Life insurance comparison: How to choose the right policy for you
Reviewed by
If you're about to buy a life insurance policy, it's important to do some comparison shopping. We'll help you better understand the primary life insurance options — and put you in a better position to make the right decisions — by telling you about:
How different types of life insurance policies work
Ways to get and compare life insurance quotes
Considerations for choosing a life insurance company
What is life insurance, and why should you consider it?
A life insurance policy is a contract between you and an insurance company. The basic terms are simple: You make payments — called premiums — to the life insurance company; in return, they promise to pay your family or dependents a lump sum of money if you die.1 This “death benefit” is usually income tax-free.
Not everybody needs life insurance. For instance, it may not be necessary if a person doesn't have a spouse, partner, children, elderly parents, or other dependents — and doesn't plan on having them in the future. However, it may be essential for anyone who has — or plans on having — one or more financial dependents. With life insurance in place, your dependents are guaranteed a measure of financial confidence in the event of your death and the loss of income from your salary, pension, or social security. Otherwise, they may be left with financial obligations that they won’t be able to handle.
If you decide you need life insurance, you should consider comparing the different types of coverage (term life insurance, whole life insurance, and universal life insurance) to decide which is best for your needs. Then, think about the amount of coverage you need so you can start to compare quotes from different companies. Finally, you should know how to determine which life insurance company provides the level of financial strength, stability, and customer service you want.
Comparing different types of life insurance policies
Life insurance isn't a one-size-fits-all product. Different types of coverage are designed to meet different needs. So, take a minute to get familiar with the basic choices.
Term Life Insurance
A term life insurance policy covers you for a specific term, typically between 10 and 30 years. Importantly, your life insurance cost will typically be lower with a term policy than with a permanent life insurance policy with the same death benefit amount. However, when the term expires, your coverage is gone, and you either have to do without life insurance or get a new policy — and typically life insurance rates will be higher because you are older. That said, many providers, including Guardian, let you convert a term policy to a permanent life insurance policy for part or all of the coverage period.
Permanent Whole Life Insurance
A whole life policy is the simplest form of permanent life insurance, providing coverage that lasts your entire life as long as the policy remains in force. Like other permanent policies, it includes a cash value that grows over time on a tax-deferred basis, so you don't pay taxes on the gains.2 Compared to other forms of permanent life, a whole life policy can provide the most guarantees:
The premium payment remains the same for life
The death benefit amount is guaranteed
There is guaranteed cash value growth
Cash value provides important benefits you can use while you're still alive. For example, you can take out personal loans against it (however, any outstanding loans will be deducted from the death benefit).3 You can also use the policy's cash value to help pay your premiums and keep your coverage in later years. Or, you can even use the policy's cash value for funds to supplement income in retirement. And when you get a whole life policy from a mutual company, such as Guardian, your cash value can also earn annual dividends.4 While not guaranteed, dividends have been consistent for over 150 years.
Permanent Universal Life Insurance
A universal life policy is another form of permanent insurance that offers lifetime coverage and a cash value.5 But there's a fundamental difference compared to a whole life insurance policy: the premiums are variable. This gives flexibility to people with income that fluctuates. With universal life insurance policies, you can raise or lower your premiums as you see fit, within the policy's limits. However, paying less could result in the need to pay higher premiums in later years to keep your coverage.6 Even so, this type of policy can adjust to life circumstances while providing cash value growth. Having another child, moving on to a different job, or taking out a loan to buy a business might all be instances where this combination of stability and flexibility is needed.
Policy Feature | Term life | Whole life | Universal life |
|---|---|---|---|
Initial premium | Typically lower than permanent life | Typically higher than term life | Typically higher than term life, but can be lower than whole |
Premium over time | Typically level (i.e., stays the same for the term) but increases when you renew | Guaranteed to remain the same for life | Flexible - can change over time, within limits established by the terms of the policy |
Flexible premiums | No | No | Yes |
Permanent coverage | No | Yes | Yes |
Length of coverage | Typically 10 to 30 years | Your whole life (if your premiums are paid) | Your whole life (if your premiums are paid) |
Health exam required | Usually, yes, but some policies do not | Yes | Yes |
Cash value | No | Yes, accumulates over time | Yes, accumulates over time |
Dividend-eligible | No | Yes, depending on company | No |
Can I withdraw cash value? | No | Yes, but will diminish the death benefit unless it’s repaid | Yes, but will diminish the death benefit unless it’s repaid |
Guaranteed death benefit | Yes | Yes | Death benefit can fluctuate |
Used for estate planning | Not usually | Yes | Yes |
Accelerated death benefit option | Yes | Yes | Yes |
Best for | Lower premiums, specific term lengths | Lifelong protection, dividend potential, guaranteed level premiums | Lifelong protection, flexible premiums |
Getting and comparing life insurance quotes
Once you have an idea of which type of life insurance coverage may work best for you, the next step is to determine how much coverage (death benefit) you need. Then, you can get quotes to see how much that coverage might cost.
In simple terms, you want a death benefit that's large enough to provide financial protection by paying for the bills and expenses you won't be able to help with if you're gone. If you're the primary earner, that includes things like rent or a mortgage, credit card debt, college tuition, and health insurance. Even if you're a part-time worker or stay-at-home parent, you should consider enough insurance to pay for childcare expenses and funeral costs. Basically, you need enough to cover all the extra costs your dependents may have in your absence, especially while your children are still at home. Typically, the more dependents you have and the younger they are, the more coverage you need.
Determining how much coverage you need
There are many ways to estimate the amount of coverage you may need, but here are three of the most popular. Once you get closer to purchasing a life insurance policy, consider talking to a financial professional or insurance agent to get a more exact number.
1. Human Life Value7
Based on the value of your future earnings, a simple way to estimate what you need is to get 30 times your income if you're between the ages and 18 and 40; 20X income for ages 41-50; 15X income for ages 51-60; and 10X income for ages 61-65. After age 65, the coverage amount is based on net worth rather than income; consider discussing what's appropriate with a financial professional or insurance agent.
2. Multiply your income by 10 — and add college for each child
This approach is a bit simpler: Just multiply your current salary by 10, then add enough to cover college tuition expenses. How much should you add for each child? College isn’t cheap; you should account for somewhere between $100,000 and $150,000 per child. If you split the difference — and have two kids — that’s an extra $250,000.
3. Apply the DIME formula8
This method considers future expenses in addition to future earnings. DIME stands for Debt, Income, Mortgage, and Education: four significant factors to consider when estimating your life insurance needs.
Debt: Total all your debts other than your mortgage. Car payments, credit cards, student loans, and even personal obligations, such as money you may have borrowed from a sibling to put a down payment on your house. On top of all that, add funds for final expenses.
Income: How much do you make a year? And how many years will your family need that money? It’s a tricky question to answer, but a good place to start is determining how many years until your youngest child graduates high school. For example, if you make $50,000 and have nine years until your youngest graduates high school, put down $450,000 for income.
Mortgage payments: Look at your last statement and get the payoff amount. If you have a second mortgage or HELOC (home equity line of credit), add that if you haven’t already included it in the debt section above.
Education: Anticipated college costs for each of your children. As we said before, consider between $100,000 and $150,000 per child.
Add those four factors together, and that’s your number. You can also make adjustments (i.e., subtract) for any current savings and life insurance you already carry.
Once you've determined a ballpark figure for how much life insurance coverage you need, you can get a quote for how much the coverage will cost. You may be surprised at how cost-efficient coverage can be. In fact, a recent study by the Life Insurance Marketing and Research Association (LIMRA) found that most people think the price of term life insurance is three times higher than the actual cost. Younger Americans are likely to say it's five times the actual cost.9
How to get life insurance quotes
You can secure quotes for term life insurance policies online, by phone, or via an in-person meeting with a life insurance agent. Generally, you'll want to begin using simple online quote calculators, which provide ballpark estimates based on a few quick questions.
The charts below show some average rates quotes for $500,000 worth of term and whole life insurance. As you'll see, rates vary widely depending on the applicant's age and gender. Also, a higher coverage amount will obviously increase the cost of the policy.10
Average term life insurance rates
The rates below are average annual rates for a 20-year, $500,000 term life policy. Rates for each age class are for men and women who don’t use tobacco and are in excellent health.
Age | Average annual rate for men | Average annual rate for women |
|---|---|---|
30 | $221 | $187 |
40 | $334 | $282 |
50 | $819 | $642 |
60 | $2,357 | $1,656 |
70 | $9,436 | $7,994 |
Source: Covr Financial Technologies. Lowest three rates for each age and risk class averaged. Data valid as of January 30, 2025.
Average whole life insurance rates
The rates below are average annual rates for a permanent, $500,000 whole life policy. Rates for each age class are for men and women who don’t use tobacco and are in excellent health.
Age | Average annual rate for men | Average annual rate for women |
|---|---|---|
30 | $4,311 | $3,959 |
40 | $6,387 | $5,860 |
50 | $10,069 | $9,037 |
60 | $16,698 | $14,635 |
70 | $29,302 | $25,631 |
Source: Covr Financial Technologies. Lowest three rates for each age and risk class averaged. Data valid as of January 30, 2025.
Factors that affect life insurance rates
The initial quote you get for coverage may not be what you end up paying, because several factors influence your final rate. Insurers look at a variety of elements when assessing your life expectancy and use that information to decide their risk in insuring you. The higher their risk, the higher your premiums. Some factors they look at include:
Smoking or tobacco use
Health conditions, such as chronic illness
Family medical history
Hobbies (especially riskier hobbies)
Occupation
Drug or alcohol use
Wondering if you can afford life insurance?
In just a couple of minutes, our calculator can show you some term life insurance quotes to help you get a better feel for how much coverage you need and what it might cost.
Keep in mind that most initial quotes are estimates that can be revised up or down after you complete the actual application process, due to the factors noted above. Also, you can't usually get quotes for permanent life whole life or universal life online. These policies are more finely tailored to each applicant, so you will probably have to provide your name and contact information so that a professional can contact you directly.
Evaluating and comparing life insurance companies
Once you've secured some quotes and narrowed your search to a few life insurance companies, the last step is to make sure that — in addition to reasonable rates — the company you choose offers high financial strength ratings, and scores well in areas such as claims fulfillment and customer service. Here are some of the best places to find the answers:
High Financial Strength Ratings (FSRs)
Independent organizations rate the financial strength of insurers to ensure their ability to meet obligations. A.M. Best, Standard & Poor's, and Moody’s are independent ratings agencies you can look to for more information. You can find Guardian’s financial ratings here.
High customer satisfaction scores
Customer surveys and reviews can tell you how satisfied others are with a company's services. Many in the industry consider J.D. Power & Associates to be one of the best sources of insurance satisfaction data because they conduct an annual customer satisfaction survey of nearly 5,000 U.S. life insurance policyholders. In the 2024 J.D. Power U.S. Individual Life Satisfaction Survey, Guardian performed far above the industry average and ranked 2 out of the 23 companies in the study.11
Low customer complaints
The National Association of Insurance Commissioners (NAIC) collects data about complaints with state regulators. According to a recent analysis by NerdWallet, Guardian Life has had significantly fewer complaints to state regulators than expected for a company of its size over the last three years.12
Product selection and customization
Some providers focus on term insurance, while others offer both term and permanent with a variety of optional riders that tailor a policy to your needs.13 For example, Guardian provides convertible term and permanent policies and even has options to help cover people with certain kinds of pre-existing conditions — such as certain cancers, heart disease, and even HIV.
Policyholder dividends
Some insurers are owned “mutually” by their policyholders, who can receive dividend payments. So, for example, when you purchase a whole life policy from a mutual insurance company like Guardian, you may get paid a dividend, helping to build your cash value further.
Direct underwriting
Some providers issue their own policies, like Guardian. Others sell policies from several different companies, which may add cost or complexity when you need to make a claim.
Taking the next step
In addition to doing your own research — such as comparing life insurance quotes — consider talking things over with an insurance agent or financial professional who can help you compare alternative options, determine which type of policy is best for your financial situation, and explain how it can be tailored to your needs. If you don't have someone to discuss insurance with, Guardian can help you find a nearby financial professional who will listen to your needs and help guide you to the right solution for you.