Life Insurance Cost

The cost of life insurance is dependent on your unique profile and the type of policy you are getting.

Life insurance provides a financial safety net that you'll potentially be paying premiums toward for decades. That’s why it’s important to understand the cost of your policy. After all, letting a policy lapse because you can’t afford it defeats the purpose of having it in the first place.

Your policy’s premiums are determined by your policy details, such as the term length and coverage amount, and your own circumstances, like your health, age, family background, and lifestyle choices. Working with an independent broker is the best way to get the most competitive premiums.

Individual life insurance quotes depend on many factors, which assess your risk. A healthy 35-year-old male can expect to pay about $28.97 in monthly premiums for a 20-year, $500,000 policy as of February 2021, while a 35-year-old female may pay $24.39.

Life insurance cost is determined by five main factors: your age, your gender, your policy type, your health, and your hobbies.

Your premium is set when you sign your policy, and it won’t change during the term of the policy. But, as you age, the cost of purchasing life insurance increases. Each year that you delay buying a life insurance policy, the cost of premiums increases by 4.5-9% on average. Because women tend to live longer than men, they also receive lower life insurance rates.

Your best bet to lock in cheaper rates is to purchase a term life insurance policy, where the premiums remain the same throughout the entirety of the policy, while you’re young and in good health.

How much life insurance you need is a two-part question: how much coverage you need (the death benefit), and how many years you need that coverage to last (the term). The longer your policy lasts and the greater your coverage, the higher its cost.

The table below demonstrates average monthly term life insurance rates by policy size & length:

The type of life insurance you have affects the cost of your policy. A term life insurance policy is the most common and most affordable; a permanent policy is more expensive but has extra perks, like an investment-style cash component.

Your health status is one of the most important factors in determining your premiums. The healthier you are, the less likely you are to die, and thus cheaper to insure. During the underwriting process, you’ll have to answer some questions about your health and your family health history and take a brief medical exam. The insurance company may also request an Attending Physician’s Statement (APS) from your doctor to get their assessment of your health as well.

Some health-related factors that might result in higher premiums include:

• High blood pressure
• High cholesterol
• Diabetes
• HIV/AIDS
• Hepatitis
• Recreational drug use
• Nicotine use
• Chronic illness

While any of these could raise your life insurance costs, each life insurance company evaluates every health condition differently. It's possible to find providers to accommodate your lifestyle or health history, which is why it’s important to shop around.

Average term life insurance rates by age

We started our evaluation by showing the change in average life insurance rates for different age groups. Life insurance companies will use age as a determinant for life insurance premiums. Rates will continue to increase as you age due to a decrease in your total life expectancy.

The term life insurance quotes below are for a 20-year term life insurance policy with a death benefit of $500,000.

Through our findings, you can see that the increase in monthly premiums as you age is much smaller if you are young, compared to when you are older. For example, the average life insurance quote only increases by 4% between ages 25 and 30, but it jumps much higher between ages 60 and 65 — an average increase of 86%, or $275.

As you can see, differences in premiums are even greater if you smoke. Smokers, on average, pay premiums that are 218% higher for life insurance policies when compared to applicants who are nonsmokers.

Average cost of life insurance by gender

Besides age, life insurance quotes will vary depending on your gender. On average, men will pay 23% more for term life insurance than women.

This is due to the fact that men tend to have a shorter life expectancy compared to women. Life insurers take this into account and thus will charge a man more expensive rates than a woman who is the same age.

Term life insurance rates by policy size

Your life insurance policy's face value, which is the dollar amount that would be paid to your beneficiaries when you die, is essential to your financial planning. For this reason, you should carefully evaluate and calculate the correct face value depending on your assets and future expenses. By choosing an accurate face value for your life insurance policy, you can adequately provide for your loved ones.