A $500,000 life insurance policy can offer significant financial protection for your family if you were to pass away unexpectedly. Many people underestimate the affordability of life insurance, so it’s wise to explore your options. You might find that a policy with $500,000 or even $1 million in coverage is more accessible than you think.
How Much Does a $500,000 Term Life Insurance Policy Cost?
We analyzed rates for term life insurance policies with $500,000 in coverage and found some illuminating trends:
- Healthy 30-year-old, non-smoker: $167 annually for a 10-year term.
- 30-year-old smoker: Approximately $615 per year for a 10-year term.
- 30-year-old with average health rating: Around $358 annually for a 10-year, $500,000 policy.
Keep in mind that your individual life insurance quotes will vary based on your age, health condition, and other factors. However, these averages provide a helpful benchmark when budgeting for a $500,000 policy.
$500,000 Term Life Insurance Average Costs by Age and Gender
Age is a key factor in determining the cost of life insurance. Premiums generally increase as you grow older. Additionally, delaying the purchase of a policy increases the risk that new health conditions will arise, potentially leading to higher premiums. Gender also influences life insurance costs, with men typically paying more due to a shorter average lifespan.
The following tables present average annual costs for a $500,000 term life insurance policy:
Average annual costs for a 10-year, $500,000 term life insurance policy
Average annual costs for a 20-year, $500,000 term life insurance policy
Average annual costs for a 30-year, $500,000 term life insurance policy
These figures highlight the advantages of securing coverage in your 30s. Waiting until your 50s or 60s to purchase a 20-year term life policy can result in significantly higher premiums.
If you wait to age 40 to buy a 20-year term $500,000 life insurance policy instead of buying it at age 30: Quotes increase 47% for men and 49% for women. If you wait to age 50: The costs leap by 250% for men and 219% for women compared to age 30. Waiting until age 60 (instead of 30): Premiums increase by 914% for men and 731% for women.
Our analysis also indicates that males generally receive higher quotes than females for $500,000 life insurance policies across all age groups. The difference in costs fluctuates, as demonstrated by the following examples for a $500,000, 20-year term life insurance policy:
- At age 30: Men pay 18% more than women, or roughly $40 more annually.
- At age 40: The difference is 17%, or $55 more per year for men.
- At age 50: Men pay 30% more, an extra $208 per year.
- At age 60: Men pay 46% more, which translates to $803 extra per year.
$500,000 Life Insurance Costs by Term Length
While longer term lengths often come with a higher overall cost, they lock in your rate for a more extended period. This level term ensures a consistent annual premium for the selected timeframe (e.g., 10, 20, or 30 years). At the end of the term, you usually have the option to renew the policy annually, but these renewals typically come with much higher rates, potentially making the coverage unaffordable.
Choosing the appropriate term length upfront can lead to long-term savings by stabilizing costs over the level term duration.
The following chart compares costs for various term lengths for a $500,000 life insurance policy for 30-yer-old males and females:
Average annual costs by term length for a $500,000 life insurance policy
Our analysis revealed:
- Moving from a 10-year term to a 20-year term life insurance policy increases rates by 42% for both men and women.
- To triple your term from 10 years to 30 years, men pay 121% more, and women pay 115% more for a 30-year term life insurance policy.
$500,000 Life Insurance Costs by Coverage Amount
We also examined how the cost of a $500,000 term life insurance policy compares to different coverage amounts for 30-year-olds. Getting quotes for various payout amounts provides valuable insight into whether a $500,000 life insurance policy aligns with your financial goals.
Average annual costs by coverage amount for 20-year term life insurance
Key findings:
- It costs men 56% more and women 49% more to secure a $500,000 policy compared to a $250,000 policy.
- Increasing coverage to $1 million from $500,000 costs 67% more for men and 54% more for women.
Tips on Buying $500,000 Life Insurance
If you’re considering a $500,000 life insurance policy, start by determining if it meets your specific needs. Consider the following:
- Assess your life insurance needs: Evaluate your current financial obligations, including credit card debt, car loans, and your mortgage. Determine if you need additional coverage for lost income, college tuition, and funeral expenses.
- Think about the policy’s duration: Term life insurance suits obligations with fixed end dates, such as the years until your retirement. For lifelong coverage, consider whole life or universal life insurance. A financial advisor or life insurance agent can help you pinpoint the optimal coverage amount and policy type.
- Prepare for a medical exam: Life insurance companies often require an exam to assess your health and set your rates. No-exam policies are becoming more accessible, but they may not be an option if your health isn’t excellent, or you’re over 50.
- Check financial strength: Review the financial strength ratings of the insurance companies you’re considering. Ratings agencies like AM Best and S&P evaluate financial stability, indicating the insurer’s ability to pay claims over many years. This is a valuable tool for life insurance buyers.
