How much does a $500,000 life insurance policy cost? – Forbes Advisor
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A $500,000 life insurance policy can provide enough coverage to take care of your family and expenses like the mortgage and children’s school fees if you die unexpectedly.
The cost of life insurance is often overstated, so don’t assume you can’t afford a $500,000 life insurance policy without getting life insurance quotes first. You may even find that the cost of a $1 million life insurance policy is much lower than you expected.
How much does a $500,000 term life insurance policy cost?
We analyzed term life insurance quotes for policies with $500,000 coverage and found:
- The average cost of a $500,000 10-year term life insurance policy is $200 per year.
- The average cost is about $275 per year for a 20-year term, if you buy life insurance in your 30s while you are in good health, including if you are a non-smoker.
Your own life insurance quotes will differ depending on your age, medical condition and other factors affecting life insurance quotes. However, our analysis of the average cost of $500,000 life insurance gives you a basic idea of how much you can expect to pay.
Average Costs of $500,000 Term Life Insurance by Age and Gender
Average annual costs of a $500,000 term life insurance policy over 10 years
Average annual costs of a $500,000 term life insurance policy over 15 years
Average annual costs of a $500,000 term life insurance policy over 20 years
Average annual costs of a $500,000 term life insurance policy over 30 years
Buying younger means lower life insurance costs
Age is an important factor in the cost of life insurance. Life insurance quotes will increase each year as you age. Plus, you risk developing a health condition that will lead to higher quotes if you wait to purchase life insurance.
To get the best life insurance quotes, buy coverage as soon as the need arises.
Our $500,000 term life insurance cost analysis reveals substantial savings if you purchase coverage while you’re in your 30s. Waiting until you’re 50 or 60 to purchase a 20-year term life insurance policy incurs significantly higher costs than if you purchase coverage at a younger age:
- If you wait until age 40 to purchase a $500,000 20-term life insurance policy instead of buying it at age 30, quotes go up 36% for men and 33% for women .
- If you wait until age 50, the costs increase by 212% for men and 176% for women compared to a 30-year-old man.
- Holding to age 60 (instead of buying at age 30) increases the cost by 740% for men and 610% for women. For men, the annual rate is over $2,500 at age 60 (compared to $300 at age 30) and for women, nearly $1,800 compared to only about $250 at age 30.
How gender affects the cost of $500,000 life insurance
Life insurance quotes show that gender is also a big issue for life insurance companies. Men generally don’t live as long as women, so men pay more for their policies.
Our analysis shows that men of all ages will get higher quotes for $500,000 life insurance policies compared to women. The cost difference fluctuates as they age.
For example, looking at a $500,000 20-year term life insurance policy, here’s how gender affects rates:
- At age 30, men pay 19% more than women, or nearly $50 more annually.
- At age 40, men pay 21% more, which is $72 more per year than women.
- At age 50, men pay 34% more than women, or $240 more per year.
- At age 60, men pay 41% more, or $732 more per year, than women.
Life insurance costs $500,000 per term
Buying a term life insurance policy with a longer term means you’ll pay more, but lock in a rate for longer. The level term period is the number of years that you will lock in a stable annual rate, for example 10, 20 or 30 years.
At the end of the uniform term period, you can usually renew the policy every year, but you will likely face much higher rates each time you renew, and the cost may become unaffordable.
Purchasing the right term life insurance term upfront will save you money in the long run by locking in your costs for the term life insurance period.
Here, we compare the costs of different policy terms for $500,000 life insurance for a 30-year-old male and female.
Average annual costs by term length for a $500,000 life insurance policy
Our analysis revealed that:
- Going from a 10-year term to a 15-year term increases the rates by 11% for men and 20% for women.
- Moving from a 10-year term to a 20-year term increases the rates by 39% for men and 40% for men.
- Both sexes can double the duration of the term life insurance policy (from 10 to 20 years) and even not pay 50% more for the policy.
- To triple the time from 10 years to 30 years, men pay 105% more and women pay 87% more.
$500,000 life insurance costs per coverage amount
We analyzed the costs of $500,000 term life insurance policies versus other coverage amounts.
Getting quotes for various life insurance payout amounts can help you decide if a $500,000 life insurance policy fits your budget.
Average Annual Costs by Coverage Amount for 20-Year Term Life Insurance
We discovered that:
- Going from $500,000 to a $750,000 policy costs 32% more for men and 14% for women.
- Increasing your coverage amount from $500,000 to $1 million does not double your life insurance costs. It costs only 60% more for men and 38% for women to double the coverage.
- Going from $500,000 to a $2 million policy gives you four times the death benefit, but does not quadruple the life insurance costs. Men pay 192% more and women 148% more.
Tips for getting $500,000 life insurance
When considering life insurance costs of $500,000, first make sure that $500,000 meets your life insurance needs.
Determine what debts and other obligations your family would have if they no longer had you. Your financial review should include credit card balances, car loans, your home mortgage, and other financial obligations. Decide if you want to provide additional life insurance to cover loss of income, college tuition, and funeral expenses.
How much life insurance do you need?
Answer simple questions in our 3-step process
Once you know how much life insurance you need, think about the length of the policy.
Term life insurance is ideal for covering obligations that have a definite end, such as the years until you retire. If you want coverage no matter how long you live, consider whole life insurance or universal life insurance. A financial advisor or life insurance agent can also help you determine the best amount of coverage and the best type of policy.
Don’t be surprised if a life insurance medical exam is required for the application process. Life insurance companies often require an exam to get a detailed picture of your condition. No-exam life insurance policies are increasingly available, but if you’re not in excellent health, you may not qualify.
Finally, check the financial strength ratings of the life insurance companies you are considering. Rating agencies such as AM Best and Standard and Poor’s analyze company financial data and create financial strength ratings that indicate an insurer’s ability to pay claims. Since life insurance may not be paid out until decades after it is purchased, a company’s financial strength is especially important.
We analyzed term life insurance rates for healthy non-smokers of average height and weight. We averaged the four cheapest quotes we found online. Your own rates will be different depending on your age, health, driving record and other factors.