When comparing life insurance quotes, be sure to compare apples to apples. Comparing the cheaper rate on a term policy against the cheapest rate of a more robust permanent policy will not give you an accurate picture.
Let's talk basics for a moment. As you see the differences between the types of policies you'll quickly realize you can only compare term to term policies and whole to whole policies. Here we go:
' Term: These are the cheapest type of life insurance policy. They can be purchased for a specific period of time. It is purchased for a set amount and you continue to pay the premiums on that amount. If you die during the policy period, your beneficiary will receive the face amount of the policy. If you don't die before the policy expires, you get nothing.
Most term insurance policies provide an option to convert to a permanent policy. If your financial condition changes, you might entertain the thought of doing so.
' Permanent: There are several types of permanent insurance such as whole, universal, variable, endowments, limited pay, and the list goes on. However, for our purposes here, rather than listing all of the various policies and the features of each, it's best to understand that unlike term insurance, these policies offer flexibility and investment opportunity.
It is not uncommon to be able to use a permanent policy as an investment tool. In addition to paying your beneficiary in the event of your death, these policies pay dividends and offer the ability to borrow against the cash value that has accrued over time.
As a result of the flexibility and various options offered by term policies, the rates will be higher than their term counterpart.
As you can see, the differences in coverages are vast and so are the range of premiums. It is important when comparing low cost life insurance, be sure to compare two or polices of the same type.