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What is the average cost of life insurance?

When looking for life insurance, the cost is undoubtedly one of the factors you will consider. But policy pricing is complicated - even for term life insurance (which is simpler than permanent life). The cost of life insurance depends on a range of variables, including the type of policy you buy, age, gender, health, lifestyle, medical history, and how much coverage you want.

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To help you sort through these factors, we've researched rates across more than a dozen insurance companies rated A or better by AM Best. We've looked at policy premiums with different coverage amounts, terms, and applicant ages to give you an idea of ​​how much you can expect to spend — or if you're currently paying too much. All charts refer to term life policies unless otherwise noted.

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  • The average cost for a 20-year policy of $250,000 at age 35 is about $14 per month.
  • The cost of insurance increases exponentially as you age.
  • Women usually pay less for life insurance than men, and the disparity increases with age.
  • Smokers who are in good physical condition, on average, pay more than non-smokers who are overweight and have problems with blood and cholesterol.
  • The cost of a life insurance policy can be 5 to 20 times the cost of life insurance policies because it is designed to cover your entire life and includes a cash value.

The cost of life insurance by the provider

Since each life insurer has its own standards for pricing policies, the rates between them for the same type of coverage can vary - sometimes dramatically. This is illustrated in the following graph, which shows the quoted average monthly rates for male and female non-smoking applicants with no health problems for a $250,000 20-year policy.

The cost of life insurance by the provider

Since each life insurer has its own standards for pricing policies, the rates between them for the same type of coverage can vary - sometimes dramatically. This is illustrated in the following graph, which shows the quoted average monthly rates for male and female non-smoking applicants with no health problems for a $250,000 20-year policy.

  • Monthly rates for a 20-year policy of $250,000
  • 25 years 35 years 45 years 55 years
  • Signboard $12 $13 $24 $53
  • protected $12 $13 $24 $53
  • owner $12 $13 $25 $54
  • Pacific life $12 $13 $25 $56
  • SBLI $12 $13 $25 $66
  • Lincoln $13 $13 $25 $58
  • Haven Live $13 $14 $27 $60
  • incurred $13 $16 $29
  • Omaha federation $14 $16 $31 $69
  • precaution $18 $20 $31 $70

* Bestow has not created quotes for 20-year policies for 55-year-olds

For example, a 35-year-old might pay $20 per month with Prudential, but only pay $13 per month for a similar policy with SBLI. In fact, as you get older, the price gap widens (making it necessary to shop, especially at 45 and over). This is most evident in the quotes we collected at age 55. The difference between insurance with Prudential, in this case, rather than Banner might be more than $200 a year for the same $250,000 of coverage and a 20-year term.

We also found that while some companies have lower rates for a certain age, term, and amount of coverage, they end up being among the most expensive as coverage and age change. SBLI is one such example. For a 20-year policy of $250,000, the SBLI was among the most expensive policies for people ages 25, 35, and 45. But at 55 years old, he was the third most expensive.

Some life insurance quotes indicate important features, such as a company rating and passengers that are included or provided for an additional cost, such as an ADB rider or property transfers.

The average cost of life insurance by death benefit

Besides the individual factors used to determine how much you will pay for life insurance, the cost is also affected by the value of your death benefits. We calculated the average monthly premiums for healthy, non-smoking men and women of different ages across 10 insurance companies for $100,000, $250,000, and $500,000.

As the death benefit increases, of course, the cost increases with it. The longer you wait to buy coverage, the more pronounced this effect will be. For example, a 45-year-old would pay $27 per month, on average, for a 20-year policy with $250,000 in death compensation, and $46 per month for $500,000 coverage. But wait 10 years, and the average cost per policy will more than double.

The average cost of life insurance by gender

On average, women live five years longer than men, so it is not surprising that the average cost of life insurance for males is generally higher than for females. For example, at age 25, males generally pay a few dollars (about 15%) more per month than females for a $250,000 20-year policy. But the price difference becomes more significant over time. At age 55, women pay $46 a month, on average, for a 20-year $250,000 policy, while men pay $61 — 33% more, working an additional $184 a year.

The average cost of life insurance based on health

To date, our data have focused on reasonably healthy, non-smokers. And while this is a good way to explain differences in cost by insurance company, amount of coverage, and gender, we also need to consider different health situations to understand why life insurance premiums differ from the total rate.

Classification Categories

Insurance companies take into account your health and whether you smoke to determine the "risk category" they will put you in, which indicates how much they will charge you for coverage. Categories of risk often include:

  • Favorite Plus: Exceptional health history, no medical issues, normal body mass index (BMI) and blood pressure, and no cholesterol issues. If your driver's license has been suspended or you've had more than two accidents in the past three years, you probably won't qualify for this category.
  • Preferred: very good health, although not perfect. If you have certain medical conditions that you control with medication, you can still qualify in many cases. Even if your health is excellent, dangerous activities or hobbies may put you in this category.
  • Standard Plus: This category can be used when you have minor health issues and do not qualify for the above qualifications, such as if your BMI is higher or you are overweight.
  • Standard (or Standard) and Other Categories: There are many other classifications, including "smoker" classes, which an insurance company may use based on their underwriting criteria or if you do not qualify for any of the above.
The more information the insurance company asks you to provide, the lower the potential price. This is because applicants usually qualify for the best risk categories when they are asked to provide more detailed information.

We looked at life insurance premiums of $250,000 for 20-year life policies for male and female applicants, 25- to 65 years old, with different risk ratings (preferred plus, preferred, normal, smoker's preferred). What we found is basically twofold, not surprising:

Smokers pay more. We collected prices for preferred smokers, i.e. those who are reasonably healthy and smoke infrequently, and found that even at age 25, males would prefer smokers to pay about 69% more (about $27 per month) than their non-smoker counterparts. Smokers who are in a good physical condition also pay more than non-smokers who are overweight and have problems with blood and cholesterol.
Age exaggerates the differences in premiums between groups. If a male smoker is 65 years old instead of 25 but is still healthy, he will pay an additional $465 per month in order to get the same $250,000 20-year coverage as a male preferred non-smoker — roughly From an additional $5,600 per year! But even our favorite chimney is no better. You'll pay over $4,000 annually for similar coverage.
Some insurance companies are more lenient or open to writing policies for people with health risks, which is another reason why it's important to shop for life insurance quotes.

John Hancock has multiple programs that cater to specific health profiles. It has a plan for type 1 and types 2 diabetics, an incentive program to quit smoking (which offers participants non-smoking rates for three years), and a lifestyle and fitness-based discount program.

The average cost of life insurance by the length of term

How long you want coverage for also affects how much you'll pay. Term insurance is available through various insurance companies for periods as short as one year and can extend up to 40 years. Premiums vary greatly between terms for older applicants.

We calculated the average monthly cost of life insurance for healthy, non-smoking male and female applicants for 10-year, 20-year, and 30-year life insurance policies with a death benefit of $100,000. We found that 25- to 35- and 45-year-olds can expect to pay a few extra dollars per month up from 10-year to 20-year coverage, and also from 20- to 30-year coverage. However, 55-year-olds can expect their monthly premium to more than double if they prefer 30-year coverage instead of 20-year coverage.

Eligibility for longer periods

When you buy a life insurance policy, your age and health status at the time of application affect not only the cost but how long the company will insure you. For example, most insurance companies issue a wide range of term policies with terms up to 40 years. But if you want a 35-year policy, you'll need to be in good health and not be over 50 to qualify. Twenty-year term policies are only available if you are under 65 (or possibly 70 if you are otherwise healthy). Banner has a 40-year policy and is only available for purchase until the age of 45.

The average cost of whole life insurance

Permanent life insurance, such as universal and full life insurance, follows the same pattern. However, they are more expensive than long-term policies because they are designed to last a lifetime. In the following chart, you can see that the cost of permanent insurance rises exponentially with increasing coverage and age. A 35-year-old who wants a $250,000 death bonus might pay $239 per month (and would pay nearly twice that for double the coverage). However, a 60-year-old could pay $785 for the same $ 250,000-lifetime coverage — more than three times what a younger man would pay per month, or an additional $6,546 per year .

If you're confident that you want permanent coverage (which won't expire after a certain number of years), it always makes sense to get it when you were young. Not only is the cost more manageable, but you can develop one or more health problems as you age that makes you uninsurable.

For consumers who want some permanent coverage, but can't afford a permanent policy with enough coverage for their needs, it may make sense to supplement it with fixed-term insurance. For example, a 25-year-old might purchase a $100,000 full life insurance policy for $71 a month and supplement it with a $250,000 20-year life insurance policy for an additional $13 a month. That would give him a combined death compensation of $350,000 for $84 a month. This strategy will pay a higher coverage cost while, say, he's building a family and has a new mortgage. After the term expires, his children may grow up and his mortgage is paid off, so he would not need to file such a reduction in death benefit.

Our research found that the average cost of whole life insurance ranges from five to more than 20 times as much as a life insurance policy, depending on the insured's age, amount of coverage, and term. Whole life insurance is more expensive than term because it is a type of permanent life insurance and includes a cash value that you can borrow or withdraw from.

The cost of life insurance for children

There aren't many options available when it comes to life insurance for children: fewer companies offer it, and when they do, the maximum death benefit may be set at $30,000 or $50,000. However, children's life insurance can be purchased as term coverage (as a contestant on a parental policy, for example), or as a permanent, stand-alone policy for life.

Like adult insurance, the younger your child is, the lower the monthly premium. For example, Mutual of Omaha and Globe Life both offer child policies. For permanent coverage of $30,000, you'll pay about $13 per month (with any insurance company) for a 5-year-old, and about $18 per month for a 15-year-old. Lifetime policies for children also build accessible monetary value during your child's life.

If you purchase the term passenger for your child as an addition to your policy, verify that the passenger has a transferred benefit—in other words, make sure your child's insurance coverage can be converted into a permanent policy once they reach the age of majority, without evidence of insurance potential.

methodology

We obtained quotes and eligibility criteria from over a dozen life insurance companies using insurance websites, online brokers, and price comparison sites. Life expectancy rates for females (5'8" 130 lbs) and for males (6'0" 170 lbs) were collected. They were non-smokers, did not take any medication, had no history of family health problems, and lived at the 90,666 ZIP Code.

Preferred, Preferred, Regular, and Preferred smoker rates were collected to compare rates based on different health profiles. Child life insurance rates do not depend on health questions; Prices are taken directly from the pricing tables or quotes on the life insurance company's website. The number of insurance carriers used in the "average" calculations varied depending on product availability.

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