What is the average cost of life insurance?
How much does life insurance cost? Here’s everything you need to know about the average cost of life insurance and factors that may affect how much you pay.
In the US, the cost of life insurance is defined primarily by two factors – age and gender.
How much is life insurance?
It’s complicated. The average cost of life insurance for US adults is $26 monthly.
This average is based on a 40-year-old taking out a 20-year term policy for $500,000. (It’s based on this valuation because that’s the most commonly purchased type of policy.)
While many wait until they’re 40 to buy life insurance, it’s cheaper to purchase sooner!
In truth, determining your life insurance cost is going to be complex.
Your age and gender have a significant impact. The state you live in impacts the rates available to you. Your health comes into play. Even your driving record is considered. And, of course, what you pay depends heavily on the coverage you need.
Before buying a policy, many compositional factors have to be considered, and this article is a great place to start.
The average cost of life insurance for US adults is $26 monthly
Life insurance rates by age
If you look at any life insurance rates by age chart, it’s plain to see this simple fact: Age is the single most significant determinant of how much you pay for life insurance.
The older you are, the more you pay.
Why? Because as you get older, your risk of death increases.
The most crucial thing to note is that your premium increases significantly after 40.
It’s never enjoyable to think about your passing, but the sooner you start planning for that day, the better position you are in to secure your family’s finances.
Life insurance cost by age is an upward line, and it’s better to save any extra money that you can.
For the average 30-year-old man, a whole life insurance policy is $4,690 annually.
For the average 70-year-old man, it's $30,462. For term life insurance, these figures drop to $224 and $9,297, respectively. (Term policies are always cheaper because they generally cover a period between 10 and 30 years.)
So, age matters. But what about gender?
If you’re buying health insurance, you might spot that women are charged more than men for their medical premiums. If you’re purchasing life insurance, you see the opposite.
Men don’t live as long as women and are statistically more likely to engage in dangerous lifestyles.
For these reasons, insuring a man’s life is usually more expensive.
Since many insurers determine life insurance rates by age and gender in unison, the context of one is as important as the context of the other.
Life insurance cost by gender
The average 30-year-old woman pays $189 annually for life insurance, while a man of the same age pays $224.
The average 70-year-old woman pays $8,204 annually for life insurance, while a man of the same age pays $9,297.
These averages are based on a 20-year, $500,000 policy (the most common). But for a shorter, less valuable policy? The impact is still felt.
If, for example, a 50-year-old non-smoking woman purchases a 10-year policy worth $250,000, she pays $1,573 annually.
If a non-smoking man of the same age, under the same terms, buys this policy, he pays $2,065 annually.
One thing to note if you’d prefer not to have to account for this gender gap is that certain states don’t weigh up life insurance costs by gender. It isn’t a factor.
The majority of states do factor gender in, but there are a fair few that legally do not, including:
Other factors impacting life insurance cost
There are many other things to think about once you’ve determined the impact that age and gender have on your life insurance cost.
You should bear them all in mind when reviewing what policy might be appropriate, as their impact might exclude or include certain types of life insurance:
Your lifestyle – This includes your profession and your hobbies. Activities like mountain climbing enjoyed in your free time affect your rates, just like high-risk job roles (police officer, firefighter, soldier, etc.)
Your location – While location doesn’t impact life insurance massively, different states allow insurers to charge different prices. The most expensive is New Jersey, with an average premium of $732 annually. The cheapest is Mississippi, with an average of $581.
Your smoking status – If you’re a smoker, you can expect to pay more for life insurance. Smokers have a higher risk of developing a respiratory disease or lung cancer and therefore are at higher risk of dying.
Your overall health and medical history – The general condition of your physical health and your health history affect your life insurance, including factors like height, weight, cholesterol, and blood pressure.
Your family’s medical history – Just like your own medical history, your family medical history can flag things that affect your policy. A history of specific conditions like Alzheimer’s or heart disease equals a higher premium.
Your criminal record – This especially concerns your driving record and any DUIs or DWIs. If your driving record is less than stellar, you’re considered a higher-risk individual, and your insurance company will likely charge you more.
For even more advice and guidance surrounding life insurance, stay on Unbiased.
Kate has written for leading publications and blue chip companies over the last 20 years.