What is an Average Life Insurance Policy?

Average Life Insurance Policy

Life insurance comes in a variety of types, but you can find policies that cost as little as $45 per month. Life insurance can be confusing for many people as they explore various policies and coverage options available, including Whole Life Insurance, Term Life Insurance, Permanent Life Insurance, and Even Burial Insurance. For instance, age and other characteristics play a role in determining the average cost for you. In addition, you’ll have to consider An Examination of Cost Economies in the United States Life Insurance Industry to determine which kind of policy suits you too. This article will cover the various life insurance policy options available and give you the information necessary to decide which policy is right for you. You can then choose a policy and get a quote from Sproutt, your trusted life insurance expert. There are several common life insurance types to consider; however, the most popular are Term Life and Whole Life. Term life insurance is designed to cover you for a specific period of time (term), after which the policy terminates with no benefit or value if you remain alive. Whole Life insurance offers a permanent plan that covers you as long as you pay your premiums and does not expire. A part of each Whole Life premium payment you make is funneled into a savings component of the policy called the “cash value.” Over time, the cash value of your policy increases, and you are allowed to withdraw those funds or borrow against it.

Comparing Whole vs. Term Life Insurance Prices

A whole life insurance policy may be the better option for you if you are older, as your life insurance needs change over time. With whole life insurance, you won’t be required to take a medical exam, making it easier to get than some other forms of insurance. However, you will often pay a higher premium than on term policies. The tradeoff is that you will build cash value with your policy while you are alive. If you are young and healthy and looking for a more affordable option, you might consider Term Life insurance for your needs. These policies offer lower premiums for greater levels of benefits. While these policies don’t hold a cash value and your policy expires at the end of the term, your rates won’t go up, and it is guaranteed renewable for the life of the term. In short, you may choose term insurance while you are still earning income in the workforce and have dependents that would need financial support in the case of your death.

Term—What is the Average Cost of Life Insurance?

The cost of life insurance is well worth it for many people who wish to have a financial safety net. It’s essential to understand how your policy works and the factors that will impact your premiums. You will be paying these premiums for many years, and letting your policy lapse due to cost is an unfortunate and uncomfortable situation. In short, you should choose a policy with premiums you can comfortably handle for your policy no matter how attractive other terms are. The specific cost of your life insurance policy will be determined by the details of your policy, including the type of policy and amount of coverage. Moreover, consider the circumstances of your age, health, family, and lifestyle. So, as you consider some of the figures in this article, think about what makes sense for you, your goals, and your budget. To give you an idea of what rates could be, we used the example below to show the average cost of life insurance over a 20-year term. In the table below, you can see rate estimates for a 20-year term policy for a nonsmoker.

AgeGender$500,000$750,000$1,000,000$2,000,000
25Male$26.68$36.89$44.67$83.48
30Male$27.46$38.03$46.80$87.58
35Male$28.96$40.31$50.29$94.15
40Male$39.01$55.78$69.47$133.78
45Male$59.19$85.45$110.13$214.61
50Male$93.47$136.56$172.75$339.73
55Male$151.95$221.44$280.48$557.70
60Male$262.37$386.46$488.49$979.02
25Female$20.92$28.36$33.94$62.16
30Female$22.04$29.98$36.08$66.59
35Female$24.51$33.49$41.43$76.89
40Female$32.54$45.70$56.79$107.39
45Female$46.22$66.48$83.37$161.37
50Female$71.12$103.17$128.73$250.18
55Female$106.05$154.55$200.63$392.74
60Female$188.26$277.60$348.94$689.19

Notice that your policy rate is fixed when you sign, and it will never change throughout the term of your policy. You will also see that each year that you put off buying a life insurance policy, your premiums will increase by up to 9 percent on average. You’ll also notice that women receive lower life insurance rates because they tend to live longer than their male counterparts. The table should illuminate that it’s a good idea to invest in a term life insurance policy while you are younger and in better health since your premium will remain the same throughout the policy’s life. Unfortunately, many people don’t consider buying life insurance until they mature and start to think about their financial health and security.

Whole Life—What are Average Life Insurance Rates?

Many people find less need for life insurance as they get older and fewer people rely on them for financial support. Their dependents are now paying their own expenses and building a life for themselves. This can free them up to focus on other financial priorities like paying off long-term debts such as a mortgage. Nevertheless, some will seek Whole Life policies to provide financial benefits for their loved ones. Due to pre-existing health issues, Whole Life policies are popular with older people, as they do not require a medical exam. Even the healthiest person in their 60s should expect that they will pay more than someone in their 20s seeking the same amount of life insurance. However, it still makes sense for many older people to purchase these policies if they desire added financial security or started a family later in life. Though whole life insurance can be more expensive than a comparable term policy, it does not have an expiration date, staying in force as long as you pay your premium. Whole Life policies also have a cash value component that is funded with each premium payment. With this component, you can withdraw tax-free funds, take out a loan against your policy, or surrender it and collect the accumulated amount. But, what do these benefits cost? Whole life insurance is a bit more complicated (even without the medical exam). There are periods when you will pay one rate and periods when you will pay another (unlike the fixed-rate offered by term insurance). For example, you may pay one rate up to age 65 and a different rate after 65. Use the table below to determine the sample rates you would pay up to age 65 for a Whole Life policy.

AGESMONTHLYYEARLY
20$85.48$994.95
30$122.24$1,423.08
40$196.21$2,280.29
50IneligibleIneligible

These rates can change based on several factors including health and lifestyle. As you can see, rates for those that are younger can be significantly lower. A 20-year-old can get a Whole Life policy for under $1000 annually with an $85 monthly payment. A 40-year-old with the same policy value will pay nearly $200 per month or over $2,000 annually.

FAQ about Average Life Insurance Premiums

Infographic - FAQ about Average Life Insurance Premiums Your life insurance policy’s actual cost will vary by your age, lifestyle, health, type of policy, and the policy’s face value. The average 30-year-old can expect to pay less than $45 per month for a 20-year Term Life policy with a face value of $500,000. This small investment could protect your cherished beneficiaries from financial despair, giving you peace of mind and financial security.

Is life insurance worth the investment?

Life insurance is an effective and affordable way to protect your loved ones from financial ruin in the unfortunate circumstance that you are no longer able to provide for them. Providing this financial safety net will give you and your loved one’s peace of mind that they will be taken care of financially in case of your death.

Does it matter where I live?

While insurance companies are permitted to change rates based on conditions like age, health, and gender, your rates will not be impacted by other factors like location, race, ethnicity, or sexual orientation.

Can I get multiple life insurance policies?

It may make sense in some circumstances for you to have multiple policies. Some choose to “ladder” policies, which may save money, as it can be cheaper to have two policies with lower face values than one with a high face value. Having multiple policies in and of itself won’t cause premiums on those policies to increase.

What factors impact my life insurance premiums?

Five factors primarily determine the cost of your insurance policy:

  • Age
  • Gender
  • Policy Type
  • Overall Health
  • Lifestyle Habits

As we have discussed, your policy’s cost will vary based on the combination of factors listed above that apply to your situation. In general, it is best to get a policy with sufficient coverage for now and in the future when you are younger and healthier.

Choose Your Life Insurance Policy

We have discussed the different types of policies available, reviewed sample rates and the factors that impact them. The next step is to choose the policy that fits your needs and get a quote from a trusted insurance expert. Sproutt gives you access to generate quick and straightforward quotes for your insurance coverage options. You can get a quote and buy your coverage in as little as 15 minutes. Contact Sproutt for your quote today.

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