What affects the cost of life insurance?

The life insurance cost factors you can’t control

Two of the biggest influences on life insurance rates are also the ones you can’t control: age and sex. Generally, younger people pay less than older people because they’re less likely to have health problems. And the cost of life insurance tends to be more for males because they have shorter lifespans and are more likely to have dangerous jobs or lifestyles, making them riskier to insure overall.

Term life insurance rates by age and sex

The life insurance rates by age chart below provides examples of the average term life insurance costs for males and females, 20 to 60 years old, quoting a 10-year term policy through eFinancial. As you can see, the average life insurance cost per month is generally higher for men than women. Plus, the average rates for 20- and 30-year-olds are nearly the same, while those for 40-year-olds skew higher as a result of increasing risk.

Age Coverage amount: $250,000
20 years old Coverage amount: $250,000 Male: $13.48Female: $12.17
30 years old Coverage amount: $250,000 Male: $13.48Female: $12.40
40 years old Coverage amount: $250,000 Male: $16.31Female: $15.22
50 years old Coverage amount: $250,000 Male: $32.84Female: $29.36
60 years old Coverage amount: $250,000 Male: $74.82Female: $56.98

Quoted life insurance rates are based on Fidelity Life Association’s best-published monthly premium rates for 10-year RAPIDecision Life policies for a face amount of $250,000 as of May 22, 2020. RAPIDecision Life is available to people who are between the ages of 18 and 65.

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Average Term Life Insurance Rates by Payout Amount

Knowing how much life insurance you need is essential. As the amount of the death benefit rises, so will your costs. We analyzed average annual rates for a 30-year-old at varying term lengths for policy payouts from $100,000 up to $3 million.

What Is a Rule of Thumb for How Much Life Insurance You Need?

There are several rules of thumb you can use for computing the amount of life insurance you'll need. These often involve multiplying your current income by a number such as 10x or the number of years left until retirement. Other rules of thumb involve adding up all expenses and obligations you need for your family.

What Happens to My Life Insurance if I Lose My Job?

If you lose your job and have private life insurance that you purchased on your own, so long as you continue paying your premiums, you will have coverage. If the insurance was provided as a group plan through your employer, you will typically lose that coverage after one month after being terminated.

Look for a policy with these extras

A term policy can last up to 30 years, and a lot can happen in that time. Your health could change. You could lose your ability to work. Consider these coverage options, or riders, that can add protection and flexibility to your base policy for relatively little added cost1.

Term conversion rider

This lets you convert to a permanent whole life policy with the same health rating – and no new medical exam. If your health takes a turn for the worse, conversion may help provide the lasting protection you want for your family. 

All Guardian Level Term policies provide this feature for the first five years, with the charge included in the premium. You can add an Extended Conversion Rider (ECR) which lets you convert to a whole life policy for the entire length of the term.

Waiver of premium rider2

If you become disabled and can’t work, this rider can pay your life insurance premiums and help keep your policy in effect. 

Guardian’s version of this rider includes a 7-year “own-occupation” definition, which means that even if you’re able to do some work, payments may be waived if you can’t work in your profession or occupation. Guardian also offers an enhanced Waiver Plus rider: in conjunction with ECR, this lets you convert to a permanent policy after five years of disability – and your insurance premiums will still be waived as long as the disability continues. 

 

Average monthly costs for term life insurance

AGE

GENDER

$500,000

Guardian

$1,000,000

Guardian

30

Female

$22

$27

$36

$48

 

Male

$28

$35

$47

$61

40

Female

$33

$40

$57

$73

 

Male

$39

$51

$69

$92

50

Female

$71

$86

$128

$167

 

Male

$93

$124

$173

$234

SOURCE: Rates valid as of 1/11/2021

This chart shows average rates quoted in January 2021 for a 20-year “level term” life insurance policy, which means premiums stay the same for the length of the policy. These rates range from 3.6¢ per $1,000 to 18.6¢ per $1,000 – a spread of over 500% – with a median cost of 11.1¢ per $1,000. That’s a lot of average stats in one sentence. What does it all mean for you? Probably not a lot because you’re not an “average,” you’re an individual. When you buy a policy, life insurance companies will set your actual rates according to criteria that are entirely dependent on you and your needs.

Sidebar/callout:

The average annual life insurance premium per U.S. household is $993.4

How much will you pay? Get an instant term life quote.

Term life insurance rates by policy length

Examining quotes for 10- and 20-year term life policies, the shorter the term length of a life insurance policy, the cheaper the life insurance premiums you will have to pay each year.

We have broken down the premiums by what is called rating class. A rating classification is the health rating that the life insurance company assigns to you after you have taken a medical exam. The rating you receive directly affects the rate you pay for your life insurance policy. These metrics are determined by each individual life insurance provider, but only vary slightly across the industry. Health indicators such as blood pressure, smoking and cholesterol levels impact your rating classification.

10-year term life insurance rates

People who are on a tight budget may prefer 10-year policies because they offer some of the cheapest rates available. Furthermore, a 10-year policy can be useful for someone who may not require long-term insurance.

Policy face value Preferred plus Preferred Standard $100K$16$19$22$250K$23$28$37$500K$35$44$61$1M$59$76$110 Compare rates

20-year term life insurance rates

The most popular term life insurance option on the market, the 20-year term policy, provides longer coverage than its shorter 10-year counterpart, though it comes with higher annual rates.

These policies are usually recommended for young families who often have large debts and expenses, such as mortgages and school loans, that would be harder to pay without one parent’s income.

The 20-year term is typically long enough for the family to substantially pay down these debts and reduce the potential risk of someone else having to foot the bill should something happen.

Policy face value Preferred plus Preferred Standard $100K$17$19$23$250K$25$30$38$500K$40$49$65$1M$69$86$117 Compare rates

How Does the Cash Value Benefit Work?

Whole life policies are one of the few life insurance plans that build cash value. What is whole life insurance cash value? It is generated when premiums are paid – the more premiums that have been paid, the more cash value there is. The main benefit of cash value is that it can be withdrawn in the form of a policy loan.

For example, if you have been paying premiums for many years and have an unexpected medical bill or financial obligation, you can call your insurance company and see how much you can withdraw from your policy. As long as the loan and any interest is repaid, your policy’s full coverage amount will be paid out to your beneficiary. If the loan isn’t repaid, the death benefit will be reduced by the outstanding balance of the loan.

Average cost of life insurance by gender

Besides age, life insurance quotes vary depending on your gender. On average, men pay 23% more for term life insurance than women.

This is because men tend to have shorter life expectancies compared to women. Life insurers take this into account and charge men more expensive rates than a woman who is the same age.

Age Policy face value Male premium Female premium 30$250K$21$18$500K$33$28$1M$58$4940$250K$30$25$500K$50$41$1M$93$7650$250K$67$52$500K$118$92$1M$226$173 Monthly premiums are for a life insurance policy with a term length of 20 years.

Average Life Insurance Rates FAQ

Expect insurance companies to possibly perform a soft credit check to review details of your credit report for anything that may give them pause. For instance, if you have a bankruptcy, this can make you a higher risk and affect your life insurance quotes. The score itself may or may not be used, it depends on the life insurance company’s rating system. Also, some companies use credit scores, or elements of credit reports and other reports, to predict “mortality” life expectancy and they sell this information to life insurance companies. For example, LexisNexis, an analytics company, offers its Risk Classifier score, and TransUnion, an information and insights company, has TrueRisk.

There is no perfect age to shop for life insurance, but a good rule of thumb is to buy life insurance as soon as possible when you have a need for it. Buying term life insurance while younger (and healthier) can lock you in on a reasonable cost for the length of your policy. If you discover you need more life insurance as you age, you can always buy additional coverage or try laddering life insurance.

If all other factors are equal, males generally pay more for life insurance due to a shorter life expectancy than females. We found that on average, for a 20-year $500,000 term life insurance policy, 30-year-old men paid about 20% more than women. For the same policy at age 50, males pay 30% more than females. There’s an exception in Montana, which requires gender-neutral life insurance rates.

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