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What Is The Average Cost of Life Insurance? 7 Ways to Save Thousands of Dollars
We analyzed rates from various life insurance companies to determine the average cost of life insurance for different term lengths. There are many factors that influence life insurance rates; Age and health being the largest. Other factors such as your smoking habit, involvement in risky hobbies, height to weight ratio all contribute towards determining your annual life insurance policy quotes.
How Much Does Term Life Insurance Cost On Average?
The good news is that Americans are living longer than ever. The bad news is that we are all going to die eventually and most of us prefer not to think or talk about this sobering reality. Fear of mortality is the first stumbling block we have to overcome with clients who want to leave a financial legacy to their loved ones and ask us how to go about it.
Since we can’t offer you immortality, the consolation prize we can provide to cover your mortality is the lowest price possible for life insurance. When you ask us “how much will my term life insurance cost?” we say, “It depends.” First of all, your premise is correct— term life coverage is the cheapest way to go because it covers you for a specified length of time—up to 30 years—and is as much as 10 times cheaper than permanent or “cash value” life insurance. Below are some sample rates and cost comparisons to illustrate how much does term life insurance cost on average.
Average Cost of Life Insurance By Age
Below you will find rates for a 20-year term life insurance policy which is the most popular option among buyers. By looking at the life insurance rates from different companies for a $250,000 coverage amount, we have determined what the average monthly rates look like for a healthy individual whose age falls between 25 and 50.
Takeaways from these tables:
- The average cost of life insurance increases as you age
- Women are mostly rewarded with cheaper premiums because their life expectancy is higher than men.
- Legal and General offers the best life insurance rates for healthy man and women who fall in ages between 25 and 50. However, we would like to mention here that these are sample life insurance quotes and actual rates may differ depending on different factors that affect life insurance cost.
Men, $250,000, 20-year term, Florida, Healthy Non-Smoker
| Insurance Company | 25 | 35 | 40 | 45 | 50 |
|---|---|---|---|---|---|
| AIG | $13.32 | $13.75 | $19.38 | $29.32 | $42.73 |
| Legal and General | $12.90 | $13.67 | $19.01 | $27.95 | $40.85 |
| Haven Life | $16.91 | $18.01 | $24.25 | $34.53 | $51.93 |
| Lincoln National | $18.82 | $20.57 | $28.23 | $43.32 | $65.85 |
| Mutual of Omaha | $13.78 | $14.88 | $20.13 | $30.63 | $46.16 |
| Prudential | $19.03 | $20.78 | $24.50 | $29.97 | $45.50 |
| Transamerica | $14.41 | $19.57 | $26.66 | $36.34 | $53.11 |
Women, $250,000, 20-year term, Florida, Healthy Non-Smoker
| Insurance Company | 25 | 35 | 40 | 45 | 50 |
|---|---|---|---|---|---|
| AIG | $11.59 | $13.32 | $18.51 | $25.00 | $35.59 |
| Legal and General | $11.25 | $12.04 | $15.26 | $22.57 | $31.56 |
| Haven Life | $13.83 | $16.03 | $20.22 | $27.26 | $39.15 |
| Lincoln National | $16.42 | $17.29 | $23.20 | $32.60 | $46.60 |
| Mutual of Omaha | $12.25 | $13.78 | $17.06 | $24.72 | $35.66 |
| Prudential | $16.41 | $17.72 | $22.53 | $29.09 | $40.03 |
| Transamerica | $11.83 | $17.20 | $22.79 | $29.89 | $43.00 |
**All rates provided above are subject to change
Cost of Term vs. Permanent Life Insurance
Below you will find a rate comparison of term vs permanent life insurance premiums, Obviously, the premiums for permanent life insurance will be greater than that of term life insurance because a permanent life policy is for a lifetime whereas a term policy is only for a certain time period.
People who are looking for a cost-effective coverage option may choose term life. Whereas, individuals who are looking for lifelong protection or a cash value investment should refer to permanent life policies.
Cost of Term vs. Permanent Life Insurance ($500,000)
| Profile | 20-year term | Permanent (whole life) |
|---|---|---|
| Male, Age 30 | $20.16 | $389.58 |
| Male, Age 40 | $29.00 | $575.83 |
| Male, Age 50 | $74.83 | $900.16 |
| Female, Age 30 | $17.33 | $345.16 |
| Female, Age 40 | $25.50 | $491.42 |
| Female, Age 50 | $55.75 | $750.25 |
** All quotes are displayed as the average cost per month. Certain policies may only offer an annual payment option.
Average Cost of Life Insurance by Term
One of the important things to note here is that you will have to pay more if you are a smoker. In the rates below for a term policy of 20 years with $500,000 coverage amount, a smoker will pay $67 more than a non-smoker for the same exact policy. That is really expensive! this disparity in premiums grows with age, which means a 60-year-old smoker will pay almost three times for a policy when compared to a non-smoker.
Average Cost of Life Insurance by Term (35 yr old Male, $500,000)
| Term | Smoker | Non-Smoker |
|---|---|---|
| 10 years | $56.80 | $13.41 |
| 15 years | $68.70 | $16.30 |
| 20 years | $88.23 | $21.33 |
| 30 years | $140.55 | $37.37 |
If you are a current tobacco or a marijuana user, and you are interested in buying a life insurance policy for your family then the following articles will offer you some useful tips to get the best rates.
>> Read: How to find the best life insurance rates as a smoker?
>> Read: Getting life insurance as a marijuana user
Now that you are pretty much aware of the costs associated with life insurance policies, let’s discuss ways to cut these costs and how to save money on life insurance.
Here we will share our best-kept secrets and strategies to help you cut costs with our Top 7 Tips that could save you thousands of dollars.
Pro tip: The building blocks to successfully cut rates involve healthy/low risk living, buying while you’re younger, buying the right type of policy, and adjusting coverage lengths and amounts to stay within your budget.
Best Kept Secrets To Cut Average Term Life Insurance Costs
Shhhh…. Don’t tell anyone but we are going to share some tricks of the trade to help you reduce your life insurance rates. The first misconception we’re going to tackle is the belief that buying life insurance is too rich for your blood.
The 2018 Insurance Barometer Study done by insurance marketing groups Life Happens and LIMRA found that 44% of Millennials overestimate the cost of life insurance by five times the actual amount. It’s an urban legend people. Life insurance is actually much more affordable than you think.
Another secret we’re going to share is that youth and health are your most valuable assets when it comes to getting the cheapest rates.
The 7 Greatest Factors That Could Cost You
Aging
Aging is the most black and white of why you could pay higher rates for your life insurance. Why? Because Father Time doesn’t stand still. Although Americans are living longer than ever, the more the clock ticks, the greater your chances of getting sick or dying. Youth is your greatest asset when it comes to scoring the lowest rates because life insurers reward you for longevity. Statistically speaking, the younger you are, the longer you are expected to live and not cost the carrier a death claim.
Smoking
Cigarette smoking carries a hefty penalty because this nasty habit is considered a major health risk by insurers. It then leads to chronic medical conditions and shortens your life. Smokers get significantly higher rates than that of non-smokers. Your life insurance company can reconsider you for a non-smoker rate after at least one year of proving you are smoke-free. It will be worth the time and money.
Gender
Gender is important in determining your annual life insurance premiums because according to U-S life expectancy tables, women outlive men by 5 years. The average lifespan for men these days is 76, while for women it is almost 81! Don’t take our word for it, check out the Social Security Administration statistics.
Genetics
Genetics matter and never more so in the digital age of ancestry and genetic testing to determine where we came from and what illnesses we might carry based on descendancy. Millions of people are ordering these tests that controversially could be used against us by health and life insurers.
Despite anti-discrimination laws to prevent this, if your 23andme results show positive results for the breast cancer gene, you could be declined coverage or rated in a high-risk rate category.
Insurance underwriters already weigh your family history in determining the average life insurance cost for you. For instance, if a first-degree relative (mother, father, siblings) died prematurely of cardiovascular disease, you will likely pay more for your own policy, despite the fact that your ancestor’s history is beyond your control.
Health
Pre-existing medical conditions and overall health are among the greatest factors considered in the price you will pay for life insurance, bar none. What you do to take control over medical issues that underwriters consider to be life-threatening will be heavily weighted.
Diabetes, high cholesterol that is unmonitored or medicated, high blood pressure that is not under control are all risk factors that could kick you into more expensive premium classes. Cancer survivors, heart attack and stroke survivors can still qualify for life insurance but usually at a standard, or perhaps even a substandard rate class.
You need to prove to insurers that you take your health seriously and are doing something proactively through a physician-supervised medical program.
Height/Weight BMI Ratio
Americans continue to outpace the rest of the world’s population when it comes to being overweight. It is now estimated that 1 in 3 adults in this country do not have a healthy height/weight or Body Mass Index with a ratio that is higher than 25. Obesity is considered to be a BMI greater than 30. Life insurance applicants that fall into these categories will have higher than average life insurance costs than others.
Where do you fall on the BMI chart?
Job and Hobbies
Life insurers follow different guidelines in determining risk factors but most look closely at applicants whose professions and hobbies could shorten their life. Tree cutters, commercial fishermen, commercial deep-sea divers, truck drivers, and small aircraft pilots— all of these jobs carry liabilities that will cost you. As for lifestyle activities and hobbies considered high-risk count on bungee jumping, skydiving, heli-skiing, cliff, and rock climbing to also hike your insurance premiums. Why? High-risk professions and living on the edge (while fun) could kill you.
7 Tips To Cut Life Insurance Costs And Save You Thousands
1. Buying life insurance when you’re young and healthy life insurers will give you the best rates. A healthy 35-year old man could pay less than $25 a month for $500,000 of term life insurance for 20-years.
2. Maintain a healthy weight. Being overweight could put you into a riskier category and end up costing you hundreds more in annual premiums.
3. Get Your Health Under Control. If you have high cholesterol, elevated blood pressure, an A1C blood glucose level creeping close to 6-7% take charge and get on an aggressive medical program to get yourself back on track.
4. Quit Smoking. Tobacco products are a no-no for life insurers. A cigarette smoker could pay 3 times as much as a non-smoker for a policy so using the example above, that same 35-year old man would end up paying more than $75 for the same policy.
5. Modify the Term Length and Amount. If you want to cut the costs of your payments, consider adjusting the coverage requested. If a $750,000/20-year term policy is priced at $40 a month, cut it back to $500,000 for 15 years to achieve the rate you desire. It may add up to nice savings.
6. Pay Annually Instead of Monthly. Speaking of paying more in premiums, the annual cost of that policy would be less than the monthly rate because insurers tack on administrative fees to process the frequent payment mode.
7. Get More Bang for your Buck with Separate Policies. If you have different priorities and financial needs for your family’s future you might want to purchase multiple term life policies and segregate them as your needs change.
No Exam Or Medical Exam Life Insurance
We used to think that applying for a no medical exam life insurance policy was prohibitively expensive and considered a last-ditch effort by unhealthy applicants to buy a policy. That is what we still call Guaranteed Issue coverage, which is still pricey and only provides low face value amounts for final expenses and basic needs.
These days, modern no exam policies are pricing at the lowest levels in history, with many top-rated companies offering them for the exact same price as fully underwritten policies that require that you take a medical exam to provide blood and urine.
If you are a good candidate for no exam coverage: younger than 50, healthy, no blemishes on your financial history or driving record… you will likely save time and money in being approved for quick coverage.
Final Point: Cost Difference Of Term vs. Whole Life Insurance
As we said before, permanent insurance can cost up to 10 times more than term life insurance coverage and the reason is simple.
Term life covers you for a specific period of time; generally 5-30 years and when the policy runs out you walk away. Some policies offer conversion options to turn it into a Whole Life or Universal Life policy, which will then provide lifetime coverage, but at a big increase.
So, we always advise clients that unless you need life insurance for estate purposes, tax implications, or liquidity, pure death benefit only term life insurance is probably the best option for you.
The cash value accumulation advantage of permanent life insurance is really for those who can afford the premiums and need the investment component but the majority of people will likely need term coverage and can feel protected for up to 30 years.
Bottom Line of Life Insurance Costs
Life vs. Death; in a nutshell that is what insurance companies are judging when they review your insurability and the risk they are taking on you. Your cost will be determined by the chance that they think you have of dying for every year your policy is enforced. It’s like gambling but with hard statistics.
Here are the basic classifications in which you will be placed that will determine your rate. We will begin with the lowest to highest rates:
Preferred Select/Elite/Preferred/Plus: This is the top of the line, awarded to people in excellent health, normal weight, and no medical risk factors or adverse family history.
Preferred: Excellent health but perhaps some minor health issues such as high cholesterol that is controlled.
Standard Plus: Good health, but some health risks such as hypertension or being overweight.
Standard: Average health, and normal life expectancy and maybe family history with the premature death of a parent.
Preferred Smoker: Smokers who are otherwise healthy and would have qualified for a regular category were it not for this habit.
Standard Smoker: A smoker with standard (not perfect) health.
All of these classification guidelines vary from company to company so it is imperative to consult a licensed, unbiased agent when it comes to selecting the right company for your particular needs.
Some are more lenient than others on certain health risks and height/weight or so-called “Build.” That is the advantage of using an independent service to help you select and lock down the policy that is tailored to you.
Taking the first step involves getting a free, no obligation, instant life insurance quote online and then going from there. The more you know, the better equipped you are to make the right choice.
We hope you found our article, ‘What Is The Average Cost of Life Insurance? 7 Ways to Save Thousands of Dollars’ interesting and useful. If you have any questions, please leave a comment below.