How Are Life Insurance Premiums Calculated Online?

life insurance premiums online

One of the hardest questions to ask yourself, is your family financially prepared for your death?

While it's not something we like to think about, there's never been a more important time to make sure your loved ones are financially prepared for the unexpected.

When it comes to buying life insurance, the sooner you purchase a policy, the more you can save on life insurance premiums. Understanding how premiums are calculated and how much insurance you need can be tricky, but we've got you covered.

Keep reading for our quick guide to buying life insurance online to protect your financial dependents in an unpredictable world. 

Factors that Affect Life Insurance Premiums

It's a good idea to understand what factors go into the cost of a life insurance policy. Some of these factors you can control, and others you can't. When you know what to expect, you can compare rates and choose the policy that offers the best coverage for the price. 


Age is one of the biggest factors that determine the cost of a life insurance policy. It's a good idea to purchase a life insurance policy sooner than later as the cost goes up as you get older. When you buy earlier, you can lock in your rates. 


Women generally pay less for life insurance than men. This is in part because of the difference in life expectancy between men and women. 


Where you live can affect the cost of a life insurance plan. Your location can also determine which policies are available in your area because each state has its own insurance regulations. 

Policy Term

The term length of your policy determines how long your coverage lasts.

With a whole life policy, your coverage will last until you die. With a term policy, your coverage will last until your term expires.

If you opt for a term policy, your term should last as long as your longest financial obligation or debt. A common example is the length of your mortgage. This will ensure your financial dependents and loved ones aren't left liable for your financial obligations. 

Type of Policy

There are two main types of life insurance policies. These are the term policy and the whole life policy.

Term policies last for a set amount of time. Whole life insurance lasts for the length of your life.

Whole life insurance is considered permanent insurance and accumulates cash value over the years. However, it's more expensive than term life insurance. Term insurance is more common for those who are interested in investing their money and growing their wealth via other means.

If you have a financial dependent with special needs, a complex estate, or significant income and assets, you might be a better candidate for a whole life policy. 

Coverage Amount

It's generally recommended that you purchase coverage that equals at least 10-15 times your income.

This is true even if you aren't currently employed but plan to be in the future. Make sure to purchase enough coverage to account for the amount of income you expect to receive in the future. 

How Much Life Insurance Do I Need?

One of the biggest benefits of buying life insurance online is the ability to do so without having to meet with a local agent. While the internet gives you a ton of flexibility with your time, it can be tricky to understand how much coverage you need.

When you compare rates online, you can always connect with an agent if you have any questions. However, it's fairly easy to calculate the basics on your own. 

Total Your Assets

The first thing you should do is add up your liquid assets and income after taxes. Liquid assets include investments, other life insurance policies, and future social security benefits. 

What Are Your Debts?

You'll also need to add up your debts and other financial obligations. These might include payments on debts, annual living expenses, and future expenses like college tuition for your children.

Once you have added these up, multiply that number by the number of years your family will need your financial support. 

Do the Math

Next, you'll subtract the amount of number 1 from number 2.

The number you get is called a coverage gap. This is how much money your family would need for financial stability after your passing. This number is the minimum amount of coverage you need for your death benefit.

The term of your policy, or how long your coverage lasts, should be however long your family will depend on you financially. 

How to Choose the Best Policy

With all of the different life insurance companies, it can seem overwhelming to choose one. The best way to ensure you get the most coverage for the best price is to get an online premium quote and compare rates directly.

When you shop for life insurance online, you can do research about your options. You should make sure the company you choose has a history of financial stability and is trustworthy according to current and former customers. Once you verify insurers, you can start comparing policies.

You want to be sure you get enough coverage. You should choose a policy that offers coverage for at least as long as you will carry your longest debt or for as long as you have financial dependents. After you've narrowed down policies to those that offer the right amount of coverage, you can choose the company that offers the best premiums. 

Are You Looking to Buy Life Insurance?

If you're looking to purchase a life insurance policy, now is the time.

The longer you wait, the higher your life insurance premiums will be.

The best way to buy life insurance in the digital age is by comparing rates online. Get a Quote today to get started by comparing rates in your area.