Purchasing a life insurance policy? 

A closer look at costs, categories and steps you need to consider taking. 

Article published: June 16, 2023

By: Robert Bain, CLTC® Insurance Director

You may have questions like do you need life insurance (if you have people financially dependent on you, yes) and how big a policy should you get (your annual income times the number of years until retirement). In this article, we’ll cover how to select your policy and how much you can expect to pay.


Generally speaking, there are two categories of life insurance: Permanent and Term. As the name indicates, permanent life insurance (like Whole Life or Universal Life) creates a death benefit that can be available all the way to age 100 and beyond. Term life insurance, on the other hand, is used to provide death benefit protection for a period of time (aka the “Term”). Common term policies provide level coverage for 10, 20 or 30 years. There are some circumstances where permanent coverage is essential, like covering estate taxes or funding a Special Needs Trust, but the vast majority of families only need life insurance protection to replace lost income during the time they’re raising kids, or until they reach retirement. Term Life is far more affordable than permanent life, and is the best fit for family protection.

How much will it cost?

Term Life in most cases is affordable, and you can purchase a policy for a specific amount of time.

For example, a $2 million, 20-year term policy for a healthy 40-year-old can cost around $77 a month for women and $92 a month for men, according to quotes provided by Crump Life Insurance Services.

Policies are available for different amounts of time (like 10 or 30 years, for example), and there is never a penalty for canceling the policy midterm.

The cost will vary depending on what risk (or underwriting) class you fall into. For example, someone in excellent health may be classed in the “Super Preferred” category, while someone might be in the “Preferred” class if they’re taking one medication or the “Standard” category if they are taking multiple medications. Other details like your height and weight, your driving record, and hazardous occupations or hobbies can also play a role. The terms for different underwriting classes may be slightly different among carriers. The categories are broken down further by whether or not someone is a tobacco user.


Fortunately, consumer protections are in place in each state to help. Regulations require carriers to file the premium with the state and prohibit them from selling it at a different premium. In other words, the same policy with a specific insurance company – based on the same coverage details and the same underwriting class (such as “Preferred Non-Tobacco”) – will cost the same, regardless of who you purchase it from. There are no discounts, sales or deals.


You can purchase a policy from an agent, a broker, or in some cases directly from the carrier. Our recommended approach is to use a broker who can show you quotes from multiple carriers, to help you find the most competitive option.


When you apply for a life insurance policy, you will complete an application that provides some medical information for the carrier to determine your underwriting category. You may need to go for a physical with your own doctor, but in most cases, the carrier will have a nurse practitioner come to your home to do an exam and send your samples to a lab. After processing, the lab sends the results to the carrier, who in many cases may also request additional information from your primary care doctor or other medical providers. They will use the information to determine which risk category you’re in – and consequently, your premium.


Once you have a policy in place, there is very little follow-up service required. You’ll need to inform the carrier if you move, if you need to change your premium payment details, or to request the appropriate form if you need to change your beneficiaries.

Life insurance is an essential part of an integrated financial strategy because it can help safeguard your family’s future.

Neither Financial Engines Advisors, L.L.C. nor any of its advisors sell insurance products. Edelman Financial Engines affiliates may receive insurance- related compensation for the referral of insurance opportunities to third parties if individuals elect to purchase insurance through those third parties. You are encouraged to review this information with your insurance agent or broker to determine the best options for your particular circumstances.

Robert Bain, CLTC®

Insurance Director

With more than two decades of industry experience, Robert Bain leads the Edelman Financial Engines Insurance Department. He holds the CLTC® (Certification for Long-Term Care) professional designation and is our firm’s subject matter expert on insurance solutions, meeting with our planners and clients to help ensure their insurance needs are addressed as part of our integrated financial planning process.

    When to buy Long-Term Care insurance

    Is Long-Term Care insurance worth it?

    7 types of insurance policies you do and don’t need

    Get water and sewer line insurance protection