How Much Does Life Insurance Cost?
Navigating the world of life insurance can feel overwhelming, with numerous companies, policy options, and coverage amounts to consider. One of the most important factors in your decision-making process will undoubtedly be the cost. This article will provide an overview of average life insurance rates to help you understand what you might expect to pay.
Based on data provided by Covr Financial Technologies, the average cost of life insurance is around $26 a month. This figure is based on a 40-year-old purchasing a 20-year, $500,000 term life policy, which is among the most common types of policies. However, life insurance rates can vary significantly depending on the applicant, the insurance provider, and the specific policy.
Factors That Determine Life Insurance Rates
Life insurance premiums are primarily based on an individual’s life expectancy. Generally, the younger and healthier you are, the lower your premiums. Insurance companies categorize applicants based on their health profiles, using classifications like “super preferred,” “preferred,” and “standard.” Each insurer has its own underwriting process, which involves assessing several factors. Here are the main aspects they consider:
- Age: Expect to pay less for life insurance when you’re younger. As you age, your life expectancy decreases, which increases the probability of the insurer having to pay out.
- Gender: Women generally have longer life expectancies, leading to lower insurance rates compared to men of the same age and health.
- Smoking Status: Smokers are at greater risk of developing health problems, so life insurance tends to be more expensive for them.
- Health: Insurance companies assess pre-existing conditions, blood pressure, cholesterol levels, and height/weight.
- Family Medical History: A family history of serious conditions such as heart disease, cancer, or diabetes may influence your premium.
- Driving Record: DUIs, DWIs, and major traffic violations can lead to higher premiums.
- Occupation and Lifestyle: Hazardous or high-risk jobs and activities can result in higher premiums.
Types of Life Insurance and Their Costs
The type of life insurance you select significantly affects its cost:
- Term Life Insurance: This is typically the most affordable option, offering coverage for a set period without accumulating cash value.
- Permanent Life Insurance: This type typically lasts for a lifetime and includes a cash value component, allowing policyholders to borrow against the policy or withdraw funds later in life. These policies cost significantly more than term life insurance.
- Life Insurance Riders: Adding riders to your policy, such as a child rider, can increase your premium.
Factors That Don’t Impact Life Insurance Premiums
Several factors won’t affect the rate you’re offered:
- Ethnicity, race, and sexual orientation (insurers cannot discriminate based on these factors).
- Credit score (although insurers may review your credit history).
- Marital status.
- The quantity of policies you own (though you’ll need to justify purchasing large amounts of coverage).
- Number of beneficiaries named.
Average Term Life Insurance Costs
Below are average annual rates for a $500,000, 20-year term life insurance policy for individuals in good health. These figures are based on data from February 2025.
Term Life Insurance Rates for Non-Smokers
Source: Covr Financial Technologies. Lowest three rates for each age averaged.
Term Life Insurance Rates for Smokers
Source: Covr Financial Technologies. Lowest three rates for each age averaged.
Average Whole Life Insurance Costs
Below are the average annual rates for a $500,000 whole life insurance policy for individuals in good health. These figures are based on data from February 2025.
Whole Life Insurance Rates for Non-Smokers
Source: Covr Financial Technologies. Lowest three rates for each age averaged.
Whole Life Insurance Rates for Smokers
Source: Covr Financial Technologies. Lowest three rates for each age averaged.
Finding the Right Life Insurance Plan
The cost of life insurance is influenced by several factors, but understanding these elements can help you make informed decisions and find the right coverage for your specific needs. Remember to compare quotes from various insurers and assess your individual circumstances to ensure you secure the best possible policy for your situation.
