Comparing life insurance rates can help you select the right policy. A true comparison also takes into account several factors, including the policy type, underwriting process or approval type, riders, and any discounts for which you may be eligible. Consider these factors:
- Policy Type and Coverage. When you begin your search for life insurance, comparing the rates between term and permanent policies is helpful. However, once you choose a policy type, compare quotes for the same type of coverage.
- Coverage Amount. The death benefit you choose directly impacts your rates. When collecting and comparing estimates, it helps to compare quotes for the same coverage amount.
- Underwriting Process and Approval Type. There are several ways a company can underwrite and approve your policy. Some will use a fully underwritten approval that requires applicants to undergo a medical exam and complete a thorough health questionnaire. Others will use simplified-issue or guaranteed-issue approvals, which may eliminate the medical exam and/or the health questionnaire. Make sure that you are comparing policies of the same approval type.
- Payment Schedule. Some carriers will lower rates for customers who choose an annual or semi-annual payment plan instead of a monthly or quarterly one. When you compare life insurance quotes, make sure you’re comparing rates based on the same payment schedule.
- Riders. Riders are additional coverage options or benefits you can add to your policy. Riders may include accelerated death benefits, accidental death benefits, or even children’s benefits, which can extend coverage to your child. Adding the cost of riders into your life insurance quote can help you make a total value comparison between two or more policy quotes.
- Using a Net Payment Cost Index to Compare Policies. As you compare life insurance policies sample rates, ask the carrier, agent, or broker if they can provide a net payment cost index. A net payment cost index is a tool that allows you to compare the total average cost and value of a life insurance policy, including cash values and dividends.