The average cost of a 20-year, $500,000 term life insurance policy for a healthy 30-year-old is $229 a year. A whole life insurance policy for the same amount will cost a healthy 30-year-old an average of $373 a year.
However, several factors contribute to your policy premium, including your age, health and desired type and amount of coverage. We’ve analyzed rates from top life insurance companies so you can get an idea of how much you may need to budget for life insurance costs.
How much is life insurance?
For a 20-year, $500,000 term life insurance policy, a 30-year-old woman can expect to pay an average of $205 a year. A man of the same age can expect life insurance costs of about $352 a year.
Whole life insurance, which is a type of permanent life insurance, offers long-term protection but at a higher rate. A 30-year-old woman shopping for a $500,000 whole life policy can expect an average life insurance rate of $352 per year. The same policy would cost a 30-year-old man an annual average of $394.
Average annual cost of a $500,000 life insurance policy by age, gender and policy type
Term life insurance rates by age
Term life insurance rates are cheaper than those for permanent life insurance. The younger and healthier you are when you purchase a policy, the lower your rates for term life insurance will be.
Term life insurance costs for women — 20-year life insurance policy
Term life insurance rates are generally cheaper for women. The table below provides the average cost of term life insurance for women from age 30 to age 60, with coverage amounts from $250,000 to $2 million.
Term life insurance costs for men — 20-year life insurance policy
When compared to term life insurance rates for women, men tend to pay more, and the difference increases with age. The table below provides the average cost of a 20-year term life insurance policy for men from age 30 to age 60, with coverage amounts from $250,000 to $2 million.
Life insurance costs by term length
The term length you choose will play a major factor in your life insurance cost, with longer terms leading to higher rates when all other factors are the same. The table below shows average life insurance rates for a $500,000 life insurance policy based on the term length.
Life insurance cost without a medical exam
Many life insurance companies offer no-exam life insurance. This life insurance product allows eligible individuals to skip medical exams, which are required for life insurance policies that undergo traditional underwriting.
The table below shows the average cost of no-exam life insurance policies with a 20-term and $500,000 in coverage.
Average permanent life insurance rates
Permanent life insurance is more expensive than term life coverage because it lasts a lifetime and typically includes a cash value component in the form of a savings or investment account.
There are multiple types of permanent life insurance, including whole life insurance, universal life insurance, guaranteed universal life insurance and indexed universal life insurance. The type of coverage you choose is one of the factors that will dictate your life insurance costs.
Average cost of a whole life insurance policy by age
Whole life insurance is more expensive than term life insurance because it includes a cash value component and lasts a lifetime. The tables below provide average whole life insurance rates by age and gender.
Life insurance rates of a whole life policy for women
Life insurance rates of a whole life policy for men
Factors that affect life insurance rates
Insurers use several factors to determine how much life insurance costs. When you purchase a policy, your life insurance cost will be based on:
- Age. The younger you are, the lower your premium.
- Gender. Women tend to pay less than men for coverage.
- Policy type and coverage amount. Term life insurance is cheaper than permanent life insurance policies, and the more coverage you buy, the higher your premium will be.
- Height and weight. Insurers use your height and weight as a baseline indicator of your health. People with a higher body mass index (BMI) typically have higher rates.
- Health. The healthier you are the more likely you are to qualify for lower rates when compared to someone with health issues. People with a history of health issues or chronic, critical or terminal illnesses may also find it difficult to be approved for some types of life insurance.
- Health history of your immediate family. If your parents or siblings have health issues, you may pay more than someone without that history.
- Nicotine or marijuana use. If you smoke or use other forms of tobacco or nicotine, such as vaping or chewing tobacco, you will pay more for coverage. Using marijuana can also increase your life insurance rates.
- Risky occupations and hobbies. Some jobs and hobbies are riskier than others. If you are a police officer, you may pay more for life insurance than an accountant, for instance.
What’s the right amount of life insurance for me?
The amount of coverage you need often depends on your reason for buying a life insurance policy. You might be looking to ensure your loved ones have enough coverage to manage the loss of your salary or cover a mortgage when you die. Or you may want life insurance so your family can cover the cost of your funeral expenses.
To determine how much coverage is right for you, identify and add up the expenses you want to cover or the income you want to replace.
Some factors to consider include:
- Your earnings over the expected course of your working life. If you expect to work until age 60, add up your projected earnings over that time so your loved ones can continue to depend on that income.
- Financial goals and obligations. Do you have a mortgage? Plan to pay tuition for your child’s education? Your existing and expected financial obligations can help you determine how much life insurance coverage you need.
- How long you want to support your family. Do you want your benefits to support your loved ones for a few years or for a decade or more? The longer your timeline, the more coverage you need to ensure adequate support.
- Inflation. A death benefit of $250,000 today likely won’t go as far 10, 20 or 30 years from now. Though you can’t predict the exact amount of inflation, it’s worth considering it when you’re selecting a coverage amount.
Another more straightforward way to choose a coverage amount is to multiply your annual income by 10. Just keep in mind that this method is best used as a starting point rather than a final solution. Otherwise, you may not choose a policy with enough coverage, especially if you are planning to have kids or are expecting to earn a higher income in later years.
Wondering which company to choose for life insurance? Learn more about Gerber Life Insurance Company.
Are life insurance costs worth it?
A life insurance policy and the associated costs can be worth it, especially if any of the following are true:
- You have dependents that rely on you for financial support.
- You have a mortgage and want to ensure your loved ones can maintain payments after you die.
- You want to provide a means to pay for a child’s education if you die before they graduate.
- You are a business partner and are considering life insurance as part of a succession plan or buy/sell agreement.
Life insurance costs may not be worth it if you don’t have dependents who rely on you or if you have other means to support loved ones after your death, such as money in savings or a retirement account.
The best way to determine if life insurance is worth it for you is to speak with a trusted financial advisor who can look at your entire financial picture and discuss your goals while alive and in the event of your death.
How can I lower my life insurance rates?
The best way to get the cheapest life insurance rates is to purchase coverage when you are young and healthy. Other ways to lower your life insurance costs include:
- Improving your overall health and eliminating risk factors, like smoking.
- Choosing a term life insurance policy over a permanent life insurance policy.
- Lowering your coverage amount or reducing your policy term, though always weigh the pros and cons before making these decisions.
- Shopping around and getting at least three quotes before you choose a policy and life insurance company.
- See if you’re eligible for any discounts, such as a bundling discount if you purchase a life insurance policy from the same company from which you purchase other types of coverage, such as homeowners insurance or auto insurance.
