How Much Does Life Insurance Cost?

February 5, 2021

How Much Does Life Insurance Cost? 

When it comes to life, one should always expect the unexpected. While there’s nothing wrong with hoping for the best, it’s undeniable that sometimes bad things do happen. Generally, there isn’t much we can do to change that, except for perhaps applying for life insurance. 

Millions of people around the world have purchased life insurance policies. These plans serve as a safety net in case the worst happens to you or a loved one. While life insurance isn’t mandatory, it’s always a good idea to consider subscribing to a plan if you can afford it. After all, nobody really knows what the future holds.

Life Insurance: Key Pointers

Below are some important things to keep in mind when applying for life insurance. The average cost of life insurance can vary significantly depending upon a number of factors, but for people of any gender between ages 25 and 60, the monthly premium insurance rates can be anywhere between $25 and $260. 

  • Life insurance cost depends upon the following five factors: age, gender, policy type (term or whole), health, and personal hobbies. 
  • The sooner you subscribe to life insurance, the better. Rates tend to go higher as you age, and especially if your health takes a dip.
  • People with high-risk hobbies and careers can expect to pay more for their monthly premiums than those with low-risk hobbies and jobs. 
  • Things that won’t affect your monthly premiums include where you live, your beneficiaries and assets, and the number of life insurance policies you are backed by. 

You can expect to be paying for insurance well throughout your adult life and even old age. Therefore, it is important to invest time in understanding how much life insurance companies are charging for plans as well as the different types of life insurance plans out there. Making an informed decision can help you save a significant amount of money in the long run. 

Some people tend to sign up for expensive policies and then have a difficult time paying for them, ultimately leading to them losing the benefits of their life insurance policy altogether. This defeats the purpose of subscribing to a policy in the first place. Therefore, you should always keep your personal budget in mind before signing up for life insurance. 

Types of Life Insurance

There are many different types of life insurance, but the two main branches are term life insurance and whole life insurance. Term insurance is usually there for a limited amount of time (called the “term”), and whole life insurance is one that will last you throughout life as long as you pay for your premiums every month.

In simpler words: term insurance is temporary, whole insurance is permanent. 

Whole life insurance policies cost more than limited-term options. Here’s why:

  • Longer-term: Unlike short term policies, whole life insurance policies won’t expire until you die, as long as you pay your monthly premiums regularly. It’s highly likely that you’ll pass away while the insurance is active, and the company will have to pay for your death benefit, which is why insurance companies charge more for whole life insurance. 
  • Additional cash value component: Whole life insurance comes paired with an extra cash value component in addition to the regular life insurance component. Your monthly premium payments will contribute to both the death benefit and the cash value component, which is why whole life insurance typically costs more than term insurance.
  • Extra fees: Whole life insurance providers charge additional background and management fees for their services. These fees are included within the monthly premiums but tend to hike the premium rate up, making your overall insurance plan more expensive. 

How Much is Life Insurance?

As mentioned above, life insurance costs depend upon your age, gender, health, hobbies, and the type of policy you are subscribing to. Below are some important guidelines:

  • According to international trends, women tend to outlive men, so their monthly premiums cost less than what a man would be expected to pay. 
  • The older you get when you begin coverage, the higher the cost of your monthly premiums will become.
  • Your current health status will heavily influence life insurance rates. People with chronic illnesses can expect to pay more than those without any such ailment. If you are callous about your health or have habits like smoking, the insurance company may drive up your monthly premium rate. Health-related factors that may increase the premium rate include high blood pressure and cholesterol levels, diabetes, HIV/AIDS, hepatitis, nicotine, recreational drug use, and chronic alcoholism. 
  • Health classes matter: people falling into the “preferred” health class can expect to pay up to 40% less than what someone within the “standard” health class will. The insurance company may ask you to take a brief medical exam to attest to your current health situation or might instead ask for an Attending Physician’s Statement (APS) to verify your health class. Your health class is not limited to just your own physical wellbeing. Interestingly, your family’s history of illness can also factor into the deal. For example, if breast cancer runs in the family, insurers may charge you a higher premium than someone without such a history. 
  • If you’re a fan of dangerous activities, like skydiving, expect to pay a higher premium. Activities like this can sometimes land you in serious health situations, which insurance companies may ultimately have to pay for. 
  • Signing up for a rider can add to your policy’s premiums cost. Riders are small side contracts that enable you to customize your life insurance policy. Very few people use them as they only come in handy for certain special cases and drive up the premium cost. However, some riders may be added to your plan at no additional cost. This includes the well-known “term conversion rider.” 
  • If you’re on a tight budget and want to invest a smaller amount in your life insurance plan, try opting for term insurance. Term insurance policies typically allow your premium rate to stay the same throughout the set time frame. This is especially helpful if you’re young because younger people can expect to pay less for their term’s monthly premiums due to the good health that typically accompanies youth. 

Life insurance policies with longer terms (including whole or lifetime terms) tend to cost more than those with shorter terms (temporary life insurance). Life insurance cost is also determined by how much coverage (death benefit) you have signed up for. 

Buying Life Insurance When You’re Older

Life insurance is usually more popular amongst adults below age 60. By the time you reach your 50s and 60s, the number of people who depend on you for financial security or other important things will have decreased. Hence, many older people feel that they do not need life insurance to protect themselves or their loved ones anymore. 

However, some people still do invest in life insurance at an older age. There are even people who will start their term after turning 60 despite knowing that they will have to pay much more in monthly premiums than someone younger would. 

People who do this typically have family members who qualify as “lifelong dependents.” In some cases, the people applying for life insurance may simply have started their family late and expect to have beneficiaries and dependents under their wing throughout their old age. 

It makes sense to sign up for life insurance despite being older than the average life insurance subscriber in such scenarios. 

Final Thoughts

Life insurance serves as a safety net for your loved ones, which is why so many people sign up for it regardless of how young or old they may be. The best time to buy a policy is as soon as you overcome major life milestones. This may include marriage, the birth of a child, buying a new house or investment property, and starting a business.

If you’re looking into comparing different life insurance policies, try visiting www.lifeplans.com for a chance to apply for quotes from multiple trustworthy life insurance carriers. Feel free to choose the one you like and start negotiating a contract for your future life insurance!