How Much Does Term Life Insurance Cost? | The Truth May Surprise You

 

Term life insurance is a type of life insurance that provides coverage for a specific period of time, usually 10, 20, or 30 years. If you die within the term, your beneficiaries receive the death benefit. If you outlive the term, the policy expires and you get nothing.

Term life insurance is ideal for people who need temporary protection for a certain stage of life, such as paying off a mortgage, raising children, or covering debts. It is also the cheapest way to get life insurance, as it has no cash value component or other features that increase the cost.

But how much does term life insurance actually cost? And what factors affect the price? In this article, we will reveal the truth about term life insurance cost and how to find the best deal for your needs.

1. The Average Cost of Term Life Insurance

• According to data from Policygenius , a leading online insurance marketplace, the average cost of term life insurance is about $86 to $147 per month for a $500,000 20-year policy as of June 2023. This is based on quotes from 11 major insurers for healthy non-smoking men and women aged 25 to 55.

• However, this is only a rough estimate and does not reflect the actual cost of term life insurance for each individual. The cost of term life insurance can vary widely depending on several factors, such as your age, health, gender, lifestyle, family history, and the amount and length of coverage you choose.

• Here are some examples of how term life insurance cost can change based on these factors:

  • Age: The older you are, the more expensive term life insurance will be. This is because you have a higher risk of dying within the term. For example, according to Policygenius data, a healthy 25-year-old male can get a $500,000 20-year policy for about $23 per month, while a healthy 55-year-old male can get the same policy for about $163 per month.
  • Health: The healthier you are, the cheaper term life insurance will be. This is because you have a lower risk of dying within the term. For example, according to Policygenius data, a healthy non-smoking 35-year-old female can get a $500,000 20-year policy for about $28 per month, while a smoker with high blood pressure can get the same policy for about $94 per month.
  • Gender: Women tend to pay less than men for term life insurance. This is because women have a longer life expectancy than men and are less likely to die within the term. For example, according to Policygenius data, a healthy non-smoking 40-year-old male can get a $500,000 20-year policy for about $46 per month, while a healthy non-smoking 40-year-old female can get the same policy for about $36 per month.
  • Lifestyle: Your lifestyle choices and habits can also affect your term life insurance cost. For example, if you smoke, drink excessively, use drugs, engage in risky hobbies or occupations, or have a poor driving record, you may pay more for term life insurance than someone who does not. This is because these factors increase your risk of dying within the term.
  • Family history: Your family history of certain diseases or conditions can also influence your term life insurance cost. For example, if you have a parent or sibling who died of cancer or heart disease before age 60, you may pay more for term life insurance than someone who does not. This is because these factors indicate a higher genetic risk of dying within the term.
  • Coverage amount: The more coverage you buy, the more expensive term life insurance will be. This is because you are buying more protection for your beneficiaries. For example, according to Policygenius data, a healthy non-smoking 30-year-old male can get a $250,000 20-year policy for about $16 per month, while a $1 million 20-year policy will cost him about $45 per month.
  • Coverage length: The longer your coverage lasts, the more expensive term life insurance will be. This is because you are buying protection for a longer period of time. For example, according to Policygenius data, a healthy non-smoking 30-year-old female can get a $500,000 10-year policy for about $15 per month, while a $500,000 30-year policy will cost her about $31 per month.

2. How to Save Money on Term Life Insurance

• Term life insurance may be cheaper than other types of life insurance, but it still costs money that you may want to save or spend elsewhere. Fortunately, there are some ways to reduce your term life insurance cost and get the best value for your money. Here are some tips to save money on term life insurance:

  • Buy term life insurance when you are young and healthy. This is the best way to lock in low rates for the duration of your term. The longer you wait, the more expensive term life insurance will be.
  • Compare quotes from different companies. Term life insurance rates can vary significantly by company and policy type, so it pays to shop around and compare quotes from multiple insurers based on your age, health, and coverage needs. You can use online platforms or brokers to compare quotes easily and conveniently.
  • Choose the right amount and length of coverage. You don’t want to buy too much or too little coverage, as both can cost you money in the long run. You want to buy enough coverage to replace your income and cover your debts and expenses for the period of time that your beneficiaries will need it. You can use online calculators or worksheets to estimate your coverage needs based on your income, assets, liabilities, and goals.
  • Opt for a level term policy. A level term policy has a fixed premium and death benefit for the entire term, which means you will pay the same amount every month or year until the policy expires. This is usually cheaper and more predictable than other types of term policies, such as annual renewable term or decreasing term, which have variable premiums or death benefits that change over time.
  • Consider adding riders or living benefits. Riders are optional features that you can add to your term life insurance policy to enhance your coverage or benefits. Some riders may increase your premium slightly, but they may also save you money in other ways. For example, a waiver of premium rider can waive your premium payments if you become disabled and unable to work, while an accelerated death benefit rider can allow you to access part of your death benefit if you are diagnosed with a terminal illness. Living benefits are similar to riders, but they are usually included in your policy at no extra cost. They can also allow you to access part of your death benefit for certain reasons, such as chronic illness, critical illness, or long-term care.
  • Review and update your policy regularly. Your term life insurance needs and goals may change over time, so it is important to review and update your policy regularly to make sure it still fits your situation. You may be able to lower your premium or increase your coverage if you have improved your health, quit smoking, paid off debt, or increased your income. You may also be able to cancel or convert your policy if you no longer need it or want to switch to permanent coverage.

3. The Truth About Term Life Insurance Cost

• Term life insurance cost may seem like a simple and straightforward topic, but there are some myths and misconceptions that you should be aware of before buying a policy. Here are some of the truths about term life insurance cost that may surprise you:

  • Term life insurance is not always cheaper than permanent life insurance. While term life insurance is generally cheaper than permanent life insurance for the same amount of coverage, this is not always the case. Depending on your age, health, and coverage needs, you may find that permanent life insurance offers a better value or a lower lifetime cost than term life insurance. For example, if you need lifelong protection or want to build cash value, you may be better off with a permanent life insurance policy that lasts until you die and grows over time, rather than paying for multiple term policies that expire and increase in price over time.
  • Term life insurance is not always easy to qualify for. While term life insurance is generally easier to qualify for than permanent life insurance, this does not mean that anyone can get it without any hassle or scrutiny. Depending on the company and the policy type, you may still need to undergo a medical exam and provide detailed information about your health history, lifestyle habits, family history, and other factors that affect your risk of dying within the term. You may also be denied coverage or charged a higher premium if you have a preexisting condition , such as diabetes, cancer, or heart disease.
  • Term life insurance is not always renewable or convertible. While most term life insurance policies are renewable and convertible in most cases, this is not guaranteed or automatic. Depending on the company and the policy type, you may face certain restrictions or limitations when renewing or converting your policy. For example, you may only be able to renew or convert your policy within a certain period of time or before a certain age. You may also have to pay a higher premium or undergo a new medical exam when renewing or converting your policy.

Conclusion

Term life insurance is a simple and affordable way to protect your family from the financial impact of your death. It provides a lump sum of money to your beneficiaries if you die within a specified period of time.

However, term life insurance cost is not as simple as it seems. It can vary widely depending on several factors, such as your age, health, gender, lifestyle, family history, and the amount and length of coverage you choose. It can also be influenced by some myths and misconceptions that you should be aware of before buying a policy.

Therefore, you should compare quotes from different companies and choose a policy that fits your budget and goals. You should also review and update your policy regularly and consider adding riders or living benefits to enhance your coverage or benefits.