SoFi

Full coverage car insurance protects you against the most common causes of car damage and bodily injury: not just accidents but also theft, vandalism, fire, and more. Depending on the state you live in, it may also include Uninsured Motorist coverage, and Personal Injury Protection for yourself and your passengers. Liability, on the other hand, only offers financial protection against other drivers’ claims of injury and damage if you’re found at fault.

It can be hard to know how much insurance you need, and how to keep costs down. We’ll review the different types of policies available, pros and cons of each, and the average cost of full coverage vs. liability.

What Is Full Coverage Car Insurance?

Full coverage car insurance refers to a policy with the broadest protections available. Although specifics vary by policy, full coverage usually includes the following:

•   Liability: If you’re involved in an accident and found to be at fault, this type of insurance provides financial protection against other drivers’ claims of bodily injury and property damage.

•   Collision: Helps pay for damages to your own vehicle after an accident with another vehicle or an object like a guardrail.

•   Comprehensive: Protects you against theft or damage unrelated to an accident, such as fire or vandalism.

In some states, full coverage may also include the following:

•   Uninsured/underinsured motorist coverage (UM/UIM): Covers your losses if the other driver either doesn’t have insurance or not enough.

•   Personal injury protection (PIP): Covers medical expenses for yourself and passengers in your car if injuries occur. It may cover other costs, as well: lost wages, the cost of services that you can’t perform while injured, such as housekeeping, as well as funeral costs.

•   Medical payments (MedPay): This can cover medical expenses but doesn’t offer the fullness of coverage that’s available through PIP.

Check your state laws for specifics. This guide to car insurance terms can also be helpful.

Recommended: Should I Sell My House Now or Wait

Recommended: Insurance Tips for First-Time Drivers

Average Cost of Full Coverage Car Insurance

The average full coverage car insurance cost in 2022 is $1,771 annually. Of course, many factors go into full coverage car insurance quotes, so your price will undoubtedly vary. The cost for a male teenage driver, for example, is $807 more each year on average.

A poor driving record will almost double your premiums. For more details, check out this look at how much insurance goes up after an accident.

Your deductible will also make a big difference in your premiums. In general, the lower the deductible, the higher the premium, and vice versa. So if you’re wondering how to lower your car insurance cost, consider choosing a higher deductible.

The cheapest full coverage car insurance is about $1,000 per year for an individual policy.

Recommended: What Credit Score is Needed to Buy a Car

Why Consider Getting Full Coverage Insurance?

You’ll have the broadest protections with a full coverage policy. Also, if you have a car loan, your lender may require you to have full coverage to protect their investment. The best way to determine how much coverage you need is to sit down for a personal insurance planning session.

Recommended: What is The Difference Between Transunion and Equifax

Pros and Cons of Full Coverage Car Insurance

There are advantages and disadvantages to paying for full coverage car insurance.

Pros of full coverage

•   Provides a broader range of protection:

◦   May cover medical expenses if you’re hurt in a collision

◦   May cover vandalism and theft

◦   Can protect you after an accident if the at-fault driver doesn’t have enough coverage

•   Typically meets all state insurance requirements.

•   Usually satisfies the requirements of your lender or lessor.

Cons of full coverage

•   Cost is higher than baseline liability insurance.

•   Doesn’t provide coverage for commercial driving purposes.

•   Won’t cover the cost of normal wear and tear.

What Full Coverage Insurance Doesn’t Cover

Although full coverage provides a significant amount of protection, it doesn’t cover every situation imaginable. It may or may not, for example, provide UM/UIM, PIP, or MedPay coverage. As noted above, full coverage also doesn’t account for standard wear and tear or maintenance needs on the vehicle — that’s up to you. Learn more about saving on car maintenance costs.

Because full coverage varies from company to company, it’s important to read your agreement carefully and understand what it does and doesn’t include.

What Is Liability Car Insurance?

There are two components to what liability auto insurance covers: bodily injury and property damage. If someone is at fault in an accident, their bodily injury coverage will pay for the medical expenses of injured parties. It may also cover lost income, legal fees, and/or funeral costs.

Property damage coverage helps pay for damage to the other person’s vehicle and to any other property that sustained damage during the accident, such as a fence, home, or bicycle.

Personal liability coverage is something different. It typically covers medical costs for someone injured on your property or because of your negligence. It may cover property damage costs, legal fees, and so forth.

Recommended: Does Net Worth Include Home Equity

Average Cost of Liability Insurance

On average, a liability insurance policy costs $716 in 2022. But again, many factors — including your age, gender, driving record, and type of deductible — can influence the price.

Why Consider Getting Liability Coverage Insurance?

Most states require liability car insurance, although the specifics vary from state to state. do not require it. In New Hampshire and Virginia, you can skip liability insurance if you can prove you can pay for costs out-of-pocket after an accident where you’re at fault.

Pros and Cons of Liability Coverage Car Insurance

While it may be tempting to pay for only liability coverage, you need to keep certain drawbacks in mind.

Pros of liability insurance

•   Costs less than full coverage car insurance.

•   Provides basic coverage in case of an accident.

•   Required by most states.

Cons of liability insurance

•   If an accident occurs, you could still be on the hook for many costs (more on this below).

•   Won’t cover theft or vandalism of your vehicle.

•   If you have a loan or lease, the lender/lessor may require full coverage.

What Liability Insurance Doesn’t Cover

If an accident occurs, liability insurance won’t cover damage to your vehicle. For that, you need collision coverage. Liability may or may not cover your personal injuries. And if you’re not at fault in the accident, it doesn’t cover the other driver’s medical bills or property damage costs.

Differences Between Liability and Full Coverage Insurance

When weighing liability vs. full coverage car insurance, here are a few things to consider:

•   Full coverage car insurance costs more, but it also offers significantly more protection.

•   Liability auto insurance is required in most states, but full coverage is not.

•   If you have a car loan or lease, the lender/lessor will likely require full coverage.

•   With liability insurance, there’s no deductible. With full coverage, deductibles range from $500 to $1,500.

When To Add Optional Coverage

Optional coverage to consider include:

•   Rental car reimbursement: If your car is in the shop or otherwise out of service for more than a day, this pays for a rental vehicle.

•   Gap insurance: This is intended for cars that have a loan or lease. If the vehicle is totalled and you owe more than the value of the car, gap insurance pays the difference.

•   New car replacement: As the name suggests, if a car is totaled, you get a new car that’s similar to your previous one.

Recommended: The Cheapest Way To Rent a Car

What Are the State Minimum Requirements for Full Coverage?

How to read this table: Alabama’s requirements for car insurance are 25/50/25. This means that the state requires $25,000 of bodily injury liability insurance per person, with $50,000 for all bodily injuries that take place within a single accident, and $25,000 in property damage per accident. Just keep in mind that this is the minimum amount of car insurance you need.

The Takeaway

Full coverage car insurance includes several different types of protection, which makes it popular with drivers who can afford it. Full coverage gives you liability protection (used when you’re at fault in an accident), collision (which pays for damage to your vehicle), and comprehensive (which protects against theft and non-accident-related damage). In some states, you’ll also get Uninsured Motorist coverage, Personal Injury Protection, and/or Medical Payment coverage. Liability coverage, on the other hand, only covers property damage and bodily injury in case you’re at fault in an accident. Auto insurance coverage requirements vary by state.

If you’re looking for affordable full coverage car insurance, we invite you to compare auto insurance quotes from top insurers. SoFi makes finding the right deal on car insurance easy.

FAQ

Is it worth having full coverage on a car?

If you have a loan or lease, you may be required to have full coverage. And you may want to get full coverage on a newer car to protect your investment even if you don’t have to. This can also be true of an older car that’s maintained its value.

What does full coverage come with?

It comes with liability insurance, collision coverage, and comprehensive insurance. It may come with additional coverages such as uninsured motorist coverage, personal injury protection, and/or medical payment coverage.

What are the benefits of full coverage?

This kind of policy provides you with a broad range of protections against not just accidents but fire, theft, vandalism, and other common threats. If you have a car loan or lease, full coverage may be required.

Photo credit: iStock/shapecharge

SoFi Relay offers users the ability to connect both SoFi accounts and external accounts using Plaid, Inc.’s service. When you use the service to connect an account, you authorize SoFi to obtain account information from any external accounts as set forth in SoFi’s Terms of Use. Based on your consent SoFi will also automatically provide some financial data received from the credit bureau for your visibility, without the need of you connecting additional accounts. SoFi assumes no responsibility for the timeliness, accuracy, deletion, non-delivery or failure to store any user data, loss of user data, communications, or personalization settings. You shall confirm the accuracy of Plaid data through sources independent of SoFi. The credit score is a VantageScore® based on TransUnion® (the “Processing Agent”) data.

*Terms and conditions apply. This offer is only available to new SoFi users without existing SoFi accounts. It is non-transferable. One offer per person. To receive the rewards points offer, you must successfully complete setting up Credit Score Monitoring. Rewards points may only be redeemed towards active SoFi accounts, such as your SoFi Checking or Savings account, subject to program terms that may be found here: SoFi Member Rewards Terms and Conditions. SoFi reserves the right to modify or discontinue this offer at any time without notice.

Insurance not available in all states.
Gabi is a registered service mark of Gabi Personal Insurance Agency, Inc.
SoFi is compensated by Gabi for each customer who completes an application through the SoFi-Gabi partnership.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

SOPT0922003

When an insurance company determines that a vehicle is totaled — that is, so badly damaged that repairing it will cost more than it’s worth — the owner may be reimbursed for its actual cash value (ACV) instead of repairs. How much insurance will pay for a totaled car varies. The exact amount depends on the insurance company, where the driver lives, how much coverage they have, and other factors.

Knowing how insurance decisions are made, and how to manage your claim, can help you prepare for this scenario after an accident.

What Makes a Car a Total Loss?

An insurance company may declare a car a “total loss” if the cost of fixing it is more than the market value, or if it wouldn’t be safe to drive the car even if the repairs were made. The insurer also may make its decision based on how your particular state defines a total loss. (You can learn more about the terms discussed here and others in our guide to car insurance terms.)

Some states use a total loss threshold (TLT) to determine if a car is totaled. In these states, the damage must exceed a certain percentage of the car’s value. Missouri, for example, has an 80% TLT — which means if you were in an accident and your car worth $10,000 required more than $8,000 in repairs, your car could be declared a total loss. The repairs wouldn’t exceed the actual cash value of the vehicle, but they would exceed the state’s TLT. (Iowa has the lowest TLT in the U.S. at 50%. Colorado and Texas have the highest, with a TLT of 100%.)

Many states use a total loss formula (TLF) to declare a vehicle totaled. With this method, if the cost of repairs plus the salvage value of the car exceeds its actual cash value, the car is totaled.

If the insurance company thinks the damage could end up being more extensive than the adjuster’s initial estimate, it may use a lower threshold for declaring a total loss than what the state requires.

Recommended: Does Auto Insurance Roadside Assistance Cover Keys Locked in a Car

What Types of Insurance Coverage Pay for a Totaled Car?

Whether your insurance will pay for a total loss (and how much it will pay) depends on your policy. This is when smart personal insurance planning pays off. There are a few types of coverage that might kick in if your car is totaled.

Collision Coverage

This coverage pays for damage to your own vehicle or property. That can include damage caused by crashing into another vehicle or running off the road and into a tree or fence. Even if you’re responsible for the accident, collision coverage will pay for the repairs, minus the deductible amount you’ve chosen. (Learn more about the types of deductibles in insurance.)

If you are found to be at-fault, however, you can expect your car insurance premiums to go up after an accident.

Recommended: How to Get Car Insurance

Comprehensive Coverage

Comprehensive insurance covers losses caused by something other than a collision, such as a weather event, hitting an animal, theft, or vandalism.

Property Damage Liability Coverage

This coverage pays for damage to your vehicle (or other property) if you’re in an accident and the other driver is found to be at fault.

Uninsured/Underinsured Motorist Coverage

If you’re in an accident and the other driver is at fault but isn’t insured or doesn’t have sufficient insurance, this coverage can cover your repairs.

New Car Replacement Coverage

With new car replacement coverage, if your car is totaled, your insurer will pay to replace your damaged car with a brand-new car of the same make and model (minus your deductible). Drivers looking for lower car insurance premiums tend to go with this extra, but it can save you big money in the event of an accident.

Recommended: How to Lower Car Insurance

GAP Coverage

If you owe more on your car loan or lease than what your insurance says your totaled car is worth, you could end up having to pay the difference. GAP coverage, short for Guaranteed Auto Protection, can help “bridge the gap” between your insurance settlement and what you still owe.

Recommended: Insurance Tips for First-Time Drivers

How Does an Insurance Company Decide How Much to Pay Out?

After an accident, you can expect your insurance company to assign an adjuster to handle your case. The adjuster will check out your damaged car and, as part of the assessment, determine the cost of repairs and if the car is worth repairing.

If it’s totaled, the adjuster will assign the car a value based on its pre-crash condition and what similar models are selling for. The “actual cash value” you receive will factor in the car’s age, wear and tear (inside and out), the car’s mileage, equipment you may have added, etc.

The payment you receive will help you buy a new car, but it probably won’t be enough for a new model of the same car (unless you have new car replacement coverage). And it may not be enough to pay off your loan or lease (unless you have GAP coverage).

Recommended: How To Find Savings on Car Maintenance Costs

What Steps Should a Car Owner Take If a Car Is Totaled?

There are a few things that need to happen to get you back on the road ASAP after a serious accident:

Contact Your Insurance Company

No matter who’s at fault for your car’s damage, you should notify your insurance company immediately. Most insurance companies are available 24/7 to take your claim by phone, online, or app.

Assess the Damage

The insurance company will send an adjuster to inspect your car and estimate the cost of repairs.

Calculate Your Car’s Fair Market Value

The insurance adjuster will do some research to determine your car’s fair market value — and you can do some homework, too. You can use the Kelley Blue Book to get an idea of what your car was worth before the accident (using the make, model, mileage, and when you bought your car). Or you can check online to see what similar cars in your area are selling for.

Contact Your Lender

If you’re still paying off your car loan, or you’re in a lease, you should inform the financing company that the car was damaged. It’s also important to keep making payments until you settle your insurance claim, so you don’t hurt your credit.

Negotiate Your Insurance Company’s Payout

If you can convince the insurance company that your car was more valuable than the amount they’re offering, they may adjust the payment you receive. The insurer may ask you to provide paperwork that shows the car was worth more, so it’s a good idea to keep your receipts and maintenance documentation. Or you may decide to hire a private appraiser to see if you can get a higher estimate. (You’ll have to pay for this service yourself.)

Get Your Payment — And a New Car

If you own the car outright, the insurance company will send you the money — often within a few days. You can use it to shop for a replacement.

When you have a car loan, your insurer will send the appropriate payoff amount to your lender and the rest (if applicable) to you. If you have a lease, the insurer will send the payment to the leasing company.

What Happens to a Totaled Vehicle After Filing a Claim?

Generally, after an insurance company decides a car is a total loss, it will take possession of the vehicle and, when the claim is settled, sell it as salvage. But the car’s final destination may depend on state regulations and whether the owner wants the car back.

Can You Keep a Totaled Vehicle?

You can talk to your insurer about the possibility of buying back the totaled vehicle if you want to keep it for sentimental reasons, or because you think you can fix it or use it for parts. This is allowed in some states, but you may have to work with the local DMV to complete the purchase.

If you hope to get the car back on the road, you can expect to go through several more steps. It will have to be fixed and pass an inspection, and you’ll have to get a new title. You’ll also have to register the car and insure it.

If that turns out to be a few too many hoops to jump through, you may end up selling it to a junkyard yourself. Or you can sell the parts to interested individuals. You also may be able to donate the car to a local charity.

Before you negotiate with your insurer to get your car back, you might want to check on whether it’s legal in your state and — if you plan to drive it again — what kind of insurance you can get on a car that’s been declared a total loss.

Can I Decide If My Car Is Totaled?

No. The insurance company must decide if the damaged vehicle is a total loss based on its value and the cost of repairs.

Understanding Your Coverage

Being in a serious collision can be stressful, whether you’re responsible or someone else is determined to be at fault. You may be hurt or hospitalized. Understanding how car insurance works, and what it will and won’t cover, can help you prepare. And it might take your stress down a notch in the aftermath of an accident.

An accident may prompt you to reassess how much auto insurance you really need. After all, more coverage means higher premiums, and vice versa.

An online insurance marketplace can help you decide what types of coverage you want, and whether getting GAP coverage or a policy with rental car reimbursement coverage is a good strategy. Your lender or leasing company, as well as your state, also may have specific requirements for how much insurance you must carry.

Recommended: How Much Does Insurance Go Up After an Accident?

The Takeaway

If your car is so badly damaged in an accident that the cost to repair it will be more than it’s worth, your insurer may decide to declare the vehicle a total loss. This means the insurer will give you the car’s actual cash value (based on its condition just before the accident) instead of paying to have it fixed.

Of course, you’ll only receive payment if you have the right kind of insurance coverage. Even then, the settlement likely won’t be enough for you to replace your wrecked car with a new car of the same make and model. Also, if you owe more on your car loan or lease than your insurance says your totaled vehicle is worth, you can end up having to pay the difference.

If you want to be proactive about your insurance coverage, SoFi can help you compare your current auto insurance policy to what other top insurers are offering. SoFi will walk you through the process of getting the right coverage for your needs.

FAQ

How do insurance adjusters determine the value of a car?

An insurance adjuster will assign the car a value based on its pre-crash condition and what similar models are selling for. The “actual cash value” will factor in the car’s age, wear and tear, mileage, and other equipment you may have added, including the condition of the tires.

What happens if insurance doesn’t pay enough?

You can try to negotiate with the insurer to get a higher payout, but you should expect to back up your request with documentation. Or you may decide to hire a private appraiser to give you a second opinion of the car’s value.

What happens when your car is totaled and you still owe money?

If you’re still making payments on your car when it’s totaled, the insurance company will send the appropriate payoff amount to your lender and the rest of your settlement to you. If the insurance payment isn’t enough to cover what you owe, you may have to pay the difference.

Photo credit: iStock/Jorge Villalba

Insurance not available in all states.
Gabi is a registered service mark of Gabi Personal Insurance Agency, Inc.
SoFi is compensated by Gabi for each customer who completes an application through the SoFi-Gabi partnership.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

SOPT0922004

Life insurance can provide families peace of mind and financial support in the event that the policy holder dies. If you’re the primary breadwinner for your household, then a life insurance policy can help pay funeral expenses, survivors’ day-to-day living costs, and children’s college costs.

Finding affordable life insurance starts with understanding your needs and budget. There are plenty of options you can choose from when shopping for coverage.

Why Should Families Have Life Insurance?

Life insurance is designed to pay out a death benefit to beneficiaries after the insured person dies. Life insurance can provide reassurance that should something happen to you, your dependents will be taken care of.

A life insurance policy can be a key part of personal insurance planning, which also encompasses homeowners or renters, auto, health, and disability insurance. If you have a family, life insurance can help your loved ones meet the following needs:

•   Replace lost income. If the sole or main income-earner dies, life insurance can help to replace their lost income and cover day-to-day expenses.

•   Pay final expenses. Funeral and burial costs can be expensive, and cremation is not necessarily any cheaper. Proceeds from life insurance can pay all of the associated costs, relieving financial stress during an already trying time.

•   Clear outstanding debts. If you leave behind a mortgage, student loans, credit cards, or other debts, a life insurance policy can be used to pay them off so your loved ones aren’t stuck with overwhelming debt.

•   Pay college expenses. If you have children, your life insurance policy can help pay for their higher education costs or secondary education expenses if they attend private school.

•   Cover basic living expenses. Even if you leave no major debts behind, your loved ones may need money to pay for utilities, groceries, and other everyday bills.

•   Fund retirement for a surviving spouse. Life insurance can help to fill a retirement planning gap for couples when a surviving spouse is not left with a nest egg.

In short, life insurance can help with a variety of expenses. Having a death benefit can help your loved ones avoid having to tap into other financial resources, or it can create a cushion if they lack other resources.

Recommended: How to Buy Life Insurance

How Much Life Insurance Do Families Need?

How much life insurance you need usually depends on your income. A general rule of thumb is to purchase a policy that’s equivalent to seven to 10 times your annual income. So if you make $100,000 a year, you’d need a policy with a death benefit of $700,000 to $1 million.

Even if one person brings in most of the income, both partners can benefit from having life insurance, especially if you have kids. If one person is the primary caregiver and they pass away, that can create new costs for the one who’s left behind.

For example, if you worked while your partner stayed home, you might need to spend money on daycare or in-home care, cleaning services, lawn care services, and other expenses to cover household tasks that they might have handled so that you can continue to work. Or if you choose to take an extended bereavement leave to care for your children, then life insurance can ensure that you’re able to meet your expenses during that time.

Recommended: How Much is Life Insurance

Types of Life Insurance for Families

There are two main types of life insurance: Term life and permanent coverage. Term life insurance is designed to cover you for a set term. For example, you might purchase a 20-year term policy. If you pass away within that term, the policy can pay out a death benefit to your family. Otherwise, the policy expires at the end of the term.

Permanent life insurance covers you for life, as long as the premiums are paid. One of the most common options for permanent life insurance is whole life. With whole life insurance, part of each premium payment is deposited into a cash value account. The account earns interest, and you can withdraw the cash you accumulate or borrow against it. When you die, the policy pays a death benefit to your loved ones, less any amounts you’ve withdrawn or borrowed against.

So which is better for families, term life vs. whole life insurance? The answer depends on your needs and budget. If you’re looking specifically for affordable life insurance for families, then term life is likely the better option. You don’t get lifetime protection or cash value accumulation, but generally, premiums for term life coverage tend to be lower than whole life.

By the way, you can typically convert term insurance to permanent insurance (such as whole life) at a higher premium if you want to keep your insurance longer than the term.

Making whole life insurance affordable is more challenging, as lifetime coverage means that your insurers are virtually guaranteed to have to pay out a claim. As such, they can charge higher premiums for the same death benefit. Age and health can also play a part in determining term life or whole insurance costs. Coverage is usually cheaper when you’re younger and healthier, so waiting to buy insurance could prove more expensive.

Recommended: What is Life Insurance

How to Get Affordable Life Insurance for Families

If you’re on the hunt for an affordable life insurance policy, it’s important to do your research to know what options are available. You may have access to life insurance already without realizing it. It’s also good to consider exactly what you need a life insurance policy to do for you and whether it makes sense to purchase coverage for children or grandparents as well.

1. Review Your Workplace Insurance Benefits

It’s possible that you may already have some life insurance in place to protect your family if your employer offers group coverage as an employee benefit. That type of life insurance covers a group of employees up to a certain benefit amount. For example, you might have $50,000 in group life insurance that your employer pays for. You may have the option to purchase additional coverage and increase the death benefit, with premiums deducted from your paychecks.

Group life insurance may not provide the full amount of coverage you need. But it can be a good starting point for getting an affordable life insurance policy if your employer is picking up the tab for the premiums. Check with your HR department or benefits coordinator to see if group life is offered at your job and how to enroll in coverage.

2. Opt for Term Life, If Possible

As mentioned, term life insurance can be a cheaper option than whole life insurance. If you’re not interested in building cash value and you don’t necessarily need lifetime coverage, term life may be preferable to whole life.

When purchasing term life insurance, think carefully about how long you’d like to keep the coverage in place. If you’re 30 years old and have two kids, for example, you might want a 20-year term policy, which could help pay for their college costs if something were to happen to you before they reach adulthood.

On the other hand, if you’re in your 40s and don’t think you’ll need coverage that long, you might choose a 10-year term policy instead. The longer the term and the larger the death benefit, the more life insurance will cost you in premiums.

Recommended: Why Life Insurance is Important

3. Weigh the Benefits of Life Insurance for Children or Grandparents

Life insurance policies for children are typically permanent life policies. You pay in premiums and part of that money builds cash value. When your child reaches adulthood, they can take over the policy or withdraw the cash value and use the money to pay for college, buy a car, or fund other financial goals. (If their health has changed this could also be the only insurance they are able to get.)

Should you buy life insurance for children? It’s an important question to ask if you’re looking for life insurance for the entire family. You can purchase life insurance for kids at fairly low premiums, and your child can decide later if they’d like to keep the policy or cash it in. Another alternative: You might be able to grow that money by investing the premiums you would have paid to life insurance into a 529 college savings account or investment account for your kids instead.

Purchasing a burial insurance policy for your aging parents can make sense if you don’t want to be facing a large bill from the funeral home while you’re grieving. Burial coverage is generally the most affordable life insurance for seniors, since it has a low death benefit. You may be able to get coverage for as little as $50 a month.

4. Choose Guaranteed Renewal

If you’re purchasing term life and you think there’s a chance that you might need coverage for longer than the initial term, consider getting a policy with guaranteed automatic renewal. Having that benefit built in means that you can renew your policy once the initial term expires, without being subjected to an increase in premiums due to age or health. Just be aware that your new premiums will likely be much, much higher.

5. Be Selective About Riders

Life insurance riders can enhance your coverage. While some may be included at no charge, others can increase your premiums by a few dollars each. Some of the most commonly added riders include:

•   Accelerated death benefit

•   Accidental death

•   Guaranteed insurability

•   Waiver of premium

•   Child rider

•   Critical illness coverage

•   Disability coverage

Any of these riders can make your policy more comprehensive. But if affordable life insurance is the goal, then it’s important to consider whether they’re worth the added cost. Accelerated death benefit riders, for instance, pay out benefits while you’re still living to help with end of life care. That could be worth paying for if you’re concerned about developing a terminal illness. However, you won’t use that benefit if you die in an accident or from old age.

Recommended: How Long Do You Have to Have Life Insurance Before You Die

Tips for Saving Money on Life Insurance

Finding affordable life insurance can be a challenge, but it helps to have a strategy. Do your homework so you’re not buying more coverage than you need or choosing the wrong kind of policy. Here are a few more tips for saving money on life insurance as a family:

•   Consider an online insurance company, which may charge lower premiums than a traditional insurer.

•   Buy sooner rather than later to get the best rates available for your age and health.

•   Ask your insurance company about any discounts you may qualify for.

•   Get multiple life insurance quotes to compare rates across companies.

•   Take care of yourself as much as possible, since staying healthy can influence your insurance rates.

With most life insurance policies, you may be asked to complete a medical exam. This exam is used to determine your health status and how much you’ll pay for premiums. You can, however, opt for a no exam policy if you’d like to get covered online without having to see a doctor.

The Takeaway

Finding affordable life insurance may seem a little overwhelming, but it doesn’t have to be. Start by reviewing your workplace benefits for group coverage that might be subsidized by your employer. Then, given a choice between term life and whole life insurance, term life is the more affordable option. Also, the sooner you purchase a policy the better, since premiums are tied to your age and health. Last, shop around for the best deal, and ask if you qualify for discounts.

You can start your search for life insurance online with SoFi. We’ve partnered with Ladder to make it easy to find affordable life insurance plans with coverage ranging from $100,000 to $8 million. You can get a quote and apply online in minutes.

Photo credit: iStock/gradyreese

Coverage and pricing is subject to eligibility and underwriting criteria.
Ladder Insurance Services, LLC (CA license # OK22568; AR license # 3000140372) distributes term life insurance products issued by multiple insurers- for further details see ladderlife.com. All insurance products are governed by the terms set forth in the applicable insurance policy. Each insurer has financial responsibility for its own products.
Ladder, SoFi and SoFi Agency are separate, independent entities and are not responsible for the financial condition, business, or legal obligations of the other, SoFi Technologies, Inc. (SoFi) and SoFi Insurance Agency, LLC (SoFi Agency) do not issue, underwrite insurance or pay claims under LadderlifeTM policies. SoFi is compensated by Ladder for each issued term life policy.
Ladder offers coverage to people who are between the ages of 20 and 60 as of their nearest birthday. Your current age plus the term length cannot exceed 70 years.
All services from Ladder Insurance Services, LLC are their own. Once you reach Ladder, SoFi is not involved and has no control over the products or services involved. The Ladder service is limited to documents and does not provide legal advice. Individual circumstances are unique and using documents provided is not a substitute for obtaining legal advice.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

SOPT0822005