How much does life insurance cost?

Summary: The cost of life insurance varies depending on factors such as the type of policy, coverage amount, age, health, and lifestyle. Term life insurance is generally more affordable, especially for younger individuals, while whole life insurance offers lifelong coverage. Life insurance can be tailored to fit most budgets based on individual needs and preferences.

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There's no set amount for how much life insurance policies cost. Life insurance premiums are typically paid on a monthly basis and range in costs, anywhere from $20 to hundreds of dollars a month depending on your plan.

What determines life insurance cost?

Many factors play into the overall costs of life insurance policies. These factors include age, risk factors such as a history of smoking and how much your policy covers. The great news is that life insurance can work with almost any budget depending on your needs.

6 life insurance cost factors

The cost of life insurance varies widely. Life insurance rates are based on several factors, including the following:

1The type of life insurance policy

Life insurance policies mainly come in two forms: term life and whole life. Choosing the right type depends on whether you need temporary or permanent coverage and how much you’re willing to pay.

Whole life insurance

If you look only at the monthly bill, it may seem that whole life insurance costs more than term life insurance. However, your whole life policy will usually cost the same amount as long as you continue paying on time. As you age or if your health declines, the cost usually will not increase.

Many whole life insurance policies provide lifelong coverage and a cash value component. Monthly premiums can range from under $100 to $500+.

Term life insurance

Term life insurance is usually less costly when you are young. But, when the term ends you may need to buy new life insurance when your age or health could increase your monthly premium. For this reason, many people consider a combination of term and permanent life insurance to get the right coverage for their budget.

Term Life Insurance generally has a set coverage for a specific period (10, 20, 30 years). Monthly premiums can range from $10 to $100+ depending on coverage.

2Coverage amount

The amount of coverage, or “death benefit,” significantly impacts the cost of a life insurance policy. Simply put, the larger the payout to your beneficiaries, the more you’ll pay in premiums.

For example, a policy worth $500,000 will be pricier than one for $100,000 because the insurance company takes on a higher financial obligation. You're able to choose a coverage amount that meets your family’s needs without over-extending your budget.

3Age

Age plays a major role in determining your life insurance cost because insurance companies base their rates on the likelihood of paying out the policy. The younger you are, the less risk you present, so you’ll often get lower rates.

As you age, the risk of health issues increases, and so does the likelihood of a claim, which raises the cost of insurance. For example, someone buying a policy at 30 might pay a fraction of what a 50-year-old would for the same coverage.

4Health status

Health conditions can affect the cost of life insurance depending on what type of policy you choose. We offer a whole life insurance policy that is guaranteed for ages 45-85 (50-75 in NY), no matter your health. However, for certain policies like term life insurance, healthier individuals may receive lower rates. Smokers, for example, often pay significantly higher premiums than non-smokers. For this reason, health and medical history is another key factor in life insurance pricing. Insurers assess your overall health to determine your risk level, often through a medical exam or a questionnaire.

Conditions like high blood pressure, diabetes, or a history of serious illness can increase premiums because they are considered high risk. Smokers, in particular, face significantly higher costs due to the associated higher health risks. If you’re in excellent health, you’ll likely enjoy lower premiums, as the insurer views you as a safer bet.

5Gender

Gender can affect your life insurance cost because, women tend to live longer than men. This can slightly reduce the cost of their premiums. Insurers take this longevity into account when calculating rates. They often give women a small discount on life insurance compared to men.

While the gender difference isn’t huge, it can add up over time. This is purely based on general life expectancy trends and helps balance the risk for the insurer.

6Riders

Riders are extra features you can add to a life insurance policy, and this can increase the cost of life insurance. Adding riders is a way to customize your policy to better fit your needs. It's wise, however, to consider whether the extra benefits are worth the additional expense. Common riders include:

• Accelerated death benefit: This rider allows you to access a portion of your death benefit while you’re still alive if you’re diagnosed with a terminal illness
• Accidental death: In addition to the base death benefit, this rider pays your beneficiaries an additional benefit if you die as a result of an accident.
• Nursing home confinement: The nursing home rider provides financial assistance for long-term care services.

Call us at 800-377-9000 with questions about purchasing a policy with an added rider or if you'd like assistance in finding a policy that fits your budget.