When looking for life insurance, one of the factors you will definitely take into consideration is the cost. But determining the cost of a policy can be difficult, even for term life insurance, which is a more straightforward option than permanent life insurance. The price of life insurance is determined by a number of factors, such as the kind of policy that is purchased, the insured person's age, gender, health, lifestyle, and medical history, as well as the amount of coverage that is desired. To assist you in making sense of all of these components, we compared the premiums charged by more than a dozen insurance providers with AM Best ratings of A or better. To give you an idea of how much you might expect to spend, we analyzed the rates for plans with varying coverage amounts, periods, and applicant ages in order to determine whether or not you are already paying too much for your insurance. Except as otherwise specified, all charts refer to term life insurance policies.
Key Takeaways
- At the age of 35, the monthly premium for a term insurance policy with a face value of $250,000 and a term length of 20 years is around $14.
- As you get older, the amount you have to pay for insurance will grow dramatically.
- In general, women pay lower premiums for life insurance than men do, and the gender gap widens as people get older.
- On average, smokers who are in good physical condition pay less for their health insurance than obese non-smokers who struggle with blood and cholesterol concerns.
- Because they are designed to ensure you for your entire life and include a cash value component, whole life plans can be anywhere from five to twenty times as expensive as term life policies.
Cost of Life Insurance Ranging from Provider to Provider
Rates charged by various life insurance providers for the same level of protection might vary, sometimes by a sizable amount, due to the fact that each provider uses its own set of criteria to establish premiums. This is demonstrated in the accompanying figure, which displays the averages of the monthly prices provided for male and female applicants who do not smoke and who do not have any health conditions, and who are seeking a $250,000 20-year term insurance. *Bestow was unable to produce quotes for 20-year term insurance contracts for individuals aged 55. If a person is 35 years old, for instance, they might spend $20 per month with Prudential but only $13 per month with SBLI for comparable coverage. In point of fact, the disparity in rates expands with increasing age, which is why it is essential to comparison shop after you reach the age of 45 and above. The quotes we gathered from people who were 55 years old make this point quite clear. If you were to insure your property with Prudential rather than Banner in this scenario, you might save more than $200 a year on the same $250,000 in coverage over the course of a 20-year term. Another thing that we discovered was that even while some insurance providers offer affordable premiums for customers of a particular age, term length, and coverage quantity, these same providers ended up being some of the most expensive as customers' coverage needs and ages evolved. One illustration of this is the SBLI. For individuals aged 25, 35, and 45 years old, SBLI was one of the most cost-effective options for purchasing a term policy with a face value of $250,000. However, the fact that it was 55 years old made it the third most expensive. Some life insurance quotes will highlight important features, such as the company's rating and riders that are either included in the policy or available for purchase at an additional cost. Examples of these riders and features include an accelerated death benefit (ADB) rider and a conversion feature.Cost of Life Insurance on an Average, Based on the Death Benefit
The value of the death benefit plays a role in determining the cost of your life insurance policy, in addition to the individual elements that are utilized to calculate how much you'll pay for life insurance. We compared the quoted monthly premiums for policies of $100,000, $250,000, and $500,000 among 10 different insurance companies for healthy men and women who did not smoke and were of varying ages. It is only reasonable that the cost would rise in tandem with the increasing death benefit. If you put off purchasing protection for a longer period of time, the magnitude of this effect will be amplified. A person who is 45 years old, for instance, will pay $27 per month, on average, for a 20-year term policy that provides a death benefit of $250,000, and $46 per month for coverage that is equal to $500,000 in value. However, if you wait ten years, the overall cost of each policy will be more than treble on average.The Typical Cost of a Life Insurance Policy for Each Gender
It shouldn't come as a surprise that the average cost of life insurance for guys is often higher than the cost for females, given that women live an additional five years than men do on average. For instance, at the age of 25, males typically pay a few dollars more (about 15 percent more) each month than females for a policy that covers $250,000 for 20 years. However, the difference in price becomes increasingly considerable over time. Women pay an average of $46 per month for a $250,000 20-year term policy, while males pay an average of $61 per month; this is a difference of 33 percent and works out to an additional $184 per year in cost.Cost of Life Insurance Relative to One's Health as an Average
Our research thus far has concentrated on those who are generally healthy and do not smoke. And while that is a good way to illustrate variations in cost according to insurer, coverage amount, and gender, we also need to take into consideration various health situations in order to understand why your life insurance premiums might be different from the average premium for the entire population.Classification Scales
The "risk class" that you are assigned by an insurer is indicative of how much they will charge you for coverage. This class is determined based on your overall health and whether or not you smoke. The following are frequently included in risk classes: Preferred plus: A remarkable health history, the absence of any medical problems, a normal body mass index (BMI), blood pressure, and the absence of any cholesterol problems is a preferred plus. In all likelihood, you will not be eligible for this group if you have ever had your driver's license revoked or if you have been involved in more than two car accidents in the preceding three years. Preferred: Excellent health, despite the fact that it is not flawless. Even if you have certain medical issues, as long as you are able to keep them under control with medicine, you may still be eligible. Even if you have excellent health, being in this group could apply to you if your career or hobbies involve risky situations. Standard plus: You may fall into this group if you have a few minor health concerns but do not meet the requirements listed above, such as if you have a higher BMI or are overweight. The standard (or regular) category in addition to other types: If you do not meet the requirements for any of the preceding categories, an insurance company may place you in one of a number of additional categories, one of which is called a "smoking" category. There are also many other categories. Your possible premium will be reduced by an insurance company in proportion to the amount of information they want from you. This is due to the fact that when applicants are asked to submit more extensive information, they are often qualified for the riskier classes of coverage. We conducted research on the cost of life insurance premiums for male and female applicants between the ages of 25 and 65 seeking policies with a face value of $250,000 and a term length of 20 years (preferred plus, preferred, regular, and preferred smoker). What we found, which can be broken down into two categories and is not surprising: Even at the age of 25, preferred male smokers pay roughly 69 percent more (about $27 more per month) than their non-smoking counterparts. This was discovered when we collected quotes for preferred smokers, which are individuals who are in pretty excellent health and smoke infrequently. Even if they are in otherwise good physical shape, smokers pay a higher premium compared to non-smokers who are overweight and have blood and cholesterol concerns. The discrepancies in premiums between groups are exacerbated by age: If our hypothetical male smoker reaches age 65 instead of 25 but is still in good health, he will pay $465 more per month to acquire the same $250,000 20-year coverage as a preferred nonsmoking guy; this is equivalent to roughly $5,600 more per year in additional premiums. However, even our ideal female smoker isn't in a very advantageous position: For coverage of the same kind, she'll have to spend more than $4,000 per year. Another reason why it's vital to shop around for life insurance quotes is that some insurers are more tolerant with or receptive to writing policies for people who have health risks. This can make it easier for these individuals to obtain coverage. John Hancock offers a variety of programs that are tailored to the needs of particular health profiles. It offers a plan for diabetics with Type 1 and Type 2 as well as a plan for those who want to quit smoking and receive non-smoker prices for three years and a plan for those who want to get discounts based on their lifestyle choices and fitness levels.The Cost of Life Insurance on Average, Varying by Term Length
The length of time you wish to be covered is a factor in determining the total cost of your policy. Term insurance policies can be purchased from a variety of insurers for durations ranging from one year to forty years, with the shortest term being one year. The differences in premiums across terms are greatest for candidates who are older. We calculated the average monthly cost of life insurance for healthy male and female applicants who did not smoke and who requested a 10-year, 20-year, or 30-year term policy with a death benefit of $100,000. According to our research, individuals who are 25 years old, 35 years old, or 45 years old can anticipate paying only a few dollars more per month to extend their coverage term from 10 years to 20 years or from 20 years to 30 years. This is based on our findings. On the other hand, individuals who are 55 years old and want coverage for 30 years rather than 20 might anticipate that their monthly cost will more than double.Possibility of Contracts with More Prolonged Terms
When you buy a life insurance policy, the length of time the insurance company will protect you as well as the cost of the policy, are both determined not only by your age and your current state of health but also at the time of application. For instance, the majority of insurance companies offer a diverse selection of term policies with coverage durations ranging from one year to forty years. However, in order to be eligible for a 35-year term policy, you will need to be in good health, and, as a general rule, you cannot be older than 50. You must be less than 65 years old to qualify for a policy with a term length of twenty years (or maybe 70 years old if your health is excellent). In addition, Banner offers a 40-year term coverage, but customers can only purchase it up until the age of 45.The Typical Annual Premium for Whole Life Insurance
There is a consistent format followed by various types of permanent life insurance, such as universal and whole life insurance. On the other hand, due to the fact that these policies are intended to last for one's entire life, they are more expensive than term policies. You can see that the cost of permanent insurance climbs exponentially with both the amount of coverage and the insured person's age in the accompanying graphic. If a man is 35 years old and wants a death benefit of $250,000, he might have to spend $239 each month (and he'll pay approximately the same amount for twice the coverage). On the other hand, a man who is 60 years old might spend $785 for the same lifetime coverage of $250,000, which is more than three times as much each month as what the younger man pays, or $6,546 more per year. If you are convinced that you want coverage that won't expire after a predetermined number of years, it almost always makes sense to obtain it when you are young because premiums are typically lower at that age. Not only is the expense more reasonable, but as you become older, you run the risk of developing one or more health problems that make you ineligible for health insurance. It may make sense for customers who desire some permanent coverage but are unable to buy a permanent policy that provides sufficient coverage for their requirements to augment their protection with term insurance. For instance, a man who is 25 years old might purchase a $100,000 whole life policy for $71 per month and then add a 20-year, $250,000 term life policy for an additional $13 per month to his insurance portfolio as a supplement. This would provide him a total death benefit of $350,000 for an expense of only $84 per month. Using this technique would allow him to pay for a higher level of coverage while he is, for example, starting a family and getting a new mortgage. Because his children may be adults, and he may have paid off his mortgage by the time the term is up, he may not require a death benefit of the same magnitude once it expires. According to the findings of our investigation, the average cost of a whole life insurance policy is anywhere from about five to well over 20 times as much as the cost of a term life policy. This range of costs is dependent on the age of the insured, the coverage amount, and the term that is selected. Because it is a form of permanent life insurance and because it includes a cash value from which you may either borrow against it or withdraw money, whole life insurance is more expensive than term life insurance.The Cost of Providing Children with Life Insurance
When it comes to life insurance for children, there are not as many options accessible as there are for adults: There are fewer companies who provide it, and when they do, the death benefit may be set at $30,000 or $50,000 depending on the company. In all other circumstances, the maximum amount of life insurance coverage that a child younger than 16 years old can be eligible for is 25 percent of the coverage that their carer has. This would include the involvement of both parents. However, life insurance for children can either be obtained as term coverage (for instance, as a rider on the parent's policy) or as a stand-alone permanent whole-life policy. Term coverage is less expensive than whole life insurance. The younger your child is when they begin their coverage, the lower their monthly price will be, just as it is with adult insurance. For instance, both Mutual of Omaha and Globe Life provides insurance for children through their respective subsidiaries. You may expect to pay approximately $13 per month (with either insurer) for a child who is five years old for $30,000 worth of permanent coverage and approximately $18 per month for a child who is 15 years old. Permanent whole life insurance policies for children also accumulate a cash value that can be withdrawn at any time during the policy's term of protection. If you buy a term rider for your child as an addition to your own insurance policy, you should make sure that the rider has a conversion feature. This means that you should ensure that your child's insurance coverage can be converted to a permanent policy once they are an adult and that this can be done without providing proof that they are insurable.Methodology
We gathered rates and eligibility requirements from over a dozen different life insurance companies by accessing the websites of the insurers, internet brokers, and websites that compare quotations from multiple providers. The term life insurance prices were gathered for non smoking females (5'8", 130 pounds) and nonsmoking males (6'0", 170 pounds) residents of the 90666 zip code who did not take any medications, did not smoke, did not have a history of family health problems, and did not use any medications. In order to evaluate smoking rates based on a variety of different health profiles, preferred plus, preferred, regular, and preferred smoker rates were all collected. The health of the insured child is not considered when determining life insurance premiums for children. These rates were obtained directly from the pricing tables or quotes listed on the website of the life insurer. The number of insurers that were factored into the "average" calculation changed depending on the variety of products that were available.