Why the Cheapest Quote Is Often Not the Best
Most people shopping for life insurance make one mistake: they sort by price and pick the cheapest option. Price matters, but it is only one of eight factors you should compare. A policy that is $10/month cheaper but excludes a critical condition, has a slow claims process, or comes from a financially unstable insurer can cost your family far more than the premium savings.
This guide walks you through exactly what to look for when comparing quotes — so you make a decision you will not regret.
The golden rule: Compare at least 3 quotes before buying. Premiums for identical coverage can vary by 30–50% between insurers for the same person.
1. Coverage Amount
Before comparing quotes, you need to know your target coverage amount. Use our free DIME calculator to get your personalised number. Then compare quotes for that specific amount — do not let insurers talk you up or down without good reason.
2. Policy Term
Make sure you are comparing like-for-like terms. A 20-year term policy will be cheaper than a 30-year term, but they are not equivalent products. Match the term to your longest financial obligation — typically your youngest child reaching adulthood or your mortgage being paid off.
3. Level vs Decreasing Cover
Level cover pays the same amount whenever you die during the term. Decreasing cover reduces over time (designed to track a repayment mortgage). Level cover is more flexible and often worth the slightly higher premium.
4. Insurer Financial Strength Ratings
You are buying a promise that will be kept in 10–30 years. Check the insurer's financial strength ratings from agencies like AM Best, Moody's, or Standard & Poor's. Look for ratings of A- or above. A cheap policy from a financially weak insurer is a risk not worth taking.
5. Claims Payout Rate
This is one of the most important — and most overlooked — factors. What percentage of claims does this insurer actually pay? Reputable insurers publish their claims statistics. Look for a payout rate above 97%. Any insurer below 95% should be a red flag.
| What to Check | What to Look For | Red Flag |
|---|---|---|
| Claims payout rate | 97%+ | Below 95% |
| Financial strength | A- or above | Below BBB |
| Years in business | 20+ years | Under 5 years |
| Customer reviews | 4+ stars | Many claims disputes |
6. Policy Exclusions
Read the exclusions carefully. Common exclusions include:
- Death by suicide within the first 1–2 years of the policy
- Death related to undisclosed pre-existing conditions
- Death in certain high-risk activities (skydiving, motor racing, etc.)
- Death during participation in war or conflict zones
If you have specific health conditions or hobbies, check exclusions carefully before buying. Some insurers will cover conditions that others exclude.
7. Premium Guarantee Period
Are your premiums guaranteed for the entire term, or can the insurer increase them? Always opt for guaranteed premiums if possible — a reviewable premium policy can become significantly more expensive as you age.
8. Conversion and Flexibility Options
Can you convert a term policy to a permanent policy later without new medical underwriting? Can you increase coverage after a major life event (marriage, new child) without a new medical exam? These options add flexibility value that price alone does not capture.
💡 Pro tip: Use an independent broker rather than going direct to one insurer. Independent brokers can compare dozens of providers and often access exclusive rates not available to the public — usually at no extra cost to you, as they are paid commission by the insurer.
The Comparison Process: Step by Step
- Calculate your needed coverage using our free DIME calculator
- Decide on term length (match to your mortgage or youngest child's dependency period)
- Get at least 3 quotes from different insurers or through an independent broker
- Check each insurer's financial strength rating and claims payout rate
- Read the exclusions on any policy you are seriously considering
- Confirm premiums are guaranteed, not reviewable
- Buy — and review every 3–5 years or after major life changes