How much does life insurance cost?

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Life insurance can provide financial assistance to your loved ones after you pass. This assistance can extend to paying for final expenses and also compensating the beneficiaries for a loss of income due to the death of the breadwinner.

There are several types of life insurance. The most common is term life insurance. With this, you pay a fixed premium (monthly or annually) for a specific amount of coverage, such as $500,000. But the coverage only lasts for a specific period of time and then expires. The coverage period can be as short as 10 years or as long as 30 years.

Another option is whole life insurance. Unlike term life insurance that has a policy expiration date for coverage, whole life insurance is permanent. This means that as long as you continue to make your premium payments on time you have coverage for your entire life. Whole life insurance is much more expensive than term life insurance in most cases. When you shop for life insurance, costs will play a large role in determining which provider and plan you use.

How much is life insurance?

The following numbers are supplied by Business Insider and demonstrate an example of life insurance prices from four major life insurers for two healthy, non smoking policy holders. Both are 35 years old and are seeking a 30-year term policy with a death benefit of $250,000:

Life insurance company 35-year-old female quote 35-year-old male quote
RiverSource $22.31/month $25.16/month
State Farm $28.00/month $30.02/month
Nationwide $23.14/month $26.26/month
Mutual of Omaha $21.29/month $24.51/month
Average cost $23.68/month $26.48/month

As you can see, the average cost of life insurance for a man is about $2.80 more per month than a woman will pay. This adds up to a little over $1,000 over the life of a 30-year term policy.

Business Insider also provides a table of average term insurance prices for two healthy policy shoppers seeking $250,000 of coverage at various ages:

Age Average female quote Average male quote
25 $20.10/month $23.05/month
30 $21.86/month $23.07/month
35 $24.19/month $26.48/month
40 $34.77/month $40.21/month
45 $48.52/month $61.40/month
50 $60.31/month $81.72/month

It is important to note that the cost of coverage increases dramatically after age 35. Those who wait until they reach middle age to purchase coverage will therefore pay much more for it than if they had taken out a policy when they were younger.

S&P Global Market Intelligence has also published a table showing the average cost of term life insurance per household for every state in the U.S., broken down as follows:

State Annual Life Insurance Premium Average Monthly Premium
Alabama $602 $50
Alaska $655 $55
Arizona $615 $51
Arkansas $584 $49
California $668 $56
Colorado $645 $54
Connecticut $724 $60
Delaware $657 $55
District of Columbia $636 $53
Florida $627 $52
Georgia $630 $53
Hawaii $687 $57
Idaho $597 $50
Illinois $631 $53
Indiana $593 $49
Iowa $601 $50
Kansas $601 $50
Kentucky $599 $50
Louisiana $597 $50
Maine $641 $53
Maryland $712 $59
Massachusetts $718 $60
Michigan $610 $51
Minnesota $639 $53
Mississippi $581 $48
Missouri $590 $49
Montana $601 $50
Nebraska $603 $50
Nevada $607 $51
New Hampshire $708 $59
New Jersey $732 $61
New Mexico $588 $49
New York $675 $56
North Carolina $617 $51
North Dakota $603 $50
Ohio $599 $50
Oklahoma $598 $50
Oregon $627 $52
Pennsylvania $658 $55
Rhode Island $660 $55
South Carolina $615 $51
South Dakota $591 $49
Tennessee $609 $51
Texas $633 $53
Utah $636 $53
Vermont $655 $55
Virginia $682 $57
Washington $655 $55
West Virginia $590 $49
Wisconsin $607 $51
Wyoming $601 $50

Factors that determine your life insurance costs

There are many factors life insurance providers examine when determining your eligibility for coverage and your premium price. The first two factors are gender and age.

To better understand these costs, think of them the way insurance providers do. The older you are when you request a policy, the more likely it is that the insurance company will have to pay the benefit. Also, women live longer than men on average, so if you’re a male, you represent a higher risk to the insurance companies.

Another factor is how much coverage you need. If you want a policy that provides adequate financial assistance to a loved one (think $50,000), you’ll pay far less for this than you would for a policy that provides a $1,000,000 benefit upon passing away.

Next, what you do for a living can also impact how much you pay for life insurance. If you’re in a dangerous profession such as construction, war reporting or law enforcement, you could face more risks on a daily basis than an office worker. Because of this added risk, you might pay a little more for life insurance.

Your health also plays a huge factor in how much you pay. If you use tobacco products, that will raise your premium significantly. Furthermore, most life insurance companies will want you to undergo a health check-up before approving you for a policy.

With this, a company-approved nurse will visit your home, gather information about your and your family’s health history and check health metrics like your blood pressure and resting pulse rate. Your current health and your family’s risk factors will at least partly determine how much you’ll pay.

Last but not least is how you live your life. If you drink alcohol regularly or participate in high-risk activities such as cliff diving, you’ll pay more for life insurance.

Frequently asked questions

How much should you spend on life insurance?

That depends on you and your household’s financial needs. It’s ideal to find out how much coverage you’ll need to provide for your beneficiaries in the event of your passing. This should include final expenses, costs associated with making up your income for your family, your children’s educational expenses and your debts. Once you have a firm estimate on how much you want to leave to your family, you can shop around to find the best rates.

Do you pay taxes on life insurance?

This depends on your life insurance policy. In general, you don’t have to pay taxes on a life insurance death benefit. If you own a cash value policy, then the cash value also grows on a tax-deferred basis and any loan you take from this amount is tax-free as well. The only time that you will pay any income tax on a cash value life insurance policy is if you cash out the policy completely and end up with more money than you paid in over the life of the policy. The difference would then be taxable income to you.

How do I buy life insurance?

In all cases, you can start the process by going through the carrier’s website to receive a quote. Some allow you to buy a policy online while others will want you to fill out a medical questionnaire that allows them to learn more about your health and your family’s health history. Moreover, some will also want to do a check-up to determine how healthy you are now. Therefore, with some, you can buy a policy right away while with other companies, it might take weeks before you receive coverage.