The best type of life insurance is the one that fits you and your family. This includes understanding how much coverage you want, and what the money would be used for if you pass away. You will also want to consider whether you want temporary or lifetime coverage. You may want lifetime coverage, but then learn that term policies would save a significant amount of money, as well as cover you for the highest risk years (more debt, more familial obligations).
Finally, figure out what you can afford. Most policies change a monthly or annual premium, with additional costs for riders. If you are looking for a low monthly cost, term policies may be a better fit, but if you want to use your insurance policy to grow your wealth, a whole or universal life policy may fit the bill (though it is more expensive). Compare costs between term and permanent policies to find what fits best in your budget.
For example, a 30-year-old man with a 20-year $500,000 policy will pay an average of $27.69 a month.[1] A 30-year-old man with a $100,000 whole life policy will pay $89 a month, payable to age 99. This is more than double the cost of term life while providing less coverage, but covering you over a longer and more risky time of your life.
To get the best life insurance policy for your situation, and one that fits your budget, follow these steps:
Step 1: Decide what kind of policy you want: term or permanent.
Step 2: Figure out how much coverage you need and how long you want to be covered. If you’re buying a term policy, figure out how long of a term you need. If you are looking to purchase a permanent life policy for lifetime coverage, figure out how the cash value component fits in your overall financial plan. You may want to talk to a financial planner about what makes sense for you and your family.
Step 3: Talk to a life insurance broker and ask them to pull quotes for the type of life insurance you’re interested in. If you're not sure whether to choose term or permanent life insurance, ask the broker to get quotes for both kinds.
Step 4: Compare quotes from different providers and choose one that meets your requirements and fits your budget.
Step 5: Schedule a medical exam if necessary. If not, apply for and wait to be approved for the policy.
Remember that it’s OK to get several different quotes to find the best policy. Do your research, ask questions, and/or speak with a financial or insurance professional if necessary.