The cost of life insurance may be less expensive than most people think. One survey found that respondents consistently overestimated the cost of term life coverage, and that half of the population estimated the cost of life insurance at more than three-times the actual cost.1

cost of life insurance

So how much does life insurance really cost?
That depends on the following factors:

  1. Amount of coverage – The amount that will be paid out if you pass away
  2. Amount of time – The length of time your policy is active
  3. You – Your health, age and behaviors

With term life insurance — which is generally the most affordable option — you choose how long you want your policy to last, often 10, 20 or 30 years. Your premium remains the same during those years.

How life insurance cost is determined

Below are common factors that determine life insurance rates:

  • Amount of coverage: Just like other types of insurance (e.g. auto or homeowners), higher coverage amounts cost more.
  • Amount of time: A longer coverage period (30 years) will have higher rates than a shorter coverage period (10 years). Why? The risk of passing away in the next 30 years is greater.
  • Age: Typically, the younger you are, the less expensive your life insurance policy will be. The likelihood of someone dying generally increases as they age, so a policy with the same terms will cost less for a 20-year-old than for a 65-year-old. The rule of thumb is that the sooner you get a policy, the less the annual premium will cost.
  • Sex: Life insurance for women usually costs slightly less than for men because women live longer, according to statistics from the Centers for Disease Control and Prevention.
  • Health: If you’re a smoker, the policy will probably cost you more, given the health risks associated with smoking. Those with pre-existing conditions such as diabetes may also have higher life insurance premiums than those without, even if the condition is well managed. If you have other medical conditions, the cost can also be affected.
  • Occupation: Your job matters when it comes to life insurance rates. If your job has a higher rate of risk than a typical office occupation, you may fall into a more expensive insurance category.
  • Behaviors: Habits and activities — such as speeding tickets or other infractions on your driving record or participation in extreme sports such as skydiving — may also impact your life insurance rate, as they indicate how safe you are.

Here’s an example of how some of these factors can affect your life insurance rates.

35-year-old male,
nonsmoker in excellent health
45-year-old male,
nonsmoker in excellent health
45-year-old male,
nonsmoker in average health
Price for a $250,000, 20-year term life policy $15.75/month $29.53/month $53.35/month

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“Insurance Barometer Study,” conducted by LIMRA and Life Happens (2020).