Life Insurance Rates: How Much Does Life Insurance Cost?

The cost of insurance can be less than you think.

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How much does life insurance cost?

While you may assume that life insurance policies with high coverage come with equally high premiums, that’s not necessarily the case. You can actually get significant coverage for very affordable rates—often more affordable than you think.

For example: a 40-year-old buying a 20-year term life policy with $500,000 in coverage will pay an average of $26 a month. Overall, that’s a small price to pay for the peace of mind of knowing your family would be protected financially if something were to happen to you. When you work with SelectQuote, you can even find life insurance for less than $1 a day.

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Term Life Cost vs. Permanent Life Cost: What’s the difference?

The most common types of life insurance that people choose between are term life or permanent life insurance (sometimes referred to as whole life insurance). The right fit for your needs will depend on your unique priorities and situation. One of the most significant factors to keep in mind when deciding between term and permanent life insurance, and the main difference between the two, is the cost.

Term Life Insurance is the Most Affordable Option
The average cost of term life insurance will vary from person to person depending on factors like health, age, and term length. For example, according to Forbes, term life insurance costs an average of $18 a month for a 30-year-old woman and $21 a month for a 30-year-old man for a 20-year, $500,000 term life insurance policy. Term policies can span anywhere from 10 to 30 years, but most term life policies have “guaranteed level” premiums, meaning you pay the same premium for the length of your policy. The premium can also usually be paid annually, and you may even receive a discount for doing so. At the end of the policy’s term length, the policy will expire unless you choose to renew or convert it. If you pass away while the policy is active, your beneficiaries will receive the coverage value you set when you purchased the policy.

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A Permanent Life Insurance Policy Literally Lasts a Lifetime
Unlike term life insurance, permanent life insurance is designed to last your entire lifetime. Premiums can also be fixed but may be five to 15 times higher than term life insurance. If you were to pass away while holding a permanent life insurance policy, your beneficiaries receive the fixed benefit set at the time you purchased your policy. Permanent life policies also have a cash value component, meaning that with every premium payment, a portion is placed into a savings account. The rules for the cash value component vary by provider, but you can typically borrow from it for a variety of expenses, like paying down debt, supplementing retirement income, or investing.

How are life insurance rates determined?

Part of the process of applying for life insurance is determining your monthly rates. This process is called underwriting, during which your health and lifestyle information will be evaluated by the carrier to assign your rates. Read on to learn more about the factors used to calculate your premiums.

The Type of Policy You Choose

Term life policies are typically more affordable than permanent life policies. Each year you delay buying life insurance, the cost can increase by an average of 8-10%. While both term and most permanent life premiums are fixed once the policy goes into force, permanent life premiums are generally more expensive.

The Amount of Benefit You Choose

You can typically expect to pay a higher monthly premium when you choose a higher benefit (also called the coverage amount) to be paid to your beneficiaries.

The Length of Your Term Life Policy

The longer your term, the more expensive your monthly premium can be. This is because the longer you have the policy, the older you get, and the greater the chance the insurance company will have to pay out the death benefit.

Your Health at the Time of Purchase

Most applicants must have a basic medical checkup before a policy goes into effect. Some factors that might result in higher premiums include high blood pressure, high cholesterol, HIV/AIDS and hepatitis, hypoglycemia, chronic illness, nicotine use, or recreational drug use.

Your Age at the Time of Purchase

Older individuals can expect to pay a higher premium for both term and permanent life insurance. The younger you are, the more affordable your life insurance premium is likely to be.

Your Hobbies at the Time of Purchase

Do you enjoy extreme sports or high-risk hobbies like scuba diving, skiing, or rock climbing? No surprise, you’re a bigger insurance risk, so you may pay a higher premium for both term and permanent life insurance.

Your Gender

On average, men can expect to pay higher premiums than women because men typically have a shorter average life expectancy than women.

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Things You Can Do to Lower Your Life Insurance Rates

If you’re concerned about the cost of life insurance, there are several steps you can take to try and lower your rates. Something as simple as applying for life insurance earlier in your life can help save you money in the long run. You can also make simple lifestyle changes to improve your chances of being quoted for lower premiums. Here are just a few of the ways in which you can try and lower your life insurance rates.

Apply sooner rather than later.
The cost of life insurance goes up the older you are, so a person in their 30s or 40s will pay much less for the same type of coverage than a person in their 50s and 60s. Younger people are also less likely to have chronic health conditions that often cause life insurance premiums to increase.

Stay on top of your medical conditions.
If you have a chronic condition, such as high blood pressure or diabetes, make sure you’re monitoring your status and following your treatment plan. Be sure to regularly check in with your doctor and let them know if your condition changes or if any medications you’re on no longer manage your condition.

Maintain a healthy weight.
Staying within a healthy weight range can help make you less of a risk to insurance companies. Being overweight is also associated with chronic conditions that come with higher mortality rates, such as heart disease. Work with your doctor to find out what a healthy weight range is for you and work to achieve it.

Quit smoking.
Tobacco use means higher life insurance premiums. You can lower your rate the longer you are tobacco-free. Note: this also includes e-cigarettes and vaping, as insurance companies view them as just as harmful as smoking.

Limit or avoid high-risk hobbies.
Frequent participation in high-risk hobbies like motorsports, hang-gliding, and hot air ballooning makes carriers view you as riskier to insure. If you limit these activities, your life insurance rate might be lower.

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The easiest way to learn more about your options for life insurance rates is by letting SelectQuote help. We can quickly help you determine what kind of policy is best for you and what might have an impact on your rates. Let us help you find the right coverage at the right price. We’ll do all of this in just minutes, as our proprietary technology allows us to search dozens of policies at once.

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