How much does life insurance cost?

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Life insurance can provide financial assistance to your loved ones after your death. This assistance may extend to payment of final expenses and also to compensation of beneficiaries for 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 yearly) for a specific coverage amount, say $ 500,000. But 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 which has an expiration date for coverage, whole life insurance is permanent. This means that as long as you continue to pay your premiums on time, you are covered for life. Whole life insurance is much more expensive than term life insurance in most cases. When shopping for life insurance or switching companies, costs will play a big role in determining which provider and which plan you use.

How much does life insurance cost?

As part of incorporating it into your financial strategy, you may want to know “how much does life insurance cost?” The following figures are provided by S&P Global Market Intelligence and illustrate an example of term life insurance prices from four major life insurers for healthy, non-smoking policyholders.

Average cost of life insurance by age

S&P Global Market Intelligence also offers age-specific pricing for healthy policy buyers, male and female, looking for $ 250,000 term life coverage at various ages:

Age Average quote from women Average men quote
25 $ 18.59 / month $ 22.67 / month
30 $ 19.79 / month $ 23.49 / month
35 $ 22.95 / month $ 25.72 / month
40 $ 29.63 / month $ 34.74 / month
45 $ 41.75 / month $ 51.42 / month
50 $ 60.68 / month $ 81.23 / month

It is important to note that the cost of life insurance increases the most after age 45. Those who wait until middle age or retirement to purchase coverage will typically pay significantly more than if they had purchased a policy when they were younger.

Average cost of life insurance by sex

To see the highlighted differences by gender, the following two policyholders are 35 and are looking for a 30-year term policy with a death benefit of $ 250,000.

Life insurance company Average cost of life insurance for a 35-year-old woman Average cost of life insurance for a 35-year-old man
RiverSource $ 22.09 / month $ 24.72 / month
State farm $ 28.07 / month $ 30.02 / month
At national scale $ 20.34 / month $ 23.63 / month
Mutual of Omaha $ 21.29 / month $ 24.51 / month
Average cost $ 22.95 / month $ 25.72 / month

As you can see, the average cost of life insurance for a man is about $ 2.80 more per month than what a woman will pay. That’s just over $ 1,000 over the term of a 30-year term policy. The rates are similar regardless of the size of the insurance company.

Life insurance rates by state

As with other types of insurance, variables unique to you can affect the cost of your life insurance. However, the cost of life insurance is not affected by geographic factors, such as the neighborhood in which you live. Life insurance may differ slightly on average in the United States. the rates or amounts of policy coverage.

Average cost of term life insurance by state

S&P Global Market Intelligence released a table showing the average cost of term life insurance per household for each state in the United States, 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 Colombia $ 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
Caroline from the south $ 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

Life insurance providers look at many factors to determine your eligibility for coverage and the price of your premium. To better understand these costs, it may be helpful to look at them from an insurer’s perspective and how rates are risk-based.

Kind

Women have a longer life expectancy than men on average, so if you are a man you are a higher risk for insurance companies. On this basis, life insurance costs are generally higher for a man than for a woman of the same age.

Age

The older you are when you apply for a policy, the more likely it is that the insurance company will have to pay for the benefit.

Death benefit amount

Another factor affecting the cost of life insurance is the coverage you need. If you want a policy that offers financial assistance to a loved one (think $ 50,000), you will pay a lot less than a policy that offers a death benefit of $ 1,000,000.

Type of life insurance

Term life insurance rates are cheaper than whole life insurance rates. Term life insurance is only effective for a specified period. Whole life insurance is permanent and does not end until you choose to cancel or stop paying premiums. Term life insurance leaves an amount of death benefit you choose. Whole life insurance also includes a cash value amount that you contribute to and can access during your lifetime.

Job

What you do for a living can also have an impact on how much you pay for life insurance. If you work in a dangerous profession like construction, war reporting, or law enforcement, you may face more risk on a daily basis than an office worker. Because of this added risk, you might pay a little more for life insurance.

Health

Your health also plays an important role in how much you pay. If you use tobacco products, it will usually increase your premium significantly. Additionally, most life insurance companies will want you to undergo either a health questionnaire or a checkup before approving yourself for a policy.

A company registered nurse will come to your home, collect information about your and your family’s medical history, and check health parameters like your blood pressure and resting pulse, or in some cases, even take a sample. of blood. Your current health and your family’s risk factors will at least partly determine how much you pay.

Way of life

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

Frequently Asked Questions

How Much Should You Spend on Life Insurance?

It depends on you and the specific financial needs of your household. It is ideal for knowing the amount of coverage you will need to provide for your dependents in the event of death. This can include final expenses, the costs associated with building up your income for your family, your children’s education costs, and your debts. Once you have a firm estimate of how much you want to leave for your family, you can shop around for the best rates.

Do you pay taxes on life insurance?

It depends on your particular life insurance policy. In general, you do not have to pay tax on a death benefit from life insurance. If you have a cash value policy, the cash value also increases with a tax deferral and any loan you take on that amount is also tax exempt. The only time you’ll pay 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 have. have paid during the term of the policy. The difference would then be taxable income for you.

How to take out life insurance?

Either way, you can start the process by going through the websites of a few carriers to receive life insurance quotes. Some allow you to purchase a policy online while others will want you to complete a medical questionnaire that will allow them to learn more about your health and your family’s health history. Additionally, some will also want to get a checkup to determine your current health. Therefore, with some you can purchase a policy right away while with other companies it may take weeks to receive coverage. Additionally, many people also have access to free or discounted life insurance through their employer’s group plan, so you can talk to your HR representative if this option would be beneficial to you.

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