Can You Shop Around for Life Insurance Like Car Insurance?

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Shopping around for life insurance is a little different than getting other kinds of coverage.


key points

  • Life insurance is an important purchase.
  • Insurance buyers don’t want to pay more than necessary for coverage.
  • It’s possible to shop around when buying a policy initially, but it becomes more complicated to switch coverage later.

Buying life insurance is essential for anyone who has people depending on them. And most term life policies are pretty affordable, especially given the peace of mind they buy.

Insurance policies have varying prices from different carriers, though. So, since the price of coverage can change from one carrier to another, consumers may wonder whether it’s possible to shop around for coverage like for car insurance.

The answer is a little more complicated than it may seem, though.

When initially buying life insurance for the first time, it’s a good idea to compare prices and policy terms from multiple different insurance carriers.

By providing some basic health information and personal details, it’s possible to get quotes from different companies to see which one offers the most affordable rate for the coverage desired. This is especially essential for individuals who may smoke or who have medical conditions, as different insurers impose differing rate increases for people who present a higher level of risk.

After obtaining different quotes, it’s then important to move forward with applying for coverage from only one carrier as typically a lot of detailed health information is collected and a medical exam may even be required.

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When it comes to car insurance, most drivers should shop around for coverage around once every year or so. Shopping around is helpful in these circumstances because there may be different insurers offering a better rate, or because new coverage options may have become available.

Life insurance works a little differently, though, because policyholders can’t just switch policies without consequences. If a covered person were to change to a different carrier, they would have to go through the entire medical exam and risk assessment process again. And since they’d be older — and perhaps less healthy — the new policy might cost more or they might not be approved for a new policy at all.

There’s also a two-year contestability period after buying life insurance in order to protect the insurer from fraudulent claims. The insurer can review the initial application if a claim is made for a death benefit within that period of time, and if any information provided in the original documents was misleading, the insurer could deny the claim.

After switching policies, this contestability period would begin again and thus there could be an increased chance of a death benefit not being paid out after a coverage switch.

Because of the big potential downsides of switching to a different life insurance carrier, it’s usually best for most people to stick with their original policy once they get covered. This is why it can be so important to make sure to find the right insurance coverage in the first place.

Consumers should be aware they’re making a long-term commitment when they pick an insurer, and should make sure they do their research, compare quotes, and are going to be happy with the insurer for the entire term of coverage.

Our picks for best life insurance companies

Life insurance is essential if you have people depending on you. We’ve combed through the options and developed a best-in-class list for life insurance coverage. This guide will help you find the best life insurance companies and the right type of policy for your needs. Read our free review today.