Life insurance calculator

Not sure what life insurance will cost you? Crunch the numbers with our free, easy-to-use life insurance calculator.

Reina-Marszalek 1600Pat Hanzel

Reina Marszalek & Patrick Hanzel

Published December 30, 2019

Calculate the cost of your life insurance policy

Ready to shop for life insurance? Whether you’re just getting started or ready to compare and buy, figuring out how much you need and what it’ll cost you will help ensure you’re making the right choice. Use our free life insurance calculator and tips below to calculate the cost of your policy.

How to use the life insurance cost calculator

  • Step 1: Enter your age — Rates increase 8-10% each year you put off buying.
  • Step 2: Enter your gender — Women generally tend to pay less than men for equivalent life insurance policies.
  • Step 3: Enter your zip code — Where you live has a slight impact on your rates.
  • Step 4: Choose your term length — The term is how long your policy lasts. A good rule of thumb is choosing a term that matches your longest financial obligation (like your mortgage).
  • Step 5: Choose your coverage amount - Most people need 10-15x their income to cover the financial needs of their family.

Once you’ve completed these steps, you’ll receive your estimated policy costs. After reviewing those numbers, you can click the button to get personalized instant online life insurance quotes and compare policies from over 12 top-rated insurers.

Most financial planners suggest covering your longest financial obligation but you do have the option to choose term and whole life insurance. While whole life insurance accumulates a cash value over time, it’s usually 5-15 times more expensive. Most people opt for term life insurance and look into other means of investing and growing their money.

As Patrick Hanzel, Policygenius’ Advanced Planning Specialist and Certified Financial Planner explains, "Due to the complexity and pricing of whole life insurance policies, term coverage is the recommendation for the vast majority of people. Permanent coverage is usually only suitable for people who have a significant income or assets, complex estate planning needs, or a special needs dependent."

How much life insurance do I need?

Before we had tools online to help us figure these things out, the first step in getting life insurance was to sit down with a financial adviser or life insurance agent and do a life insurance needs analysis worksheet.

This basically consists of:

  • Adding up your current debts, monthly living expenses and income, multiplying them by the number of years your family would need support and adding any extra financial obligations like college tuition.
  • Subtracting your current assets, the value of any life insurance policies you already own (like group life insurance coverage you may have through work) and any future assets like social security benefits.

The remaining number is the coverage gap — the amount your family would need to be financially comfortable in your absence. This is the coverage amount you should select as the death benefit. The amount of time your family will require coverage is called the term.

Two final things to take into account when making a life insurance calculation:

First, the payment your beneficiaries receive is tax-free, so you can use your after-tax (take-home) pay to calculate your income replacement needs.

Second, remember that the death benefit gets paid upfront, but your beneficiaries won’t use it all at once. Much of it can be invested, and the rate of return can provide additional income to make the benefit last longer. However, you’ll also want to consider the inflation rate over a 20- or 30-year term.

If you’re looking for a quick answer to how much life insurance you’ll need, check out our life insurance coverage calculator below:

Learn more about how much life insurance you need.

Cost of life insurance

The good news is that most people overestimate the cost of a term life insurance policy by at least 2x to 3x. There are a number of factors that determine your life insurance premium, including:

  • Age: Life insurance is cheaper when you’re young, and increases 8-10% per year
  • Health: Any health conditions or unhealthy habits like smoking make life insurance more expensive
  • Coverage amount: The bigger the death benefit you select, the higher your premiums
  • Term: A 30-year policy costs a bit more than a 20-year term policy

A healthy 30-year-old male who purchases a 20-year term policy with a $500,000 death benefit can expect to pay approximately $28.58 monthly.

quote

Due to the complexity and pricing of whole life insurance policies, term coverage is the recommendation for the vast majority of people.

- Patrick Hanzel, Advanced Planning Specialist and Certified Financial Planner

How to choose a life insurance company

All life insurance companies offer the same financial protection, and thanks to regulations they’re all guaranteed to pay if the worst happens (with some rare exceptions for self-inflicted injury, fraud and crimes). So how to know what life insurance company you should go with?

Simple: whichever one gives you the best rate. Life insurance companies offer the same product, but they have different methods for measuring risk. One company may see you as risky to insure, while another may see you as a relatively safe bet. Therefore you may get a wide range of life insurance quotes from different providers.

Here’s a look at the average monthly rates from 10 different companies for that same 30-year-old male we mentioned above, who is looking to purchase a 20-year term policy with a $500,000 death benefit:

Life Insurance CompanyRate
AIG$25.94
Banner Life$25.80
Lincoln Financial$35.18
Mutual of Omaha$28.17
Pacific Life$25.62
Principal$27.69
Protective$25.81
Prudential$39.38
SBLI$25.97
Transamerica$26.23

So it’s important to compare quotes from as many life insurance carriers as possible before buying a policy. You can use our tool to compare unbiased, accurate quotes from the nation’s top insurers tailored to your specific profile. Get started in minutes today.