How to compare life insurance policies

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Shopping for life insurance coverage is a little like that. But unlike buying ketchup — which only costs you a few bucks, and only lasts a short while — life insurance is a more serious commitment. You want to make sure you’ve done your due diligence before signing up for years, maybe even decades, with an insurance provider.

Learn what factors to consider before choosing a life insurance policy. (And hey, they might come in handy next time you’re getting ketchup, too.)

What is life insurance, anyway?

Before we begin, let’s start with what life insurance is all about. Simply put, you buy a life insurance policy with enough coverage to take care of your family in case you die. The value of the policy is equal to the death benefit — that is, the money your loved ones will receive if something happens to you while the policy is in place.

To secure this coverage, you typically pay a monthly premium, usually a fraction of the policy’s overall value.

So who needs life insurance? If you have loved ones who depend on you and your income to pay for things, you should consider getting life insurance. Those things might be day-to-day expenses like groceries and a mortgage or rent; they might also include long-term debts (like student loans) or future expenses like tuition.

Getting life insurance provides financial protection for your family in the event the worst should happen to you.

But where do you start? By shopping around, and comparing your options. Here are the factors to consider.

What type of life insurance policy do you need?

There are many types of life insurance, but the two most common types are term life insurance and whole life insurance. Here’s what they are:

Term life insurance

As the name suggests, term life insurance policies last for a set period of time (the “term”). This can often be 10, 15, 20, 25 or even 30 years. The idea is that a term life insurance policy covers the years when you need insurance.

For example, if you are a new parent who just took out a mortgage, you might want a term life insurance policy that covers the years when your child is living at home, and mortgage payments are due.

After those years — when your newborn is all grown up (that went fast!), and your mortgage is paid off (congrats!) — you might not want or need life insurance, because you’re no longer responsible for paying for things for other people. You might even be retired, or otherwise have reduced your expenses.

Whole life insurance

Another type of life insurance where the name says it all. Whole life insurance is designed to last your whole life. (For this reason, it is a form of permanent life insurance.)

Because of that, however, it often comes with higher premiums. After all, you’re buying a policy that covers the years when you’re likely to be in poorer health. In addition, some whole life policies accumulate cash value — but accessing that money through a withdrawal or a loan can come with tax complications, or reduce the benefits your beneficiaries receive when you die.

Despite these additional costs and complications, whole life insurance can make sense if you want coverage through the end of your life, or if building cash value appeals to you.

How much life insurance do you need?

An industry rule of thumb is that you should buy a policy worth 5 to 10 times your annual salary. This is so you have enough coverage for your loved ones if you die, but not so much that you’re paying higher premiums than necessary.

The thing to keep in mind is that this money is often paid as a lump sum, and can be used for anything your beneficiaries desire. This includes necessities like food and housing, plus longer-term items like tuition. The money can also cover a funeral and burial expenses, not to mention help make ends meet if, say, your spouse takes time off work to mourn your loss.

These calculations are personal, and there is no one-size-fits-all solution. That said, the aforementioned rule of thumb, as well as an online life insurance calculator, can help you determine the amount of coverage you need. At Haven Life, you can get a policy worth anywhere from $250,000 to $3 million.

How long do you need life insurance?

As mentioned before, many people only need life insurance to cover the years when they’re working (i.e., drawing a salary) and/or covering someone else’s expenses. Some factors to consider when deciding the term length for your policy:

Your age, and how many years you expect to keep workingThe age of your children if you have themAny outstanding debts, including a mortgage

If you’re young and healthy, with young kids and a couple decades left on your mortgage, you probably need a policy that lasts 20 years or more. If you’re nearing retirement, the kids are out of college, and your mortgage is almost paid off, you can probably consider a shorter policy.

Where should you buy life insurance?

When shopping for life insurance, you’ll discover there is no shortage of places to buy it. One important factor, of course, is cost, and we discuss that below. But there’s also the question of the quality of your provider — after all, this is a relationship that will last for decades.

If you’re reading this, you’re probably a digital native, who is comfortable shopping for things online, whether it’s a mattress, tonight’s dinner, or, yes, a life insurance policy.

But you might also wonder about the nature of digital-first brands. When so much can change so fast, how do you know your insurer will be around in a few decades to take care of your loved ones?

This is what makes Haven Life special. It’s an online-first insurance agency, backed by MassMutual, one of the most esteemed insurers in the world. Haven Life pairs an easy, online application process that can be completed over your lunch break.

When shopping for life insurance, considering an insurer’s ratings from a third-party agency is essential — these ratings tell you whether your insurer is on solid financial ground, and can be counted on to deliver when your family needs it most.

What does life insurance cost?

A confusing thing about life insurance is that the value of the policy isn’t what you pay. For example, if you’re buying a $1 million policy, you might think you need to pay $1 million for it, either up front or over time. But that’s not the case.

Instead, you’ll pay a monthly premium during the life of the policy. At the end of the policy, you’ll no longer need to pay premiums (and better yet, you’re alive). To learn what your average premium payment might be, compare life insurance quotes from potential providers.

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

AgeGenderHealthFace amountTerm lengthMonthly premium30MaleGood$250,00030$23.92FemaleGood$300,00030$24.28MaleExcellent$500,00030$29.99FemaleExcellent$1,000,00030$43.4135MaleGood$250,00020$16.86FemaleGood$300,00020$17.15MaleExcellent$500,00020$20.72FemaleExcellent$750,00020$23.1340MaleGood$250,00010$15.40FemaleGood$400,00010$18.42MaleExcellent$600,00010$18.98FemaleExcellent$800,00010$20.89

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.

After you compare life insurance policies

Once you’ve done your homework, it will be time to choose a policy. Don’t delay — the cost of life insurance depends on your age and overall level of health, and you’ll never be younger than you are today. (And in all likelihood, you’ll never be healthier, either.)

Just as importantly, going without life insurance leaves your family at financial risk in case something happens to you in the meanwhile. Begin your journey toward peace of mind by getting a free online life insurance quote from Haven Life today.

Our editorial policy

Haven Life is a customer-centric life insurance agency that’s backed and wholly owned by Massachusetts Mutual Life Insurance Company (MassMutual). We believe navigating decisions about life insurance, your personal finances and overall wellness can be refreshingly simple.

Our editorial policy

Haven Life is a customer centric life insurance agency that’s backed and wholly owned by Massachusetts Mutual Life Insurance Company (MassMutual). We believe navigating decisions about life insurance, your personal finances and overall wellness can be refreshingly simple.

Our content is created for educational purposes only. Haven Life does not endorse the companies, products, services or strategies discussed here, but we hope they can make your life a little less hard if they are a fit for your situation.

Haven Life is not authorized to give tax, legal or investment advice. This material is not intended to provide, and should not be relied on for tax, legal, or investment advice. Individuals are encouraged to seed advice from their own tax or legal counsel.

Our disclosures

Haven Term is a Term Life Insurance Policy (DTC and ICC17DTC in certain states, including NC) issued by Massachusetts Mutual Life Insurance Company (MassMutual), Springfield, MA 01111-0001 and offered exclusively through Haven Life Insurance Agency, LLC. In NY, Haven Term is DTC-NY 1017. In CA, Haven Term is DTC-CA 042017. Haven Term Simplified is a Simplified Issue Term Life Insurance Policy (ICC19PCM-SI 0819 in certain states, including NC) issued by the C.M. Life Insurance Company, Enfield, CT 06082. Policy and rider form numbers and features may vary by state and may not be available in all states. Our Agency license number in California is OK71922 and in Arkansas 100139527.

MassMutual is rated by A.M. Best Company as A++ (Superior; Top category of 15). The rating is as of Aril 1, 2020 and is subject to change. MassMutual has received different ratings from other rating agencies.

Haven Life Plus (Plus) is the marketing name for the Plus rider, which is included as part of the Haven Term policy and offers access to additional services and benefits at no cost or at a discount. The rider is not available in every state and is subject to change at any time. Neither Haven Life nor MassMutual are responsible for the provision of the benefits and services made accessible under the Plus Rider, which are provided by third party vendors (partners). For more information about Haven Life Plus, please visit: https://havenlife.com/plus

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Wonderful company!! I definitely recommend Haven life!! Awesome at finding the best coverage for me! Great coverage that is affordable!! Glad I listened to the recommendation that was given to me about this company

I looked into two other companies. The coverage was comparable but I was most impressed with Haven Life’s customer service. I was also impressed with the pricing tools.

Pros:
-Easy online application
-Can get coverage immediately after applying online
-Pretty seamless process throughout the experience Cons:
-Although told I was covered initially after applying online, I was informed that I needed to get physical check up in order to continue the plan.
-Although I’m very healthy, my plan price increased 2x after the physical checkup.

Applying for life insurance in your 40’s is exhausting!! But at least Haven made it as easy as possible! Everything is efficiently handled through email. Communication is excellent, they give updates all along the way. Scheduling the bloodwork is easy and convenient. Plus, the rate was better than other companies. Easy to sign off on paperwork.

The application was easy to complete and the rate quoted was very competitive. The amount applied for required an examination and that process was very convenient, efficient, flexible, and the medical professional was friendly and capable. The policy approved was exactly as quoted with an option to add to the amount originally applied for and I took advantage of the offer. Haven Life is a subsidiary of MassMutual, one of the highest rated companies in the insurance industry. I couldn’t be happier!

In this article:

What is life insurance, anyway?