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 providing for a loss of income.

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. This 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 does have a policy expiration date for coverage, whole life insurance is permanent, meaning as long as you continue to make your payments on time you have coverage for life. Whole life insurance is more expensive than term life insurance.

When searching for life insurance, costs will play a primary factor in which provider and plan you use.

The average cost of life insurance

To help you understand the costs you could face when buying life insurance, we broke down costs by different categories such as age, gender and policy coverage amounts using data from Finder.com.

With these factors in mind, let’s start with the monthly term life insurance rates by age and policy amounts for men with a 30-year term life insurance policy:

Amount insured 30-year-old man 40-year-old man 50-year-old man
$250,000 $14.84 $20.85 $46.30
$500,000 $22.93 $33.31 $79.88
$1,000,000 $38.61 $58.14 $147.83

When reading this table, you’ll notice several things. The older you are, the more expensive life insurance is going to be, no matter what coverage amounts you have. The reason for this is insurers assign risk ratings to each candidate. The older you are, the more likely you or loved ones are to cash out a policy.

Moreover, your coverage amounts are also a crucial driver in costs. With this in mind, let’s see how much women pay for insurance using the same metrics:

Amount insured 30-year-old woman 40-year-old woman 50-year-old woman
$250,000 $13.13 $18.23 $35.82
$500,000 $19.56 $28.23 $61.74
$1,000,000 $31.37 $48.80 $112.14

It is less expensive for women to buy life insurance because the averages show they live longer than men. Because of this, women are less risky to an insurer, so they don’t pay as much.

Whole life insurance will be significantly more expensive than these rates for a term policy.

Factors that determine your life insurance costs

There are many factors life insurance providers examine when determining your eligibility 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 your 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’ll raise your premium significantly. In addition, some life insurance companies 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 can 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 want to provide 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 benefit. However, if you earn interest on a policy (think whole life) then you’ll want to report this income to the IRS and pay the tax accordingly.

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.