How to buy affordable term life Insurance online

On the one hand: In the 21st Century, it’s not exactly news that you can get a life insurance policy through the magic of the internet.

On the other hand: If it were as simple as, say, stocking up on household supplies from your favorite e-commerce site, this article wouldn’t exist.

So let’s start here. Buying affordable term life insurance online is marginally more complicated than ordering, say, paper towels or laundry detergent. But it’s still easier than it’s ever been, and this guide will show you how to do it, from when life insurance is important to making the key decisions that will help take care of your loved ones in case something should happen to you. By the time you finish reading this article, you’ll be well on your way to experiencing that peace of mind.

Part 1: Understanding life insurance

What is life insurance and why is it important?

A life insurance policy is a contract between you and a life insurance company that helps financially protect your loved ones if you pass away. When you pay the monthly or yearly premiums associated with a life insurance policy, you help increase your loved ones’ long-term financial security.

If you die while the contract is in place, the insurer pays a death benefit (sometimes called a policy payout) to your beneficiaries. The money from a life insurance death benefit can be used to help pay for important final or daily expenses like a funeral, mortgage, childcare and more. It’s your family’s financial safety net if they have financial obligations they need to cover.

What is term life insurance?

There are two major types of life insurance: term life insurance and permanent life insurance. These life insurance policies are exactly what their names imply — a term life insurance policy covers you for a specific period of time (often 10, 15, 20, 25 or 30 years), while a permanent life insurance policy often covers you permanently (that is, for your entire life if you pay the premiums).

Term life insurance is one of the simplest and most affordable types of policies. You have coverage during the years you need it most — until your mortgage is paid off or your kids are adults, for example — and if you die during your coverage term, the term life insurance policy will pay a death benefit to your beneficiaries.

There are many types of term life insurance policies, including simplified issue life insurance and return of premium life insurance. Of the available types of term life insurance offerings, medically underwritten term life insurance tends to offer more coverage options and more competitive pricing.

As for permanent life insurance, it comes in a few varieties, the most common being whole life insurance and universal life insurance. Many permanent policies provide coverage for a lifetime and include a cash value component that has the potential to grow over time. These features are why a permanent life insurance policy can be between 5 and 20 times more expensive than a term life policy. Due to that significant difference in premium costs, permanent insurance policies can be less affordable for younger, cost-conscious families — and if people do sign up for permanent policies, they might try to cut costs by taking out less coverage than they need.

Should I choose term or permanent life insurance?

Term life insurance might be the right choice if you:

• Are looking for an affordable way to financially protect your family
• Need coverage until your children are financially independent
• Have, or plan to have, substantial money saved for retirement

Permanent life insurance might be the right choice if you:

• Seek coverage that lasts a lifetime and won’t expire before you pass away
• Are seeking a product that offers a cash value component
• Want life insurance to be part of your long-term financial strategies

Ask yourself what you hope to get out of your life insurance policy, and then look for the best policy that offers what you want.

How can life insurance benefit your loved ones?

A standard life insurance death benefit could help cover:

• Funeral, burial, and other final expenses
• Lost income
• The mortgage
• Other debts like car payments, credit card balances, private student loans, taxes, medical bills, etc.
• Day-to-day bills like the phone bill, internet, car insurance
• Childcare expenses
• College expenses (either now or in the future)

People use life insurance money to cover immediate expenses, like funeral costs and mortgage payments, as well as fund long-term dreams, like starting a business or traveling. Life insurance can provide financial security, and it can also serve as a financial legacy. A final gift, if you want to think of it that way.

Plus, the life insurance benefit is usually income tax-free. If you were to die with a life insurance policy in place, your beneficiaries generally won’t have to pay income taxes on their death benefit. This means that when you’re deciding how much life insurance coverage to take out, you can work out your family’s future needs without trying to factor in what might happen if the tax code changes over the next couple of decades.

Part 2: Getting quotes and choosing a life insurance policy

How much life insurance do I need?

The old rule for determining the right amount of life insurance coverage involved taking your annual salary and multiplying it by a number between 5 and 10 — 5 being the absolute minimum coverage amount you should consider and 10 being the maximum.

Fortunately for you, we now live in a world with an online life insurance calculator. This free-to-use online tool takes into consideration your age, income, marital status, debts and number of dependents to provide a recommendation that’s more personalized than the old salary multiplier rule. It’ll even tell you if you don’t need to purchase insurance. (Don’t believe me? I just used Haven Life’s online calculator and got “Based on your answers, you probably don’t need life insurance at this time.”)

So open up a life insurance calculator and see how much coverage it recommends.

How do you get quotes for term life insurance?

While shopping for the best life insurance provider, it’s a good idea to get a life insurance quote from a few different providers, both to compare prices and to see what kind of premiums you might end up paying. (Remember, these life insurance quotes may be different from your actual life insurance rates — but they can serve as a good estimate.)

When determining your premium pricing, a life insurance company will ask questions about:

• Age
• Gender
• Smoking, drinking or drug habits
• Health and family health history
• Occupation
• Hobbies

This information is used to determine the risk you represent to an insurer — and the lower the risk, the lower your insurance premium will be. As you might expect, younger, healthier individuals get the best rates, which is why it can be a good idea to buy life insurance in your 20s or in your 30s. Women will typically have lower premiums than men (because they typically live longer than men) and certain occupations that are more dangerous than others come with higher insurability costs.

The amount of coverage and the length of the term policy you select will also be major drivers in your premium price. The more coverage you purchase and the longer the term length, the higher the premium will be. If you’re accustomed to paying less every month if you sign up for a longer period of time, not more, think of it this way: the longer your life insurance term length, the higher the chance that your insurer might end up paying out your policy. That means more risk for the insurer and higher premiums paid for you. (It doesn’t mean that a 30-year term life insurance policy is a bad idea, though. It all depends on what kind of coverage you’re looking for.)

How much does term life insurance cost?

If you want a quick overview of life insurance costs, here are some sample monthly premium rates for a Haven Term policy, issued by MassMutual or its subsidiary, C.M. Life, for people in good and excellent health. The actual cost of your life insurance policy will depend on your age and health, as well as the term length and coverage amount you choose.

Quotes for term life insurance

Estimate based on pricing for eligible Haven Term applicants in excellent health. Pricing differences will vary based on ages, health status, coverage amount and term length. These prices do not reflect the rates for applicants in DE, FL, ND, NY and SD.

Get a quote for medically underwritten term life insurance.

Once you’ve got a number, ask yourself:

Do both spouses need life insurance?

Life insurance policies are designed for individuals — but if you’re thinking about taking out a policy, your partner should probably take out a policy, too.

Why? Because if you’re at the stage in your life when you have the kind of responsibilities that make you wonder whether it’s time to take out life insurance, well … your partner is probably at that same stage in their life. Maybe you bought your first home together. Maybe you had your first child. Maybe you’re working on paying off your student loans, and wondering what might happen if you die before your debts are paid in full.

Don’t make the mistake of assuming that only the higher-earning spouse needs life insurance. That kind of thinking is what got us into our current life insurance gender gap, in which men value their lives financially nearly twice as much as women do — even though both men and women bring financial strength and value to a partnership that often goes above and beyond the dollar value of their earnings. This is one of the big reasons why stay-at-home parents need life insurance.

Ask yourself how much money it would cost to replace not only your spouse or partner’s salary, but also all of the homemaking and caregiving work they contribute. Then ask yourself why you aren’t both considering a life insurance plan. (Then consider life insurance. For both of you.)

Do I need any life insurance riders?

If you want to add extra insurance to your life insurance, you can pick up what’s called a life insurance rider. (This is another term that’s exactly what it sounds like, since these insurance features “ride along” with your primary life insurance policy.)

Common life insurance riders include long-term care insurance, waiver of premium insurance and accidental death and dismemberment insurance. While many riders cost extra, some life insurance companies include certain riders as part of their standard life insurance policy. Haven Life, for example, includes an accelerated death benefit rider as part of every life insurance policy at no extra cost. This rider allows you to receive a portion of your life insurance benefits early if you become terminally ill.

Haven Life also offers its Haven Life Plus rider, included in eligible Haven Term policies, that offers access to additional benefits that make life less hard. The following services are available through Haven Life Plus:

• A no-cost annual subscription to the award-winning fitness app Aaptiv
• 15% discount on any family health service with MinuteClinic®
• A no-cost subscription for you and up to five family members to online vault LifeSite 
• A year of unlimited jet lag management plans at no cost from TimeShifter®
• An individual or joint will or trust and a year of unlimited updates at no cost from Trust & Will
• A full premium membership for end of life planning and 1-on-1 post-loss consultation with Lantern

In total, these services can save you more than $700 per year. Not to mention the added stress relief that comes with having a will and a solid exercise routine.

How can you save money on life insurance?

Term life insurance is generally a very affordable life insurance option — but if you want to make it even more affordable, here are some tips to help you save on your term life insurance premiums:

1. Buy more affordable life insurance coverage while you’re young and healthy. If you put off buying your life insurance policy for too long, you might end up paying higher premiums when you finally get around to filling out the application.
2. If you smoke, ask yourself if it’s time to quit. Most life insurance companies will let you qualify for non-smoker rates after one or two years without tobacco.
3. If there are other ways to improve your lifestyle, like making healthy eating choices, exercising more often or getting more sleep, go ahead and get started on those. Better health equals lower premiums.
4. Select the proper coverage amount (and term length) from the beginning. Don’t pay for $1 million in coverage unless you really need that much — but don’t skimp on the coverage that’s meant to be your family’s financial safety net. Buying the right amount of coverage will prevent you from overpaying and also from needing to buy more coverage later on.

How do you choose a life insurance company?

You have plenty of choices when you are looking for a life insurance company. A quick Google search for “life insurance companies” returns more than a billion results.

Fortunately, consumers have the assistance of a number of third-party agencies that rate the financial health and claims-paying ability of life insurance companies. For example, one frequently-referenced rating agency, A.M. Best, has been around since 1899 and only rates life insurers

Additionally, don’t forget the value of customer reviews. As you already know, reviews can help you learn from other people’s experiences so you can choose a company or agency that offers a simpler process, affordable prices and real, caring people to help along the way. If a company has frequent, unresolved complaints, that may be an indication that it isn’t prepared to meet your needs.

You don’t have to look far to find customer reviews. A quick search of “[insert company name] reviews” is a great place to start. It can quickly turn up everything you need to know from the standpoint of consumers, media, and experts. You can also often find reviews on Trustpilot, Consumer Affairs and company Facebook pages, which all specialize in sharing customer experiences.

Part 3: How to buy life insurance online

Complete the application process

Life insurance online applications are designed to be as easy to complete as possible. During the online application process, you will be asked about your age, your lifestyle, your personal health history and your family health history. Your answers will be fact-checked with third-party vendors like the Medical Information Bureau, the DMV and the Social Security Administration to ensure everything is accurate. (If that sounds a little too internet-creepy, be aware that this is a standard step in the life insurance application process. But when you apply online, the information can be analyzed in real-time instead of over the course of several weeks.)

If you’re applying with Haven Life and your Haven Term application is approved, you can start coverage that day. However, if you’re applying for medically underwritten coverage, you might need a medical exam to verify the application information and to finalize your rate — which means you might only qualify for temporary life insurance coverage until the exam results are in and the underwriting process is complete. With Haven Life, you can set up a medical exam at both the time and place of your convenience.

Take a life insurance medical exam (or not)

As I mentioned earlier, the most affordable term life insurance is what’s called medically underwritten life insurance. These kinds of policies require proof of your current health, which often means taking a life insurance medical exam.

If you dread the thought of a medical exam, you’ll be glad to know that the process is really simple. The exam usually takes less than 30 minutes, and it can often be completed at your home or workplace. (Yes, many life insurance companies send the medical professional to you, instead of asking you to go to a hospital or facility. No sitting around in waiting rooms!)

However, thanks to recent underwriting innovation in the life insurance industry, it may not be required for qualified applicants to take a medical exam. Haven Life offers the InstantTerm process in which some applicants ages 18–59 seeking a $1 million death benefit or less might meet the criteria that allows them to finalize coverage without a medical exam, based on the information they provided during the application process. (Keep in mind that it’s always very important to be honest in the application process. The issuance of the policy or payment of benefits may depend upon the answers given in the application and their truthfulness.)

Whether you qualify for InstantTerm or end up taking the medical exam, medically underwritten coverage will generally provide you with a wide range of coverage options and better pricing than you’d get from a no-exam life insurance policy.

If you don’t want to take a medical exam, consider a 100% no-medical-exam life insurance policy like Haven Simple. Though simplified issue policies will usually cost more per month than medically underwritten coverage, it may be a good option for those who know they absolutely do not want to take an exam. It’s important to note that issuing the policy or paying its benefits depends upon your insurability, based on your answers to the health questions in the application, and your truthfulness.

Additionally, with simplified issue policies, maximum coverage amounts are usually limited to $500,000 or less. Here are some examples of the cost of coverage for a Haven Simple policy, issued by C.M. Life Insurance Co., a MassMutual subsidiary, for nonsmokers in excellent health.

Quotes for 100% no medical exam term life insurance

Estimate based on pricing for eligible Haven Simple applicants in excellent health. Pricing differences will vary based on ages, health status, coverage amount and term length. These prices do not reflect the rates for applicants in DE, ND, NY and SD.

Get a quote for simplified issue life insurance.

Name your primary and contingent beneficiaries

The entire goal of life insurance is to take care of your loved ones, which is why selecting your beneficiaries is a crucial part of the application process.

You’ll need to designate both primary beneficiaries and contingent beneficiaries. What’s the difference? A primary beneficiary is a designated individual, chosen by the policyholder, who would receive the proceeds of the insurance policy (the death benefit) if the policyholder dies.

A contingent beneficiary is your back-up. If for some reason the primary beneficiary is unable to receive the death benefit, the contingent beneficiary will receive the policy proceeds.

Typically, people list their spouse or partner as the primary beneficiary and their children as contingent beneficiaries. However, your beneficiary can be anyone whom you’d like to receive the proceeds of your life insurance policy: parents, friends, siblings, a favorite charity, a living or revocable trust and more.

Is life insurance worth it?

We all have plenty of demands on our income and our time — and we don’t really want to spend that time thinking about how our lives might end or adding one more expense to the monthly budget. This is one of the reasons why so many people ask themselves: Is life insurance really worth it?

The answer to that question is a resounding yes.

We’d all do anything to protect our loved ones and shield them from the burden of our death. A life insurance policy serves as a financial safety net for your family if something happens to you.

Plus, taking out life insurance coverage can provide peace of mind. Knowing that, no matter where you are, there’s a contingency plan in place to help protect the people closest to you, is a powerful feeling that brings an abundant amount of inner peace.

So don’t put off that inner peace any longer. If you’ve been avoiding the life insurance application process for whatever reason, use this guide to help you buy the best life insurance online — and if you still have questions about which life insurance product is right for you, Haven Life’s customer success team has plenty of answers.