life and permanent life policies. Term life offers larger death benefits, but those policies are only for a set number of years. If you outlive your term life policy, your loved ones don’t get a death benefit. Meanwhile, permanent life policies like whole life last your lifetime and guarantee a death benefit as long as you make your payments.  

How do you save money on life insurance?

The best ways to save when you buy life insurance are by shopping around, being healthy, and getting a policy that provides enough coverage but doesn’t overdo it. When shopping for life coverage, get quotes from multiple life insurance providers. Insurers differ in how they gauge risk, so you may find one insurance company offers much lower rates than another.

What type of life insurance should I get?

The best life insurance policy for you depends on what you want from coverage. If you prefer to pay the least for the largest death benefit, term life might be a wise choice. If you want to guarantee that your loved ones get a death benefit, a permanent life policy might be a better fit.

How do you decide what coverage you need?

To determine how much life insurance coverage you need, think about all of your debts that would need to get paid if you were to die. That includes mortgage, credit card bills, student loans, and children’s future education costs. Also, think about your income replacement and any child care that would be needed if you passed away. Figuring out those costs can help figure out how much coverage your loved ones would need. 

How to get life insurance ?

There are many ways to get life insurance. You can meet with an independent life insurance agent to discuss your options or you can search on your own for the best life insurance rates. 

While some people are confident shopping for a policy on their own, a little help can go a long way. 

“It’s important to seek the help of a trusted financial professional to ensure you’re adequately covered and can make the most of your policy,” Ball says. 

What is the difference between term vs. permanent life insurance ?

Term life insurance covers you for a certain period, such as 10, 15, 20 or 30 years. 

Buyers typically choose a term life policy to help during their peak earning years. A term life policy can cover them until their mortgages or other debts — such as a child’s college education — are paid off. A term life policy only pays a death benefit during the term. So, you may outlive a term life policy. In that case, your loved ones won’t get anything. 

Term life insurance is less expensive than permanent life coverage. The average annual cost for a 20-year, $250,000 term life policy for a 30-year-old female nonsmoker in regular health is $314. A man the same age and with the same health status is $368 on average. 

Permanent life policies cover you for life as long as you make payments. It doesn’t matter if you pass away in a year or 50 years. Permanent life policies also include an investment component. Cash value allows you to grow an investment, which you can borrow from during your lifetime. 

These policies are more expensive than term life, but guarantee your loved ones get something and allow you to invest. 

Is life insurance worth it? 

Term life insurance can be a key part of an investment strategy along with retirement, savings and an emergency fund. 

Having a term life policy during the years of a mortgage could provide income replacement and guarantee that your loved ones have enough money to pay off the debt if you were to die. 

On the other hand, permanent life insurance could give you peace of mind that your beneficiaries will receive a death benefit. That benefit could help them pay off debts and funeral services. A permanent life death benefit could also help make mortgage payments. 

Do I need life insurance? 

Life insurance can be an essential piece in your investment strategy. It depends on your other savings. 

Life coverage might not be required if you have money saved in different ways in case of your death. Otherwise, life insurance can play a vital role. 

What does life insurance cover? 

Life insurance typically pays out death benefits regardless of how you die. Life insurers view suicides the same as other deaths. 

There are exceptions, though. For instance, there’s usually a two-year contestability window when you get a policy. During that time, companies won’t pay out if you die. That clause protects the insurer from issuing a policy to someone with a terminal illness or who plans to take his or her life. 

Another time when an insurer may deny a death benefit is if you lie on your application. For instance, let’s say you claim that you don’t smoke. Years later, an autopsy finds that you died from smoking-related causes. At that point, the insurer could deny your beneficiary money. The company may argue you lied on your application or should have told them if you started smoking. You avoided years of higher rates for smokers. So, the insurer would claim you committed fraud. 

Can I get life insurance with no medical exam? 

Many life insurance companies offer guaranteed issue or simplified issue policies, which don’t require a medical exam. 

  • Guaranteed issue policies provide coverage without an exam and no questions asked. 
  • A simplified issue policy doesn’t require an exam. However, you’ll have to answer a handful of medical questions. 

Standard life insurance policies may not be available to everyone. In fact, these life products may be the only option for people with health issues. Life insurance companies charge more for these policies since they’re taking on more risk, so keep that in mind when you get a quote 

Is life insurance taxable? 

Life insurance isn’t usually taxable. A life insurance death benefit isn’t considered gross income. So, you don’t have to report it on your federal taxes. However, any interest is taxable. 

What’s a life insurance rider? 

Many permanent life policies allow you to add riders. These riders add supplemental coverage to the policy. 

The benefits often enable you to use your life insurance policy while you’re still alive. Some examples of riders are accidental death and dismemberment, long-term care, chronic illness, and waiver of premium. Waiver of premium allows you to skip payments if you ever become critically ill, seriously injured or disabled. 

Riders provide flexibility, but they can add costs to your policy. 

Do pre-existing conditions like cancer or diabetes mean you can’t get life insurance? 

Chronic conditions don’t necessarily mean you won’t find life insurance, but it may be harder to get affordable life insurance. 

Life insurers often provide higher-cost policies to people with pre-existing conditions. You will also likely have a two-year contestability period before the policy takes effect. If you die in that period, your loved ones won’t get a death benefit. 

Is group life insurance better than individual life insurance? 

group life insurance is often cheap life insurance — a low-cost or even no-cost policy. These shouldn’t be seen as an alternative to an individual policy. Group life policies can expire and usually have limited benefits. 

Employers often have group insurance policies. However, when you leave the job, you’re no longer covered. group life insurance is an affordable option, but it doesn’t have a big payout and ends when you leave your job. 

Even if you have group life insurance through your employer, it’s a good idea to get individual life insurance coverage, so you and your loved ones are adequately protected. 

How long do you have to have a life insurance policy before it pays out? 

Typically, a life insurance policy has a waiting period before it kicks in. For example, many policies have a two-year waiting period — or even longer — before your beneficiaries are eligible for full benefits. If you die during that time, your beneficiary likely would receive only the amount of premiums paid up to that time. 

In addition, when you initially apply for your policy, you may have to wait several weeks for underwriting to be complete before your policy goes into effect. 

There are exceptions to these rules, however — such as with guaranteed issue life insurance — and each life insurance policy has different rules. Consult with your agent to find out when your policy will go into effect. 

What is not covered by life insurance? 

In most cases, your beneficiaries will receive money after you die. But some policies may have exceptions that will prevent loved ones from collecting on the policy. For example, a policy may not pay out if: 

  • You die during a war or as part of military service 
  • You die from suicide or even terminal illness within a couple of years of the policy issue date 
  • You die in an airplane accident 

It’s important to note that every policy is different, so make sure you understand your policy terms. 

What happens if I can’t pay my policy premiums? 

Your life insurance policy lapses if you have term life insurance and you can’t pay the premiums. At that point, you no longer have life insurance coverage. 

Those who have permanent insurance but can’t pay their premium can cash out their policy. Although you lose life insurance coverage in that case, you’re still entitled to keep the cash value you have built up. However, if the cash value exceeds what you have paid in premiums, you may owe taxes on the amount. 

You also may have what is known as a “reduced paid-up” option. This essentially means that if you stop paying premiums, you have the option of a reduced death benefit without any cash savings. In some cases, you also might be allowed to convert your permanent policy to a term life policy. This will depend on how much cash savings you have accumulated in the policy. 

Some insurers may allow you to reinstate a policy within five years of it lapsing. However, you may need to undergo a physical exam and pay back all the premiums from the years when you let the policy lapse, plus interest. This can be worth considering if your annual premiums remain lower than what you would find in a new policy. 

What is a beneficiary? 

A life insurance beneficiary is a person or entity you name to receive the death benefit from your life insurance policy. Typically, this is a family member or other loved one or multiple people. However, you can also name charities, the trustee of a trust you have established or your estate. 

When naming beneficiaries, it’s common to have both primary and contingent beneficiaries. The primary beneficiary is first in line to get the death benefit. If that person dies or can’t be found, the secondary beneficiary is entitled to the money. 

If neither a primary nor secondary beneficiary can be located, the death benefit will go to your estate. 

It’s important to make your wishes as clear as possible when naming beneficiaries and to identify your beneficiaries with the details, such as their Social Security numbers. Also, keep your beneficiaries up to date. Events like marriage, divorce, or the birth or adoption of a child can change your beneficiary wishes. 

Does a beneficiary need to do anything to receive the death benefit? 

Beneficiaries need to contact the life insurance company about the death, so the insurer can collect the needed documents and make the death benefit payment. A beneficiary may be asked to fill out the insurer’s claim form and submit it to the insurer, along with a certified copy of the policyholder’s death certificate. 

Unlike some aspects of an estate, a life insurance policy isn’t included in the probate process. Instead, it’s a contract between the insurer and the person who purchased the policy. 

That means that when you die, the death benefit from your life insurance policy goes directly to the beneficiaries you named in the policy. 

What type of life insurance policy should i get?

Your policy needs may change over time, so do your research and consult with an insurance agent to find the best policy type for you.

How do you decide what coverage you need?

Your amount of coverage generally depends on how much money your dependents need to continue with their current standard of living without your support. Be sure to consider outstanding loan balances, monthly bills, and plans for the future.
Penny

Still got a question?

Our Life Insurance experts are here to help!

Please Enter Valid Question. Please Enter Valid Email.

Thank You, Your message has been received.

Technical Error, Please try again later.