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 Low Cost Life Insurance

"Low Cost Life Insurance" is a term you will hear more and more, but just what is it? It's an individual life insurance policy that can cost as little as 5% of the full amount of coverage. Let me give you some examples. If you want to purchase $1 Million worth of life insurance, that would usually cost around $50,000. That's the price for a basic individual life insurance policy. But with low cost life insurance, it could cost you as little as $2,500 per year. That's a BIG difference! The best part is that you can compare the prices from multiple companies to make sure you're getting the lowest price possible.

When I first heard about this concept of low cost life insurance, I thought it was just another gimmick being used by unscrupulous agents and brokers in an effort to separate me from my money. But after doing some research and talking with some experts in the field, I found that there is actually a lot of good information on low cost life insurances out there if you know where to look.

So let's start at the beginning. What is a life insurance policy? A life insurance policy is basically an agreement between you and an insurance company that they will pay your beneficiaries a specified amount of money if you die. So if you die in a car crash while you are insured, then your beneficiaries will get paid for your death. Pretty simple, right?

But here's where it can get confusing...

There are basically two types of life insurance: Term Life Insurance and Whole Life Insurance. You can compare these two by looking at them on opposite ends of the spectrum: One is cheap and temporary, the other expensive and permanent...

Term Life Insurance  is just that...term insurance. It is inexpensive, and you will only be paying your premiums for a specific period of time. You can renew this type of policy indefinitely, but it is usually about as expensive as you can expect to pay for life insurance.

So let's take a look at what some of these companies are offering: As you can see, the term policies that these companies offer can really vary from company to company. Amazon Life Insurance offers a "Get Started for $1" term policy (which is really one of their whole life policies). That's pretty inexpensive! They have all kinds of different income level plans and term options available. Some companies offer 5% coverage plans, others with higher coverage limits like 10% or 15% coverage... There is no limit to the choices that you can get with a low cost life insurance policy.

They offer a "No Payment Plan" too which can be nice in that it means that you don't have to pay the extra money up front at all. You will only be paying your premium during the life time of your policy, and after either 12 or 18 months, you can simply cancel the policy if you would like to make payments down the road. This author did a great comparison of these different policies . It's really important to note that this is a great deal if you're earning just enough to pay off the premiums each month. If not, then it might not seem like such a good deal. Whole Life Insurance, on the other hand, is a bit more expensive, but it can be made to last for a really long time.  Whole life policies are typically paid at a much higher rate than term insurance. There is no limit to the amount of coverage you can receive with a whole life policy... as long as it lasts until your beneficiaries reach age 21.  These policies are usually paid in installments over the term of your X years.

I'd like to talk just a bit more about Whole Life Insurance...

Whole life insurance is basically designed to be permanent life insurance. You can usually choose a term policy and renew it over and over again, but if you choose a whole life policy rather than a term policy, then you are stuck paying your premiums for the rest of your life!

The good part about that is that these plans don't just have to last until your beneficiaries are 21... they can last way longer than that! Besides that, whole life policies can cost relatively small amounts (like 5% of coverage, like we talked about earlier). The bad part is if you cancel the policy before it's paid in full... you have to pay back all of the money you received to that point. That can really hurt!

There are a lot of different factors that will determine the price you pay for a whole life insurance policy. One of those major factors is your age when you get your policy... the younger you are, the less it will cost you. Some policies even offer discounts for getting multiple policies at once (like an auto and health insurance policy). Another thing to consider is whether or not you smoke, exercise regularly, or even drink alcohol. All of these things affect how much it costs to get a whole life policy. These policies are often sold by salespeople who work on commission. They tend to try to push whole life policies as much as they can because they are more profitable for them... but it's up to you to make sure you aren't getting tricked into buying an overpriced policy that you won't need.

What Is a Quick Look Policy?

In my opinion, this is really the most important thing to know about low cost life insurance: In many cases (like with Amazon Life Insurance), you don't actually need a physical whole life insurance policy at all! All of the policies that Amazon offers are really just group term policies... and that's not even a bad thing! You can learn all about how group term policies work here . Group term policies are cheap... very cheap. If you pay a $1.00 premium for a policy that will last 20 years, then your premium would only be $0.50 per month. This is a tiny fraction of the cost of a whole life policy... and it can be renewed over and over like term insurance, so it's not like you have to stick with these companies either!

Life Insurance Reviews

If you decide to look at companies like Amazon Life Insurance or any of the other low cost life insurance companies, then I strongly suggest that you read reviews about them before making any final decisions. Just because one company offers cheap life insurance doesn't mean they are all trustworthy... or even that they will deliver on everything they promise.

What's Next?

If you want to look into getting cheap life insurance, then it might be a good idea to check out some of the additional life insurance information we have here. There is a lot of great information about how your age can affect your price, and there are also videos that discuss the topic from many different perspectives.

One video in particular is my favorite to watch because he has a really good way of explaining how different insurance companies get their money. You'll see exactly where the cost differences come from between term and whole life insurance policies...

Conclusion