December 7, 2017

Average Cost of Life Insurance May Surprise You

Read more about Life Insurance

Life insurance can cost you an average of $2,000 - $7,000 per year. You could pay that amount for the next 15-30 years too. Is life insurance worth the cost?

© Matt Burns (CC BY-SA 2.0) via Flickr

Read this shocking study to learn more about the life insurance industry.

Life Insurance Highlights

  • What is the average cost of term life insurance?
    On average, Americans spend $2,037 per year on term life insurance. This average is for non-smokers with a $500,000 term life insurance policy. Smokers pay a higher rate, with an average of $7,313 per year for term life insurance. This comes out to around $609 per month.

    Note: This average takes into account people between the ages of 20-65 with a $500,000 policy. The older you get, the more expensive your life insurance rates. It's always best to secure life insurance at a younger age to keep your premiums lower.

  • What is the average cost of whole life insurance?
    Whole life insurance rates are on average $250 more than the average term rates. This makes the average monthly cost of whole life insurance $419 for a non-smoker. Smokers pay an average of $859 per month.

  • How much does life insurance cost for a family of 4?
    A 20-year, $250,000 term life insurance policy for a family of 4 with no health issues costs an average of $470 per year. This average is based on the best rates possible. It assumes the adults have not smoked within the last 3 years.

  • How much does life insurance cost for a 60-year-old?
    The average non-smoker 60-year-old in good health pays an average of $1,158 per year for a 20-year $250,000 term policy.

  • How much does life insurance cost for a 50-year-old?
    The average 50-year-old pays $448 per year for a $250,000, 20-year term policy.

  • How much does life insurance cost for a 35-year-old?
    The younger you are when you get life insurance, the cheaper the rates you'll pay. The average 35-year-old pays only $159 per year for a $250,000, 20-year term policy.

  • How much does life insurance cost for a smoker?
    The average cost of a 20-year, $500,000 term life insurance policy for a male smoker is $707 per month. The average cost for the same policy for a female smoker is $511 per month.

Looking Closer at Life Insurance

  • What is the average cost of 30-year term life insurance for a $250,000 policy?
    • 30-year-old women pay an average of $17/month. 30-year-old men pay an average of $20/month.
    • 40-year-old women pay an average of $25/month. 40-year-old men pay an average of $31/month.
    • 50-year-old women pay an average of $54/month. 50-year-old men pay an average of $73/month.

  • What is the average cost of 30-year term life insurance for a $1,000,000 policy?

    • 30-year-old women pay an average of $49/month. 30-year-old men pay an average of $60/month.
    • 40-year-old women pay an average of $80/month. 40-year-old men pay an average of $102/month.
    • 50-year-old women pay an average of $173/month. 50-year-old men pay an average of $258/month.


  • What factors affect your life insurance rates?
    The top reason life insurance rates vary is age. The older you are, the more expensive you are to insure. In addition to age, though, your health, gender, and occupation play a role. An applicant in perfect health will pay a lower rate than someone else the same age in poor health. Insurance companies determine your rate based on the illnesses you may have.

    Women generally pay lower rates than men. However, your occupation plays a role. The more dangerous your job, the higher your premium, no matter your gender.

  • How much more do smokers pay for life insurance than non-smokers?
    On average, smokers can expect their rates to be 250% higher than rates for non-smokers. Typically, you are not considered a non-smoker until you are nicotine-free for at least 12 months. This varies by insurance company, though. Some require a longer waiting period than others do.

  • How does high cholesterol or high blood pressure affect life insurance rates?
    If you have high cholesterol or blood pressure, expect to pay as much as 50% more than regular rates for life insurance.

    There's good news, though. If you manage your condition with medication, you probably won't see much of an increase at all. The 50% increase is for those at the high end of the spectrum who don't take medication. They are at high risk for a heart attack or stroke and pay the higher rates because of it. Managing your condition can help you keep your rates lower.

Life Insurance Needs

  • What's the top reason beginning families need life insurance?
    Just starting your family is probably not when you consider buying life insurance, but you should. Rates are often much cheaper at a younger age. It allows you to set your future children up for financial stability now, before they are even a twinkle in your eye.

  • What's the top reason established families need life insurance?
    Established families need life insurance to cover the costs of what they are used to having. This doesn't mean just covering a working adult's income. Think about the cost of everything everyone in the household does, such as chores, managing finances, and caring for the children. If your loved one dies, you'll need someone to take over those "jobs."

  • What's the top reason single adults need life insurance?
    Single adults don't seem to have a lot to worry about. They don't have to support another adult if they pass. But they do have to worry about their own burial expenses. Life insurance can help cover that cost so the burden is not on elderly parents or other family member.

Life Insurance vs Other Insurance Options

  • What's the difference between life insurance and health insurance?
    Life insurance covers your loved ones should you pass away. It helps them live the same lifestyle they lived when you were alive. Health insurance covers you while you are alive, should you have any illnesses or injuries. It helps with the cost of the treatments.

  • What's the difference between life insurance and 529?
    Life insurance can serve as a savings vehicle for college costs. Many people use it instead of a 529 College Savings Plan for one reason - financial aid. Life insurance with a cash value does not affect your financial aid offers for college. Savings in a 529 plan can reduce your financial aid by 5.6 cents for each dollar saved in the 529 plan.

  • What's the difference between work life insurance and your own life insurance policy?
    According to the American Council of Life Insurers, 44% of life insurance policies are group policies. In other words, they are through an employer. Oftentimes, the policies are free. So why would you pay for a personal policy?

    Generally, group policies offer much lower coverage. You may get up to $50,000 in coverage. But is that enough? This is where a personal policy or supplemental policy comes into effect. However, you don't have to personally qualify for the group policy, which could help you save money if your personal policy would be at inflated rates.

Children and Life Insurance

  • Why would children need life insurance?
    Life insurance for a child protects you if something were to happen to your child. Covering the funeral expenses while you take time off work could leave your family under financial strain.

Life Expectancy

  • What is the average life expectancy of a woman?
    According to the Social Security Administration, 65-year-old women today have a life expectancy of 86.6 years old.

  • What is the average life expectancy of a man?
    The SSA also states that men age 65 today have a life expectancy of 84.3 years old. However, the good news is that 1/4 of today's 65-year-olds will live past age 90 and 1/10 will live past 95!

  • What was the average life expectancy in the 1950s?
    In 1950, 65-year-old women had a life expectancy of 80 years old. However, men only had a life expectancy of 77.8 years old.

Life Insurance Industry

  • How large is the insurance industry?
    The insurance industry brings in $1.1 trillion in premiums per year. 53% of those premiums are from life and health insurance.

  • How many life insurance companies are in the U.S.?
    There are 872 different life insurance companies throughout the U.S. This makes it possible for you to shop around for the best rates.

Bottom Line

Life insurance can protect you and your family. But it can get costly. Try minimizing your risk factors before applying. Getting insurance at a young age can help too. You need to find the perfect balance between protecting your family and spending too much money on coverage.

Sources and References:

More from CreditDonkey:

Average Cost of Car Insurance

Buying Your First Home

How to Invest Money

More Articles in Money Tips

Life Insurance

Fabric Life Insurance

Fabric offers term life insurance for families with affordable premiums and a fast application process. Is it right for you? Keep reading to find out.

Leave a comment about Average Cost of Life Insurance May Surprise You?

Email (won't be published)


Chad Parks knows first-hand how hard it is for small businesses to succeed in today's economic landscape.
More Articles in Investing

About CreditDonkey®
CreditDonkey is a life insurance comparison website. We publish data-driven analysis to help you save money & make savvy decisions.

Editorial Note: Any opinions, analyses, reviews or recommendations expressed on this page are those of the author's alone, and have not been reviewed, approved or otherwise endorsed by any card issuer.

†Advertiser Disclosure: Many of the card offers that appear on this site are from companies from which CreditDonkey receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). CreditDonkey does not include all companies or all offers that may be available in the marketplace.

*See the card issuer's online application for details about terms and conditions. Reasonable efforts are made to maintain accurate information. However, all information is presented without warranty. When you click on the "Apply Now" button you can review the terms and conditions on the card issuer's website.

CreditDonkey does not know your individual circumstances and provides information for general educational purposes only. CreditDonkey is not a substitute for, and should not be used as, professional legal, credit or financial advice. You should consult your own professional advisors for such advice.