December 7, 2017

Average Cost of Life Insurance May Surprise You

Read more about Life Insurance

Life insurance can cost $200 - $7,000 per year, depending on factors like your age, health, and policy size. Read on to see what you can expect to pay for life insurance.

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

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

Average Cost of Term Life Insurance

On average, Americans spend $2,037 per year on term life insurance. This average is for non-smokers between the ages of 20-65 with a $500,000 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.

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.

Average Cost for 10 Year Term Insurance

10-Year Term Rates - Male

Age$100,000$250,000$500,000$1,000,000
20$9.41$12.50$16.26$24.58
30$9.45$12.50$16.26$24.58
40$10.75$15.30$21.75$38.80
50$17.87$26.72$44.83$77.17
60$36.14$65.82$117.32$221.04

10-Year Term Rates - Female

Age$100,000$250,000$500,000$1,000,000
20$8.04$9.62$12.94$20.48
30$8.10$10.34$12.94$20.48
40$9.93$13.35$16.93$27.15
50$15.87$21.87$37.08$66.73
60$27.47$46.94$81.13$148.12

Average Cost for 15 Year Term Insurance

15-Year Term Rates - Male

Age$100,000$250,000$500,000$1,000,000
20$9.50$13.14$18.14$29.45
30$9.50$13.14$18.14$30.45
40$11.30$16.85$25.67$42.11
50$21.07$35.31$63.62$110.27
60$47.63$101.29$186.29$299.02

15-Year Term Rates - Female

Age$100,000$250,000$500,000$1,000,000
20$8.51$10.65$14.66$25.10
30$8.51$11.68$14.66$25.10
40$10.75$14.79$22.46$34.37
50$17.33$27.35$49.08$81.39
60$32.31$62.28$121.24$210.84

Average Cost for 20 Year Term Insurance

20-Year Term Rates - Male

Age$100,000$250,000$500,000$1,000,000
20$9.92$13.57$20.88$34.67
30$9.92$14.57$20.88$35.67
40$12.67$19.67$34.92$56.90
50$24.63$47.68$92.06$145.55
60$64.34$132.70$266.85$419.38

20-Year Term Rates - Female

Age$100,000$250,000$500,000$1,000,000
20$9.05$12.09$18.71$30.19
30$9.14$13.31$19.14$32.06
40$12.12$17.99$27.67$46.72
50$20.16$34.46$63.87$109.36
60$42.26$89.37$165.03$298.02

Average Cost for 25 Year Term Insurance

25-Year Term Rates - Male

Age$100,000$250,000$500,000$1,000,000
20$11.18$16.42$27.08$47.75
30$17.78$16.83$28.41$49.25
40$16.89$24.92$45.08$81.08
50$33.80$57.67$110.75$194.83
60$98.87$101.58$382.83$712.16

25-Year Term Rates - Female

Age$100,000$250,000$500,000$1,000,000
20$10.32$13.75$22.16$38.17
30$10.94$14.25$23.42$39.81
40$14.52$21.00$37.91$67.74
50$26.42$43.75$81.67$161.08
60$72.89$84.25$292.42$494.26

Average Cost for 30 Year Term Insurance

30-Year Term Rates - Male

Age$100,000$250,000$500,000$1,000,000
20$12.96$20.53$33.06$55.00
30$13.31$21.62$34.28$61.77
40$20.52$31.18$55.26$103.53
50$39.78$74.94$138.99$258.39

30-Year Term Rates - Female

Age$100,000$250,000$500,000$1,000,000
20$11.92$18.49$26.97$46.72
30$12.88$19.45$28.62$51.03
40$18.15$27.61$45.51$83.09
50$31.94$59.64$102.66$194.95

Once you hit 60 years old, you're generally not allowed to purchase 30-year term life insurance anymore. You can usually still purchase 25-year term up to the age of 65, and 20-year term after that.

Average Cost of Whole Life Insurance?

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

Here's a more detailed breakdown of average whole life insurance costs by age (for non-smokers).

AgeMenWomen
25$177.70$155.73
30$200.25$179.16
35$260.57$218.59
40$327.99$263.61
45$415.86$328.86
50$530.92$420.86
55$677.73$543.97

Average 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.

Smoker vs. Non-Smoker Life Insurance Costs

On average, smokers can expect their rates to be 250% higher than rates for non-smokers. 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.

Typically, you are not considered a non-smoker until you are nicotine-free for at least 12 months. This varies by insurance company. Some require a longer waiting period than others do.

Factors That Affect Life Insurance Costs

  • Age: The top reason life insurance rates vary is age. The older you are, the more expensive you are to insure.

  • Gender: Women generally pay lower rates than men, because women have longer life expectancy (86.6 years vs men's 84.3 years). On average, men pay 38% more for term life insurance than women.

  • Occupation: The more dangerous your job, the higher your premium, no matter your gender.

  • Health: If you have high cholesterol or blood pressure, expect to pay as much as 50% more than regular rates for life insurance. However, if you manage your condition with medication, you can still keep rates lower.

  • Hobbies: Got pastimes like motorcycle racing or skiing? Those with more high-risk hobbies will face higher premiums.

  • Policy size: The bigger coverage you get, the higher your premium. Find out how much life insurance you need.

Reasons to Get Life Insurance

Some reasons to get life insurance include:

  • Replace your income so your family can maintain the same standard of living
  • Pay off your debts so your family isn't burdened with them
  • Pay for child care services
  • Pay for your children's education
  • Pay for final burial expenses
  • Transfer business ownership
  • Pay off estate taxes

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:

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