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Today we’ll show you the average life insurance cost by age, state, company, plan type, and tier.
The cost of individual life insurance can vary significantly depending on numerous factors considered when determining the premium. Age, gender, overall health, lifestyle, and even occupation can dramatically influence the amount you'll pay for coverage.
The type of policy you choose, such as term or whole life insurance, and the desired coverage amount will also contribute to the overall cost. Therefore, it's crucial to thoroughly explore your options, compare quotes from different providers, and seek professional advice to secure the most suitable policy tailored to your needs and budget.
Investing in individual life insurance can offer financial protection and peace of mind for you and your loved ones and serve as a practical tool for estate planning and wealth accumulation.
As of March 2023, the average monthly premium for a term life insurance policy with a face value of $500,000 and a term length of 20 years will be approximately $30.15 for a healthy 35-year-old male, while the average monthly premium for a healthy 35-year-old female with the same term length and policy amount would be roughly $25.43.
In most cases, whole life insurance is more expensive than term life insurance. This is because whole life insurance lasts for a longer period of time and includes an additional savings component. In fact, whole life rates are anywhere from five to fifteen times more than term rates. As of March 2023, a non-smoking 35-year-old guy in good health can anticipate to spend approximately $571 per month for a $500,000 whole life insurance policy with premiums paid in full by age 99.
According to research, the monthly premium for a term life insurance policy that is in effect for 20 years and offers a death benefit of $500,000 costs approximately $147. Consider this number to be nothing more than a starting point; the actual cost of life insurance for you will vary depending on factors such as your age, the insurer you go with, and the amount of coverage you buy.
If you are 25 years old, the average rate for term life insurance is $288 per year; if you want to buy term life insurance until you are 65 years old, the average rate is $5,138 per year. The rate is higher if you want to buy term life insurance until you are older than 65. There is a 4.5% to 9% increase in the cost of your life insurance policy for every year that you are older.
According to life insurance companies, this is because you become a higher risk to insure as you age. Purchasing insurance when you're still relatively young can help you lock in the market's best premiums.
There is not a significant difference between the costs of life insurance from one state to the next. However, the average characteristics of buyers in a given region, such as age, height, and weight, do differ from one another. MoneyGeek gathered quotations for the cost of life insurance coverage for the state's typical purchaser profile and compared them across all 50 states in the United States.
The state of Colorado offers the most reasonably priced life insurance policies for both 10- and 20-year terms, with coverage amounts of $250,000 costing an average of $161.03 and $199.68 per year, respectively.
On the other hand, the state of West Virginia has the most expensive average life insurance policy for a 10-year term at $242.95 per year, while the state of Maine has the most expensive 20-year policies at $260.75 per year on average. Both of these states' policies are the most expensive overall.
In any state, a typical customer should be able to obtain coverage of at least $250,000 wherever they go.
Permanent life insurance, which includes whole, universal, and variable life insurance, and term life insurance are the two primary categories of life insurance policies available. Each type grows and pays death benefits differently, and each insurance cost has very different prices.
According to research conducted by S&P Global Market Intelligence in 2019, the following is a breakdown of the key differences between each type, as well as the average cost of each option:
Age is one of the essential elements that play a role in determining the cost of a life insurance policy. The younger you are when you purchase a life insurance policy, the lower the premiums will be. This is because people of younger age are, on average, healthier and have a lower risk of passing away than people of older age. Because your chances of passing away rise as you get older, purchasing a life insurance policy during this stage of your life will cost you more money.
Your current health status is another factor that will be taken into consideration when determining the price of your life insurance policy. If you take care of your health and maintain a healthy weight, you can expect to pay a lower premium for life insurance than someone overweight or obese. This is because those in good health have a lower risk of passing away than those in poor health.
Your health class can significantly impact the cost of your insurance policy, which is why insurance companies use medical exams and other information to determine it.
Your way of life is another component that can play a role in determining the cost of your life insurance policy. Suppose your job or hobby involves significant risk, such as skydiving or rock climbing. In that case, you can expect to pay a higher life insurance premium than someone with a less hazardous occupation or pastime.
This is because people who lead riskier lifestyles are more likely to die than those who lead safer lifestyles. Insurance companies will use this information to categorize your level of risk, which will, in turn, affect the premium they charge you.
Your life insurance policy's premium will also be affected, to some degree, by the amount of coverage that you purchase. The greater the coverage you purchase, the higher the premium for your policy will be. If a more comprehensive policy covered you at the time of your death, the insurance company would be required to pay out a more significant death benefit.
The cost of your life insurance policy will also be affected by the length of the term of your policy. The policy cost will go up proportionately to the length of the term selected. This is because a more extended term indicates that the insurance company will be required to make payments for a longer period in the event that you pass away while the policy is still in effect.
If you work in a profession that puts you at increased risk of injury, such as being a firefighter or performing professional stunts, you may have a difficult time finding an insurer willing to provide you with a life insurance policy. If you successfully find one, you will most likely be required to pay a higher premium because the nature of your work may negatively impact your health and safety.
In some states, you can use a credit-based insurance score to determine your premiums, which takes into account your credit history. If you live in one of these states and have a good credit history, you might be eligible for a lower premium payment.
Lenders' scores are not the same as those of credit-based insurance companies, but they are based on similar information. Ninety percent of the top lenders use the FICO® Score. The same actions that you would take to improve your FICO® Score, such as making payments on time and reducing the balances on your credit cards, are likely to positively affect the credit-based insurance score assigned to you as well.
Regardless of who you are, life insurance offers crucial protection for you and your family. According to a 2020 report by the CDC, females typically pay less for life insurance because they have a longer life expectancy (80.5 years) than males (75.1 years).
One of the key factors insurance companies take into account when determining your premium is your own health. However, your insurer might raise concerns if there is a history of serious illness or hereditary disease spanning several generations. When writing your policy, your insurer might ask for more information about your family history, for instance, if your father, brother, and uncle have all had prostate cancer (and hike your premium as a result).
Although certain external factors may permanently influence life insurance premiums, there are ways to reduce the associated costs. Use these suggestions before submitting a life insurance application to obtain a more affordable policy.
When selecting a life insurance policy, take your time. You'll have it for a very long time, after all. Be sure to obtain coverage that takes your projected needs into account.
Even though term life insurance may be more affordable now, a permanent life insurance policy may be better for your long-term objectives, given its cash value component.
Don't just choose the first policy that is offered to you. Do your research and compare rates from various insurers, as some weigh your age, gender, and other factors differently.
Consult a professional if you're still unsure of the type of coverage to purchase or the insurer to use. Many independent agents who aren't affiliated with any specific insurer are available, and they can provide unbiased guidance regarding the provider to apply with and the appropriate level of coverage.
Although you shouldn't hurry the process, you should try buying life insurance as soon as possible. It is less expensive the earlier you purchase it.
As a takeaway, life insurance remains one of the smartest financial decisions you can make for yourself and your family. It provides a beneficial service for those without the means to financially provide for their loved ones – no matter what happens. The cost of such protection varies significantly based on individual circumstances, but as we proved today, it is not always as outrageous as one might think.
Whether you opt for term or permanent life insurance, finding a rate and plan that best suits your needs within your budget is essential. Ultimately, life insurance can be invaluable to everyone's peace of mind during unexpected challenges and adversity.
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