How much should life insurance cost? See the breakdown by age, term and policy size
Life insurance can be a small price to pay if it guarantees peace of mind that your loved ones will be financially stable in the event of your untimely death. (iStock)
Life insurance can be a small price to pay if it guarantees peace of mind that your loved ones will be financially stable in the event of your untimely death. But the monthly cost of life insurance can vary widely depending on the type of insurance you have, as well as your age, gender and health status.
The analysis below shows the average cost of life insurance broken down in detail, so you can get an accurate idea of how much you should be paying for your monthly premiums. Data was collected June 16 and 18, 2021, from the Policygenius marketplace and assumes the policyholder is a nonsmoker with a Preferred health rating.
If you're shopping for life insurance, it's important to compare different types of policies at varying lengths and values to decide what's best for your family's needs. Plus, you may be able to secure a cheaper premium by comparing offers from multiple life insurance companies on Credible.
Here's the average cost of term life insurance by age, sex and policy value
Term life insurance is a policy in which you pay monthly premiums over a set time period, typically up to 30 years. If you die before the term expires, your beneficiaries will receive a death benefit payout. This is the traditional type of life insurance policy that helps you keep your loved ones financially protected if you die unexpectedly.
The monthly cost of term life insurance depends on the value of the death benefit, as well as the policyholder's age, sex and health status. The average premium for a $500,000, 20-year term life insurance policy for a healthy, young policyholder can be around $25 to $35 per month.
The table below breaks down the average cost of a 20-year term life insurance policy by age, sex and policy size using data from the Policygenius marketplace.
As you get older, life insurance rates increase up to 9% each year. And since women tend to have longer lifespans than men, they qualify for lower life insurance premiums.
For example, a healthy, 35-year-old female who takes out a 20-year term life insurance policy worth $1 million can expect to pay around $36 per month. A 60-year-old male who takes out the same policy will pay $493 per month, on average.
A policyholder's health rating will also impact the cost of their monthly premiums. For example, a male with a Preferred health rating can expect to pay around $29 per month for a $500,000, 20-year term life insurance policy. But if the same man had a Standard health rating, he could expect to pay $45 per month.
You may experience even higher life insurance premiums if you have high blood pressure, high cholesterol, diabetes or a number of other chronic illnesses. You'll also pay more for life insurance if you smoke cigarettes or use drugs recreationally.
The policy premiums referenced above are averages, but you may qualify for even lower rates by shopping around with multiple life insurers on Credible.
Life insurance policies with shorter terms tend to be cheaper
If you're looking for another way to save on life insurance premiums, consider looking into a shorter term. Put simply, you're less likely to die in the next 10 years than you are in the next 30 years, so it's less likely that a life insurance company will need to pay a death benefit if you have a shorter term. As a result, life insurance policies with shorter terms are usually cheaper than longer-term policies.
When shopping for life insurance, you should get rates for multiple types of policies from a few different life insurers. This ensures you're making the most informed decision possible before you take out a policy. You can compare rates on life insurance for free on Credible.
Whole life insurance has much higher premiums than term life insurance
Whereas term life insurance expires after a set term, whole life insurance lasts your entire life. Some policyholders view whole life insurance as more of an investment because it has a guaranteed cash value that you can tap into while you're still alive. But as a result, whole life insurance can cost up to 15 times more than term life insurance, according to Policygenius.
Whole life insurance premiums vary widely, costing anywhere from about $300 to $7,000 per month. The best way to lock in a cheaper rate on life insurance is to take out a policy when you're young and in good health. The table below shows the average cost of whole life insurance by age, sex and policy size.
The premiums on whole life insurance may seem high, but the amount you pay isn't a total loss. You're able to retain a guaranteed cash value in addition to a death benefit for your loved ones.
Not sure which type of life insurance policy you need? Visit Credible to compare your options and get quotes for both term and whole life insurance policies.
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