5 Tips to Get the Cheapest Term Life Insurance Program

by Neal Frankle, CFP ®

Here are 5 tips to get the cheapest term life insurance program possible. (If you’re not sure about term life insurance versus whole life or you aren’t sure how much you need…don’t worry. I’ll be writing about those topics soon…)

1. Go shopping.

This is likely the only time you’ll hear me tell you that you should go shopping. When it comes to term life insurance, it really pays to shop every few years – especially when you are younger than 50. It’s likely that you’ll be able to replace your old term coverage with better coverage for lower premiums. At least that was my experience. Why?

People keep living longer. This happens because the doctors and drug companies work miracles to expand our lifespan. So we’re all going to live much longer than we think we are. That means we’re going to be around a lot longer to pay those insurance premiums, and the insurance companies know that.

It also means lots of us are going to die AFTER the policy expires. That translates into bigger profits for insurance companies. As a result, it’s cheaper for the insurance companies to provide insurance and they’ve reduced the rates to be more competitive. If you haven’t gotten a quote for life insurance in the last five years, you owe it to yourself to get a quote today. I saved a pile of dough…why shouldn’t you?

2. Don’t wait.

I know I just finished saying that I saved money as I got older, but I don’t want you to misinterpret that. If you need life insurance, you should get it now. Today. This minute. Why? One major reason.

You have no guarantee that there is a “tomorrow” with your name on it. (Read Do You Need Term Life Insurance?)

Nobody knows when their time is up. If you’ve read my story, you already know I’m a big believer in taking your responsibilities seriously. If people depend on you – like a spouse or children – take care of them. I lived through a situation where people I depended on really didn’t do what they should have. As a result, my siblings and I struggled for years.

Get insurance now if somebody relies on you. Don’t make me come over there…OK?

3. Stay healthy and ditch your Harley.

There are at least 7 ways to save on life insurance and one of them is by being healthy and safe. Life insurance companies may be many things…but stupid they are not. If they make you pay a lot more (or refuse to insure you completely) because of your lifestyle it may be time to rethink your priorities.

I know you love that double double cheese whopper, but does your heart? If it’s time to lose 20 pounds, get on that now.  You may love skydiving, but if the insurance companies won’t insure you if you do, maybe you should take up chess instead.

They’ve done all the research. They know what kills people. All you have to do is listen to them. Don’t kid yourself into thinking you’re the one who’s going to beat the odds. You might beat the odds of course…but what happens to your spouse and kids if you don’t?

4. Be honest.

If you lie about your health and hobbies on your insurance application and then die, your family isn’t going to receive the death benefit you paid for. If the insurance company proves that you completed the insurance application falsely, they’ll just refund the premium you paid to your beneficiary. That’s a bummer.

Be honest (but stop doing things that make you a bad risk for the insurance companies).

5. Don’t buy insurance from your brother-in-law or best friend.

OK…I know that if you have a life insurance agent you really trust, nothing I say is going to get you to buy term insurance from someone else. But that shouldn’t stop you from shopping around for the policy. Remember, buy term only (unless you have estate planning needs) and keep everyone honest by getting a few quotes. Then when your brother-in-law rolls out the new policy he has in mind, you’ll be even more convinced he’s trustworthy. Win-win.

What money-savings tips have you come up with when it comes to getting term life insurance?

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{ 18 comments… read them below or add one }

Susan June 20, 2014 at 12:16 AM

Hello I sent you a comment please let me know if you received it.
Thank You
Susan ( Patti ) Hazen

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Susan June 20, 2014 at 12:15 AM

Hello, I am needing your advice please. I am a 57 year old female and work as a waitress. My husband is 66 and is on Social Security and it is only $1,300 a month. I need to get some type of Life insurance for myself as I have none, yet I cannot afford to pay very much per month. I just don’t want to leave my daughter or husband paying for my Burial. My mother passed away and she had no life insurance and us three kids had to pay for everything. Do you think AARP is a good way to go ? I thank you for any advice you can give me.
Susan ( Patti ) Hazen

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Neal Frankle, CFP ® June 21, 2014 at 10:01 AM

Susan…..I would try to get more quotes. Check out

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Lincoln April 10, 2014 at 9:58 AM

When I originally commented I clicked the “Notify me when new comments are added” checkbox and
now each time a comment is added I get theee e-mails with thhe
same comment. Is there any way you can remove me from that
service? Appreciate it!

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Neal Frankle, CFP ® April 13, 2014 at 5:02 AM

hmmmm….not sure how to do that! isn’t there an unsubscribe option? I will look into this as well.

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ALICIA March 4, 2014 at 7:35 AM

Hello Neal,

I have had a whole life insurance policy for 23 years (I’m now 49) for a total of $1 million in benefits and pay $341.00 monthly (which seems reasonable to me and I can afford). Currently I have accrued $47,000.00 in cash value. Recently, my agent of 23 years came to see me and told me that as the years go by and I get older and the cost rises that the company will start taking from my accrued cash value to subsidize their cost increase and I could eventually not have any cash value left at all, and worse at this point the company can ask to increase my monthly premiums as they so choose. He’s asking me to switch companies, which is basically purchasing life insurance all over again at the age of 49, and of course my monthly premium payments will be over $800. I’ve done a lot of research and have not found any literature referring to this dwindling cash value phenomenon. Of course if what he says is true I face a dilemma. Do I switch and pay more and save what I’ve paid so far and have something left at the end? Do I keep paying my current policy and find myself at 75 with no cash value, an unaffordable monthly premium at which point I would have to surrender the policy, wasted all my money and have nothing to leave my 5 children (the reason I took it out in the first place) or do I just surrender it now and forget about leaving any benefits to my children? I would greatly appreciate your opinion as I feel I can’t trust anyone these days. Warm regards, Alicia.

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Neal Frankle, CFP ® March 6, 2014 at 2:03 AM

ALicia, thanks for checking in. I am of course very sorry you had this experience but it is the exact example of what I am trying to warn people about. I wish I could say I’ve never heard this story before but I hear it all the time.

It’s a dilemma. But if you want to leave the kids some money, permanent insurance is the only insurance that will do it. I would look for a guaranteed policy so you don’t run into this problem again. But I wouldn’t go with the same agent who sold me the wrong policy 23 years ago. If you want further info, maybe I can try to point you in the right direction on that. Please email me at neal DOT pilgrimm AT gmail.com
Thanks!
Neal

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Thomas Rockford January 19, 2014 at 3:33 PM

I don’t know if it’s wise to recommend people under 50 to get a term life policy. Most policies are for 10, 20, or 30 years. If you plan to die before age 80, then yeah, it might be worth it… but like you said, if you live past the end of the policy, the only person who profits is the insurance company.

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Neal Frankle, CFP ® January 20, 2014 at 11:54 PM

Thomas, I respectfully disagree. What if, like most people, you don’t need it? Whole life is often 7 to 12 times as expensive as term. Read this

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sarah July 25, 2013 at 11:01 PM

Dear Neal:

I am 78 years of age and my husband is 74. I just had to cancel a whole life because I couldn’t continue paying the $200 dollars per month. We both only receive SS. What is the best and most inexpensive insurance for us at our ages?

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Neal Frankle July 30, 2013 at 11:06 AM
Jason July 7, 2013 at 11:19 AM

Try to use an independent agent. They can do the shopping for you. Of course, you still need to trust him/her. But if you find a good independent agent, they can search through all the carriers for you to find the best fit, and the right premiums. As you mentioned though, get it young! It makes all the difference in those 20+ year policies.

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ROSEMARY June 7, 2013 at 7:19 AM

HELLO NEIL
MY NAME IS ROSEMARY POWELL I WAS DOING SOME SEARCHES ON LIFE INSURANCE ONE FOR MYSELF AND ONE FOR MY GRANDFATHER I SEEN YOUR ARTICLES AND I SEEN HOW SOME PEOPLE COMMENT ON YOUR VIEWS AND THEY AREN’T NICE MAKES ME BELIEVE THAT THEY ARE THE SAME PEOPLE WHO WORK FOR THE COMPANIES AND ISSUE MAKE YOUR COMMENT ABOUT. I WAS WONDERING IF YOU WOULD BE KIND ENOUGH TO GIVE ME LITTLE ADVICE . I CHOOSE TO ASK YOU CAUSE I FEEL THAT WOULD BE HONEST WITH ME AND LEAD ME IN THE RIGHT DIRECTION AFTER READING UR ARTICLES AND POST I CAN SEE THAT YOU ARE A TRUTHFUL UPFRONT PERSON WITH THAT SAID I WILL LET YOU KNOW ALITTLE ABOUT MYSELF I AM A SINGLE MOTHER OF 2 CHILDREN ONE 17 AND 7.I COME FROM A POOR FAMILY BARELY MAKING IT. I AM 34 RIGHT NOW AND WHEN I GOT PREGANT VERY YOUNG I DECIDED NOT TO FOLLOW IN THE FAMILY HISTORY. I AM NOT RICH BY FAR I MAKE 65 GRAND A YEAR AND HAVE 2 KIDS ONE WILL BE GOING TO JOHN JAY COLLEGE FOR CRIMINAL LAW AND FORENSIC SCIENCE BTW I AM FROM NYC BUT TO MY FAMILY I AM LOADED AND ALWAYS LOOKING FOR A HAND OUT. I HELP MY FAMILY OUT ALOT ESPECIALLY MY MOTHER AND MY GRAND FATHER. MY GRANDFATHER JUST TURNED 78 YEARS OLD HE LIVES OFF OF HIS SS N PENSION AND I AM THE ONE THAT PAYS HIS FONE BILL GAS ELECTRIC AND THE FOOD FOR HIM AND HIS CAT EVERY WEEK.HE IS IN GREAT SHAPE AND GREAT HEALTH.BUT THE LOAD ON MY SHOULDERS TAKING CARE OF MY FAMILY MAKES MANY SLEEPLESS NIGHTS AND STRESS LIKE GOD FORBID IF SOMETHING HAPPENS TO ME WHAT WILL HAPPEN TO MY KIDS AND WHEN MY GRANDPA PASSES I WILL BE THE ONE TO PAY FOR EVERYTHING AND PICK UP THE PIECES I HAVE NO ONE TO HELP ME WITH THAT SAID WOULD YOU PLEASE GIVE ME ALITTLE ADVICE ON WHAT LIFE INSURANCE I SHOULD GET FOR MYSELF AND GRANDFATHER TO HAVE A PIECE OF MIND

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CJ October 30, 2012 at 9:59 PM

I read your article on http://finance.yahoo.com/news/4-life-insurance-policies-never-180314056.html.

As to permanent life insurance, I understand your hesitation with universal life, and much of whole life, but I’ve owned a Northwestern Mutual Whole Life policy for 21 years, and truth be told, it has done better than any investments I’ve made (which could be an indication of how lousy of an investor I am, but 2008 hit my 201K real hard, as well as my E-Trade account).
LOL!

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Neal Frankle October 31, 2012 at 12:32 AM

CJ – fair enough. Thanks. You are right that insurance did much better than most investments over the last 10 years. I really appreciate you pointing this out. My experience is that this is the aberration rather than the norm but it’s important to point out. Thanks!

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Ardn June 23, 2010 at 9:58 AM

I like the idea of shopping for the term life insurance every few year. I used to think that the best option was to stay with the same insurance company.

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Evolution Of Wealth May 20, 2010 at 8:43 AM

I have to say #5 is the most important. It’s hard to control some of the other things listed but people always think all life insurance is the same and it isn’t. Most insurance agents have very limited resources when it comes to what companies they work with. They will never tell you because they have a life insurance license that essentially allows them to work with any and ever company out there but they don’t. Then depending on how they are contracted they can become extremely limited on what they can offer. It’s one of the biggest lies in life insurance.

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Thisiswhyubroke! May 10, 2010 at 7:00 AM

I think one of the most important things is to be honest like you said! I’ve heard far too many stories of families being denied payouts.

“Because ridicule is the most effective form of education”

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