How to understand your term life insurance quotes

how to understand your term life insurance quotes
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    “What are all of these details on my life insurance quote?” This is a common question for life insurance shoppers. Having the knowledge so you know how to understand your term life insurance quotes is one of the first steps to getting the best policy available.

    In order to save on life insurance you have to compare quotes and in order to compare quotes, you have to understand them.  That’s where we come in by helping you understand the language used by insurance companies. We will help you understand the jargon and so you can compare the best quotes for your needs.

    How to understand your term life insurance quotes

    We are going to break the various categories and language that insurance companies look at for approving or not approving someone’s application for life insurance.

    Coverage amount

    This is the amount of money your beneficiary will receive when you pass away which is referred to as the death benefit.  The total sum will remain the same throughout the entire time your policy is in effect. Make sure, when shopping around, that the amount is the same for all the policies you are considering.  That’s the only way you can compare one against another.

    Length of the policy

    Term life insurance

    The term length is the length of time your policy will be in effect such as a 10-year term.  That means your premium cannot change during that period of time, no matter what. When comparing policies make sure they all have the same time period.  For instance, if you look at a policy that is offering a 10-year term, it will be less expensive than a 20-year term but really is not giving you accurate information to compare.  You have to compare both policies with the same time period, 10 years vs 10 years.

    Permanent life insurance

    A permanent life insurance policy will remain in effect as long as you pay your premium and is a life-long protection, unlike term life insurance.

    Your Age

    Quotes are based on your age and different insurance companies have different stipulations and costs based on that.  Most life insurance companies will consider your age based on your closest birthday so you must be careful by providing accurate information.  If the company uses the wrong age, your quote will be irrelevant and inaccurate. If you are sold a life insurance policy based on the wrong year of your birth, your policy will become null and void.

    Your premium

    This is the amount you pay for your policy.  Most quotes will show you the monthly premium but you can view the yearly/annual premiums they offer.  Usually, companies have different payment plans but you should compare the annual premiums of different companies in order to decide which works best for you.

    Level Premium

    This simply means the cost of your policy will not increase during the term of the policy.  This is a way life insurance companies perceive what your level of risk is.

    Health class

    There are different classes of underwriting from very high premiums to very low premiums, which ones are the best and which ones are the worst.

    •  Preferred Plus
    •  Preferred
    •  Standard Plus
    •  Standard
    •  Substandard


    These various health classes will usually have a “Non-tobacco” or “Tobacco” rating listed in the underwriting.  If you are a smoker, expect to pay more for your premium. For instance, a non-smoker might pay $50 a month while a smoker might pay $100 (or more) a month. You’ll typically pay twice as much as a tobacco user.

    Company details

    Most quotes will have basic information about each provider including their name and the year they were founded.  You should also research their A.M. Best ratings, BBB ratings, and J.D. Power ratings.

    This information will tell you how different rating agencies view the strengths of different life insurance companies and their finances.  It is highly recommended that you only work with insurance companies that are the strongest when comparing policies. You might save a few dollars on a weaker provider but will your beneficiary be stuck with a poorly financed company after you have died?

    A.M. Best

    This rating measures a provider’s financial strength and how likely they will go out of businesses. A.M. Best has a rating system of A++ to D.

    Better Business Bureau

    The BBB ratings are based on the feedback from customers and offer a view of the provider’s customer service.

    J.D. Power

    J.D. Power’s rating is measured by the provider’s customer satisfaction, the quality of their product, and buyer behavior on a scale of 5 to 2 (5 being the best).


    The lowest premium doesn’t always mean it’s the best policy available. Yes, the cost is very important but so are the policy’s features, especially if you have a certain need.  What if you want the option to change your term life policy into a whole life policy when the policy is set to end? You need to be sure the life insurance company provides this option.


    Riders are additional options or coverages to a life insurance policy.  In most cases, these are add-ons that will increase the price of your policy, but sometimes they are included at no extra cost.  There are some companies that have a rider built into the policy, a very popular one is known as the accelerated death benefit or living benefits.

    Other things to consider are the cancellation policy, accepted payment methods, exclusions and value.

    Compare policy to policy

    The policies you should compare against each other should have the same term length, coverage amount, and included riders.

    Honesty is key

    When it comes to the condition of your health always be honest.  If you are not, you are in for a rude awakening after you have completed your medical exam and underwriting is completed. The quote you initially received will not be accurate at best. At worst, you can be declined or rated up much higher than if you provided your agent all of your details.

    Quotes are the same no matter the source

    If they do, it could be that there is a minor detail missing or altered that you aren’t aware of. For example, one quoter may gather additional health information compared to a more basic quoter.  Legally, premiums must be based on the provider’s rate tables. These rates are submitted to each state that a company wants to sell life insurance in.

    Prices are the same when comparing the same product from an agent, broker or direct from the carrier. You cannot get a cheaper rate by buying directly from the provider.

    Related article

    Can I save money buying direct from a life insurance company?

    Where and how do I get term life insurance quotes?

    Use our instant life insurance quoter found right on this page. You can also request CUSTOMIZED QUOTES that are the most accurate based on your specific needs, health and lifestyle.

    How To Save On Life Insurance With Comparison Shopping

    Getting the best life insurance quotes starts off by working with someone who has access to multiple life insurance companies. Working with someone who works with only one or a few companies will limit your options significantly – that’s Life Insurance 101.

    Prices vary considerably across companies – even when comparing rates for policies of the same coverage amount and term length. One of the reasons is that not all life insurance companies look at you the same

    Whenever you are ready to begin your life insurance shopping, Life Insurance Blog is here to help. We work with over 40 of the best life insurance companies in the market. We’ll help you get all of the information and details that you’ll want easily, quickly and conveniently online and over the phone (no need to have an agent come into your home). We even have a simple process of buying life insurance online.

    If you have any other questions about how life insurance works, how to get life insurance quotes, or life insurance in general – the experts at Life Insurance Blog are here to help.

    Michael Quinn

    Michael Quinn

    Michael is a licensed life insurance agent, expert & owner of Life Insurance Blog. LIB has helped thousands of shoppers understand life insurance and secure affordable coverage.

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