What Is The Cost Of Life Insurance By Age?

What Is Life Insurance? And The Cost Of Life Insurance By Age?

A life insurance policy is a financial safety net for your loved ones. And even though it isn’t the most cheerful thing to think about, buying a life insurance policy is one of the most loving and helpful things you can do for your family. Average Cost Of Life Insurance By Age was calculated based on quotes from five of the largest insurers.

Plain and simple: The main purpose of insurance is to transfer risk. You insure your car, your health, maybe even your cell phone (but we don’t recommend that!), so that in the event of an accident, illness or some other unexpected circumstance, you’re not left footing the entire bill. It’s a similar idea with life insurance, only instead of the policy benefiting you, it benefits your loved ones.

When you purchase a life insurance policy, you’re entering into an agreement with your insurance provider that, in exchange for your payments (these are called premiums), your insurer will pay your loved ones a sum of money when you die. Essentially, you’re transferring the financial hardship your death could have on your loved ones to your insurance provider instead of leaving it to your family.

But what kind of policy should you choose and just how much is the Cost Of Life Insurance By Age? Don’t worry, we’ll walk you through your options so you can understand the cost of life insurance and choose the right policy for your needs.

Term Life Insurance vs. Whole Life Insurance

The only type of life insurance we ever recommend is term life insurance. That’s it. No whole life, no universal life, no variable this or variable that—just term life.

And the name says it all. Term life covers a term of your life, or a period of time. Because, ultimately, you’re on your way to becoming self-insured and you don’t need a policy that lasts a lifetime. Whole life insurance (aka term life’s arch nemesis) covers your whole life. Make sense?

Another difference is that with a whole life policy, part of your premium goes into investments. The problem is that they’re bad investments. In fact, we never recommend whole life insurance because it’s such a terrible use of your money!

You’ll pay a higher premium for less coverage with a whole life policy. Since you’re paying more up front, you’re also missing a killer opportunity to invest. The whole life “investment” grows super slowly—think sloth speed, then cut that in half. That could mean hundreds of thousands of dollars in missed investment income.

A term life policy has lower premiums that save you money up front and free up more money for real investments. Let’s say you pay $20 a month for term life instead of $200 a month for a lousy whole life policy. You can take your extra $180 a month, invest it in mutual funds with good returns and watch that money grow more than that whole life policy ever would. (Again, we’re talking hundreds of thousands of dollars here!)

So skip all the whole life sales pitches and choose a term life policy instead. We recommend buying a policy that lasts 15–20 years. And your policy should cover 10–12 times your annual income. For example, if you make $50,000 a year, then you want to get a term life policy with at least $500,000 in coverage.

A term life policy is meant to protect your loved ones in the event of your death during the period of your policy’s coverage. You want them to be able to cover funeral expenses, the mortgage, debt you may still be working to pay off, plus the everyday expenses of living.

And if the unthinkable does happen, your family can invest your term life insurance payout into the same types of mutual funds we just talked about. Then they can live comfortably on the return of that investment—without ever having to touch the original payout.

Of course, if you invest your money well, you’ll be able to let the term life policy expire without renewing it. Remember, the long-term goal is to become self-insured by following the 7 Baby Steps with your money. Then when your term life policy expires not only will you be debt-free with a fully loaded 3–6 month emergency fund, but you’ll also have invested in solid mutual funds that financially protect your family.

What Is The The Average Cost Of Life Insurance By Age?

These annual life insurance rates are based on a $500,000, 20-year term life insurance policy for super preferred applicants.

AgeAverage annual rate for menAverage annual rate for women
30$227$193
40$341$289
50$842$654

Average cost of life insurance by age wes calculated based on quotes from five of the largest insurers: John Hancock, MassMutual, New York Life, Securian and Transamerica. Costs shown are for a man in excellent health. Additionally, gender life insurance rate charts used the same insurers and included applicants in excellent health.

Data from this study showing the cost by policy term length was sourced from Northwestern Mutual Life Insurance. Life insurance figures were calculated by looking at four policy amounts ($100k, $250k, $500k, and $1 million) across four rate classes. Below is the breakdown of each rate class:

Preferred plus policies assume no tobacco use in five years, no serious medical issues, cholesterol levels below 200 and blood pressure that doesn’t exceed 130/80.

Preferred policies assume no tobacco use in three years, above-average health, no serious medical issues, cholesterol levels below 240 and blood pressure that doesn’t exceed 135/85.

Select policies assume no tobacco use in 12 months, good health, blood pressure below 140/90 and cholesterol levels below 300.

Standard policies assume tobacco use in the past year, good health, cholesterol below 300 and blood pressure readings below 140/90.

How Can I lower My Life Insurance Rates?

Your overall medical history may be out of your hands, but you can take steps to potentially lower your premium.

  • Quit smoking. Kicking the habit could cut your premium in half and improve your health.
  • Cut down on drinking. If you enjoy more than a drink a day, you could cut back on alcohol for lower rates.
  • Get in shape. Insurers consider weight and exercise habits an important part of your risk. A lower BMI typically leads to cheaper rates.
  • Consider major life changes. Look at your coverage after changes like becoming a new parent. You can also ladder policies based on debt, like a 30-year term policy for your mortgage and a 15-year policy to get to retirement.
  • Look for discounts. Talk with your insurer about lowering premiums with a joint policy or other savings opportunities.

1 thought on “What Is The Cost Of Life Insurance By Age?”

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