In 2002, a study into ‘Life Insurance in the Information Age’ was conducted by Austan D. Goolsbee and found that since the mid-90s, life insurance comparison websites online have reduced the average life insurance premium by over 20 percent. When you compare life insurance online you are giving life insurance companies an incentive to lower their prices and offer more competitive rates. So how do you go compare life insurance effectively?

First, decide if you need life insurance at this point in your life. You should do this before you compare life insurance. If you were to die at this moment, would your family be able to cover your debts, loans, and funeral expenses? Would they be able to continue living at the standard they are living at presently, (i.e. does your partner and/or children count on you for the basics; food, shelter, and transportation)? If the answer to either of these questions is ‘yes’ then it is highly recommended that you do a life insurance comparison and that you purchase life insurance.

People who are single, don’t have a large amount of debt, and/or are in relationships where the other partner also earns a considerable income, then life insurance may not be necessary at this point, especially if you have not yet started a family. However, it’s still advisable to talk to a financial adviser who can answer that question with a sound idea of your finances and stage of life.

If you are one of those people who should purchase life insurance, add up how much money you owe in credit cards, home loans, car loans, and any other debt you have outstanding. You can deduct from this amount what you have in savings and investments. One expert recommends that you buy life insurance for at least five years your annual income if not more. This is enough to cover the debt of most people and/or keep their family financially solvent until further arrangements can be made.

Remember that there are two kinds of life insurance and that both can be found when you compare life insurance. There is term life insurance and cash-value life insurance. Term life insurance will yield pre-determined payments for a set period. 100% of your premium will go to the cost of the policy. With a cash-value life insurance policy, however, only part of your premium pays for life insurance. The rest of the money will go into whatever other financial products the life insurance company offers, which are most often investments.For this reason, cash-value life insurance policies are more complex matters than term life insurance. If you also plan to deal in investments and are unsure if you can manage them yourself, a cash-value life insurance policy may be ideal for you.

Online life insurance comparison is one of the greatest tools you have on your side to not only insure your family for the future but to also save as much money as possible.