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The cost of life insurance is dependent on your unique profile and the type of policy you are getting.
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byPatrick Hanzel, CFP®
Patrick Hanzel, CFP®
CERTIFIED FINANCIAL PLANNER™ & Advanced Planning Team Lead
Updated June 18, 2021|7 min read
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Table of Contents
Life insurance provides a financial safety net that you'll potentially be paying premiums toward for decades. That’s why it’s important to understand the cost of your policy. After all, letting a policy lapse because you can’t afford it defeats the purpose of having it in the first place.
Your policy’s premiums are determined by your policy details, such as the type of policy and coverage amount, and your own circumstances, like your health, age, family background, and lifestyle choices. Working with an independent broker is the best way to get the most competitive premiums.
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The cost of life insurance is determined by five factors: age, gender, policy type (term vs. whole), health, and hobbies
It’s best to get coverage sooner rather than later because rates increase as you age and as your health declines
The longer and larger your policy or the riskier your health and hobbies, the higher your premiums will be
Where you live, how many beneficiaries you have, and the number of life insurance policies you hold won’t affect your policy’s premiums
To see life insurance pricing trends month over month, check out our price index.
Individual life insurance quotes depend on many factors, which assess your risk. A healthy 35-year-old male getting a term life insurance policy can expect to pay about $30.27 in monthly premiums for a 20-year, $500,000 policy as of June 2021, while a 35-year-old female with the same term length and policy amount may pay $25.41.
The following are sample rates of a 20-year policy for a 35-year-old male non-smoker with a Preferred health rating.
For shoppers interested in a whole life insurance policy, rates are significantly higher. A healthy, non-smoking, 35-year-old male can expect to pay about $517 per month for a $500,000 policy with premiums paid up by age 99. Other types of policies, including some no-medical exam or guaranteed life insurance policies, may cost even more.
Life insurance rates are determined by five main factors: your age, gender, policy type, health, and hobbies.
Your premium is set when you sign your policy, and it won’t change during the term of the policy. But, as you age, the cost of purchasing life insurance increases. Each year that you delay buying a life insurance policy, the cost of premiums increases by 4.5-9% on average. Because women tend to live longer than men,  they also receive lower life insurance rates.
The tables below demonstrate average monthly life insurance rates for different types of policies: a 20-year term policy, a whole life insurance policy paid up by age 99, and a no-medical exam policy.
20-year term life insurance
Paid up by age 99 whole life insurance
No-medical exam term life insurance
Your best bet to lock in cheaper rates is to purchase a term life insurance policy, where the premiums remain the same throughout the entirety of the policy, while you’re young and in good health.
At this time, there is no established protocol on gender for transgender applicants across the life insurance industry. Typically, insurers offer policies based on your self-identified gender as opposed to the gender you were assigned at birth, but it’s up to the underwriter to make this determination. It’s best to shop around to find an insurer that will recognize your gender in your life insurance policy.
Having a policy in place before major life events guarantees support for the people who rely on you as your responsibilities grow. You should buy a policy as soon as you anticipate crossing major milestones like:
Most people don’t need to buy a life insurance policy when they’re older. You’ll hopefully have fewer people who rely on you for financial security as your dependents become independents and you start paying off long-term expenses like your mortgage.
However, even though a healthy person in their 60s can expect to pay much more than someone in their 30s for the same amount of life insurance, there are times when it makes sense to buy a policy at an older age. Maybe you have a lifelong dependent or started a family later than usual, which is common among many millennials.
How much life insurance you need is a two-part question: how much coverage you need (the death benefit), and how many years you need that coverage to last (the term). The longer your policy lasts and the greater your coverage, the higher its cost. Should you want a whole life insurance policy, your coverage will last the rest of your life.
The table below demonstrates average monthly term life insurance rates by policy size & length:
The type of life insurance you have affects the cost of your policy. A term life insurance policy is the most common and most affordable; a permanent policy is more expensive but has extra perks, like an investment-style cash component.
Whole policy rates can be five to 15 times as expensive as a comparable term policy. The average cost of whole life insurance is a lot higher than term life because:
It lasts longer. A term life policy has an expiration date, but a whole life policy doesn’t. It lasts your entire life as long as you pay the premiums, and it’s more likely that you’ll die while the policy is active.
There’s an additional cash value component. Whole life has a cash value component in addition to a life insurance component. Premium payments fund both the death benefit and the cash value, leading to higher rates.
There are more fees. There are management fees associated with whole life insurance that are incorporated into premiums.
Riders are like mini contracts that allow you to customize your life insurance policy. They often come at an additional cost that will raise your premiums so they might not be worth it. Some riders, however, like the term conversion rider, are added to your policy by the insurer at no additional charge.
Your health status is one of the most important factors in determining your premiums. The healthier you are, the less likely you are to die, and thus cheaper to insure. During the underwriting process, you’ll have to answer some questions about your health and your family health history and take a brief medical exam. The insurance company may also request an Attending Physician’s Statement (APS) from your doctor to get their assessment of your health as well.
The table below demonstrates monthly term life insurance costs for a 35-year-old male and female in a Preferred health class and Standard health class.
Some health-related factors that might result in higher premiums include:
While any of these could raise your life insurance costs, each life insurance company evaluates every health condition differently. It's possible to find providers to accommodate your lifestyle or health history, which is why it’s important to shop around.
"In order to cover you while working in a high-risk occupation or while participating in hobbies that are considered higher risk, insurance companies might require something called a flat additional fee, such as $2 or $5 per $1,000 of coverage," says Patrick Hanzel, Advanced Planning Specialist and Certified Financial Planner at Policygenius.
A skydiver with a $1,000,000 policy could end up paying an extra flat fee of $5,000 per year. However, someone who skydives too much might not be able to purchase life insurance with certain insurance companies at all. A Policygenius advisor can help you determine the best options based on your hobbies and how frequently you participate in them.
Even though an adventurous hobby might increase the cost of your life insurance, it’s important to be completely honest about it in a life insurance application. If your life insurance company finds out that you lied on the application, they can invalidate your coverage when you die and not pay out the death benefit to your beneficiaries.
Studies show that younger adults are more likely to overestimate the cost of life insurance and put off buying a policy as a result. In a study by LIMRA and Life Happens, 50% of millennials estimated that a $250,000 policy would cost $1,000 or more per year, compared to 39% of Baby Boomers and 38% of Gen X-ers (the actual cost of the policy was approximately $160/year). 
But, it’s actually best to buy a policy when you’re young and healthy in order to save money over the long term, and the same study found that 40% of current life insurance policyholders expressed regret that they didn’t purchase their policy at a younger age.
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Although the underwriting process accounts for factors like age and gender, life insurance companies cannot discriminate against race, ethnicity, or sexual orientation as determining factors during the underwriting process.
Here are some other factors that will not affect how much you pay for life insurance:
As long as you live within the U.S., your specific state or city won’t affect your premiums. This means that your premiums won’t increase even if your area is prone to certain natural disasters or has higher rates of violence. But because life insurance is state-regulated, where you live can determine certain rules and regulations related to your policy.
Many people choose to name multiple life insurance beneficiaries in their life insurance policies. Your premiums won’t increase or decrease based on how many beneficiaries you name.
Depending on your financial situation, having multiple life insurance policies might make sense. Sometimes, laddering multiple policies can even save you money long term. If you end up getting coverage from multiple policies, your premiums for any single policy won’t increase based on how many total life insurance policies you hold.
The cost of life insurance varies depending on your age, health, lifestyle choices, and how much life insurance coverage you’re getting. Term life insurance policies offer affordable coverage.
While the cost of life insurance coverage varies for each individual, a healthy 35-year-old can expect to pay $20-30 for a $500k life insurance policy that lasts 20 years.
Life insurance protects your loved ones from financial despair if you die prematurely and can no longer provide for them. Getting coverage is absolutely worth it — for peace of mind and financial security.
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