How to Get the Best Rate on Life Insurance

Last Updated: April 9, 2019

Most potential clients that call us ask, “How do I get the best price for term life insurance?”

It seems like every insurance company advertises that they have the best rates for life insurance. In the mail, on the radio, on TV, we’re constantly bombarded by insurance companies that promise to save us up to 15%, but how do you know when you’re really getting the best deal on your coverage?

Searching for the best deal on any type of life insurance is extremely overwhelming. No one wants to divulge their medical and financial details to complete strangers over and over again to try to find the best deal.

If you’re like us, you want to make sure your loved ones can maintain their present lifestyle whether we’re around or not. At the same time, you want to make sure you haven’t overpaid for a life insurance policy that may never be needed.

In this article, we’ll provide some insider tips to help you secure the most affordable life insurance coverage available from a reliable life insurance company.

Quick Article Guide:

1. How Do I Know Which Insurance Companies Are Financially Solid?
2. Should I Call Each Life Insurance Company Directly?
3. Why Is It Important to Shop the Market? Aren’t All Life Insurance Prices Roughly the Same?
4. How to Change Your Application Age to Save Money
5. Getting Ready for Your Life Insurance Exam
6. Re-shopping the Market After Your Life Insurance Exam

How Do I Know Which Insurance Companies Are Financially Solid?

Did you know there are about 1,200 life insurance companies that are based in America? Each one of these companies offers multiple products and around 12 different prices for each product based on the applicant’s age, health, and lifestyle. There are literally hundreds of thousands of life insurance options available to most individuals, so how do we know which option is the best, and which companies are reliable?

In the life insurance industry, one company is just as financially secure as the next. All life insurance companies are regulated at the state and federal level and their finances are reviewed periodically to ensure that they remain in good standing. In fact, each life insurance company must prove that they are financially stable and able to pay claims before they are able to sell life insurance.

The good news is that no major life insurance company has ever gone out of business, other than voluntarily getting out the business. If a life insurance company becomes financially unstable, the company will enter a process of liquidation where your policy is assigned to another insurer of equal or higher financial standing, also referred to as reinsurance.

In addition to reinsurance, each state also has a central guarantee fund similar to the banking industry’s FDIC. Every time a life insurance policy is purchased, a small fee must be paid to the state’s central guarantee fund. Your policy isn’t affected, other than who you pay your premiums to.

BOTTOM LINE: The “big name” insurance companies are not financially stronger or more reliable than any other insurance company; they simply spend more money on their advertising. The companies that spend the most on their advertising also tend to charge the most for their life insurance policies and most of these companies typically specialize in home and auto insurance, not life insurance. In 2016, companies like State Farm, Allstate, and GEICO spent almost a billion dollars on their advertising. These costs eventually found their way to the consumer, resulting in an inflated cost of insurance coverage.

If you buy your life insurance from a company rated “A” or higher by A.M. Best (the industry benchmark), you’ll be fine. To earn an “A – Excellent” rating means that the insurance company has never failed to pay a valid claim and has well above the money in cash reserves required by regulators to pay future claims. In fact, most of these companies have been in business for more than 100 years.

Should I Call Each Life Insurance Company Directly?

Some of our potential clients ask us if they should call each life insurance company to shop for rates. Some life insurance companies may offer you a quote, but most of the insurance companies will refer you to a call center because you can’t buy term life insurance directly from the insurer, you have to work with an agent. Regulators require term life insurance be sold through licensed “agents.” An agent will help you through the shopping process, answering your questions about the application process as well as any questions you may have about your policy and its limitations.

It’s important to note that in most cases, there is no cost for you to use an agent. An agent is directly compensated by the insurance company only if you decide to buy a life insurance policy.

This is why it is so advantageous to work with an independent agent that represents dozens of top-rated life insurance companies. They will do the shopping for you.

Before I started selling life insurance about many years ago, I mistakenly assumed I’d get my best life insurance price from a State Farm agent. It made sense at the time, especially since I already had my home and auto insurance with them. I thought I might even get a larger “multi-policy” discount to save even more money on my life insurance… The truth is, life insurance cannot be discounted… It’s heavily regulated, and based strictly on mortality risk. A life insurance company cannot charge you less for your policy than they would anyone else of the same age and health.

In the life insurance industry, there are two types of agents, “captive” and “independent.” Most insurance agents that work for the “big box” companies like Farmers, State Farm, Allstate, etc. are “captive agents”… they are contractually bound by this company and they can only sell insurance products from that company. An independent agent can shop the market on your behalf, ensuring that you receive the best rates available for your life insurance policy. Every life insurance company has different rates and some companies specialize with applicants in excellent health while others are more lenient with individuals that have health issues.

BOTTOM LINE: Working with an experienced and independent agent will save you time and money on your life insurance. Independent agents are specialized and knowledgeable about life insurance because it is the only type of insurance they sell. Most captive agents specialize with home and auto insurance, limiting their ability to keep up to date with the ever-changing life insurance industry.

Our agents are well versed in underwriting and we have access to each company’s medical underwriting guidelines. This allows us to match each of our clients with the best products available.

Why Is It Important to Shop the Market? Aren’t All Life Insurance Prices Roughly the Same?

Most of the clients we speak with are surprised to learn that every life insurance company has their own unique underwriting guidelines. These guidelines are based on an individual’s overall health and lifestyle and they are used to determine your mortality risk class, or the price of your life insurance. The higher the risk, the higher your cost will be for coverage.

In the life insurance industry, there are actually 16 different rate categories that are used to assess the risk of the person who is being insured. Each person is assigned to a rate class based on their health and lifestyle. However, it’s important to note that every life insurance company’s guidelines vary. Each company looks at health and lifestyle differently and some companies are more lenient with some health issues than others.

Here are some examples:

Build (Height to Weight Ratio)

One of the A+ rated companies we represent, Prudential, is very lenient with an applicant’s build. They will allow a male who is 6’0” tall to weigh up to 213 pounds and still qualify for their very best rate class. Comparatively, State Farm will not offer their top rate class to a 6’0” tall male if they weigh more than 197 pounds.

Family History

Another common factor life insurance companies consider is an applicant’s family medical history. If your parent or sibling had cancer before the age of 65, some companies will charge you a higher rate while other companies will not consider your family history at all. Applying with the wrong company can cost you 30-35% more for an identical life insurance policy.


Some life insurance companies specialize in applicants with diabetes. Most companies will automatically decline an applicant with diabetes or offer them an expensive sub-standard rate. A handful of the companies we work with will actually offer standard or better rates to applicants with well-controlled diabetes. Some of these companies are also extremely lenient with applicants who are struggling to control their diabetes. For most life insurance companies, this will cause your application to get denied.

Tobacco Use

If you use any form of tobacco, most life insurance companies will charge you the same rate as someone who smokes cigarettes. The rates for a tobacco user are 2 to 3 times greater than the rates for a healthy non-tobacco user. However, some companies offer leniency for applicants who use tobacco but do not smoke cigarettes. A+ rated companies like Lincoln Financial and Prudential offer a “non-smoker” rate to applicants that use chew, e-cigarettes, or even cigars, even if they have tobacco in their system when they complete their exam. We’ve saved clients hundreds of dollars a year on this industry secret alone!

BOTTOM LINE:  Working with an experienced and independent life insurance agent that represent dozens of life insurance companies will save you money. Our agency has access to each life insurance company’s medical guidelines allowing our agents to match you with the company that is the best fit for your specific age, health, and lifestyle risk factors.

How to Change Your Application Age to Save Money

If you’re over 50, the cost of your insurance will raise 12-15% with each birthday. Applying before your next birthday can save you a considerable amount of money over the course of a life insurance policy, especially if you are purchasing a term of 20 years or longer. Most life insurers will determine your age by which birthday you’re closest to, while a few insurance companies will use your actual birthday.

When you’re applying for life insurance, your agent will be able to determine which company is able to offer you the best pricing based on the date of your next birthday. If you happen to change age during the application process, don’t worry. Many companies will allow you to backdate your policy up to 6 months. This allows you to start the policy the day before you were considered a year older. You may have to pay an extra month of back premiums, but over time you’ll be able to save a considerable amount of money.

BOTTOM LINE: If you have a birthday approaching, we’ll help you determine the best option available for you. Your agent will be able to provide you with the policy dating options available and explain how each option will affect your cost of insurance over time. You’ll be able to select the option that best fits your needs and budget.

Getting Ready for Your Life Insurance Exam

In 2016, a handful of life companies began offering up to $500,000 of life insurance without a free medical exam. Generally these policies are reserved for applicants under the age of 65 who are in average or better health. If you need more than $500,000 of life insurance, have a few health issues, or if you want to make sure you get the best rates, taking a physical exam will probably save you money on the cost of your coverage.

To get the best rates on life insurance, most of our clients will complete a standard in-home mini medical exam. The mini medical exam is paid for by the insurance company you apply with and it consists of a small blood and urine sample. In addition, the examiner will also measure your height, weight, and blood pressure. Applicants over 50 will often get a mobile EKG if they are applying for more than $500,000 of coverage.

Here are some tips to get the best results on your exam:

1. Take the exam in the morning on an empty stomach
2. Avoid fatty foods and alcohol for 24-48 hours
3. Drink lots of water beginning 48 hours ahead
4. Avoid cardio workout or strenuous exercise for 48 hours prior
5. Take your maintenance medications as prescribed
6. If you recently began taking a medication, or will soon end taking one, ask your agent if it will affect your rates. It could be a valid reason for delaying your physical

Bottom Line: Drink plenty of water, relax, and take your medications as prescribed.

Re-shopping the Market After Your Life Insurance Exam

Our agency goes a step further to ensure that our clients have always received the best rate on their life insurance policy. Once you complete your free mini-medical exam, our in-house underwriter will review your results to make sure you are still matched up with the best company available.

Let’s say your cholesterol was a bit higher than you thought, or maybe it’s been a while since you weighed yourself… If there’s a company that has more lenient guidelines for that specific issue, we’ll let you know your options. If you decide to apply with another company, you won’t need to complete a new exam; we can send a copy of your lab work to the company that’s able to offer you a better rate. We’ll also send you a copy of your lab work to save you a trip to the lab at your doctor’s office.

We will normally recommend that you activate your initial policy just in case the second underwriter sees things differently, or if they find something in your medical records that the first company missed.

You want to avoid doing multiple exams with multiple insurance companies. Each time you apply for life insurance, there is a record of your application in the Medical Information Bureau to help discourage fraud. When companies see multiple pending applications, they tend to err on the side of caution and you’ll generally get the harshest underwriting.

We’ve also seen clients get declined for coverage because the insurance company will refuse to accept their application. When insurance companies see too many applications pending, they don’t want to waste resources or they may be afraid that you’re trying to hide something. If you do get a “decline for insurance coverage,” this is also shared amongst insurers, making it really tough to qualify in the future for anything other than a burial policy.

BOTTOM LINE: Before applying for life insurance, ask your agent if they have the ability to re-shop your term life coverage with another insurer if something unknown comes up in lab results or medical records. Most large call centers do not offer this option unless your policy has been active for at least a year.

We’re Here to Help!

If you have questions about life insurance or if you’d like to shop the market to find your best life insurance options, we can help. By working with more than 60 highly rated life insurance companies, we’re able to shop the markets on our clients’ behalf to save them time and money. Give us a call today at: 855-902-6494, or request a free quote online below to instantly shop dozens of companies.

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