How Much Does Life Insurance Cost In 2018 (And Money Saving Tips)

Oct 30, 2018 (0) comment

how much does life insurance cost

You know you need life insurance but answering the question how much does life insurance cost, and figuring out what affects the price isn’t always an easy thing to do. 

But, did you know:

While many elements will determine the individual cost of life insurance, certain unchanging factors make up the core of the rates.

In this post today I will give you a detailed answer to the question how much is life insurance, as well as the systems behind the pricing and how you can get the best term life insurance quotes online.

If you new to life insurance, then you can check out our post on how does term life insurance work first.


How Much Does Life Insurance Cost 

To figure out how much life insurance will cost you are going to have to look at it from an individual basis.

The rate for each person will be different since insurance companies underwrite each policy on an individual basis.

The factors that determine each individual price are going to be:

Age

All things being the same, your age is going to be a huge determining factor in how much your life insurance rates will be. 

For example: 

The average life insurance cost for an 18 year old will be significantly lower than the cost of life insurance for a 40 year old.

We have a whole post that goes over term life insurance rates by age

Gender

Your gender is going to be a solid determining factor in your monthly premiums. 

Rates for women, all things being the same, will always be lower on a month to month basis than they will be for men. 

Tobacco Use

You can expect to pay significantly more on your life insurance cost per month if you are a tobacco user.

Your rates can be up to 50% to 60% more expensive than someone that doesn't use tobacco.

Also keep in mind that some insurance companies will use different factors to determine if you are considered a tobacco user.

If you have been tobacco free for more than 12 months, some companies consider you a non tobacco user.

Others will require 24 months of no tobacco use before they will consider you for non-tobacco rates.

Also some companies treat you as a tobacco user if you smoke a cigar while others don't.

So if you use tobacco or recently stopped, be sure to know how the company you are looking at might underwrite your situation.

The amount of coverage that you purchase is going to also affect your term life insurance cost.

The more coverage you purchase, the higher your rates can become so looking at different coverage options is always a solid idea. 

Height & Weight

When dealing with your Body Mass Index (BMI), insurance companies don't go by the industry standards, they have their own internal height & weight charts.

If you are outside the guidelines, no matter how healthy you are, it can affect your rates.

Term Length

The term length of your policy will also play a major role in your final life insurance prices.

We discuss this more below.

Amount Of Coverage

The amount of coverage that you get will also affect what your monthly premiums come out to be. 

The higher you go up in the amount of coverage you want, the higher the rates can become.

Check out our post that answers the question how much life insurance do I need.

Overall Health

The entirety of your health is going to give the final say-so in what your ultimate cost for life insurance will be.

In general, the healthier that you are, the better your rates will be, we also discuss this more below.

Sample Rate Chart Based On Tobacco & Non-Tobacco

The below rates will show the differences between tobacco and non-tobacco rates.  

These monthly rates will be based on a 33 year old male and female in perfect health looking for a 20 year term policy.

  • Male
  • Female


Tobacco


Non-Tobacco


$100,000


$25.90


$9.60


$200,000


$45.79


$13.20


$300,000


$61.31


$15.92


$400,000


$79.75


$19.23


$500,000


$86.00


$21.06


$1,000,000


$166.00


$36.09

The above principals are the stepping stones to what your initial cost for life insurance is going to be.

After that, the next part is figuring out which term length you will choose which is the next layer of figuring out your cost.

Life Insurance Cost By Term Length 

In all honesty, Term Life Insurance is going to be the best bet for about 90% of people looking for life insurance, so I am going to focus on term life for this post.

2 Year Term

This term life insurance option is one of the newest options available and is being used as sort of a place holder type of policy.

Getting coverage for 2 years can give you the option to be covered without worrying about a huge commitment.

Be mindful that sometimes this coverage can cost more than coverage with a longer term length.

5 Year Term

When it comes to looking at the average cost of life insurance, a five year term option is going to be the most affordable.

Usually I see parents purchase these policies for their kids in a divorce decree or for when they are co-signing a loan for their college bound students.

Lately however, quotes for 5 year term policies have been a bit harder to find and a 10 year term seems to be the starting standard now.

10 Year Term

The 10 year term is the second most affordable option when it comes to the cost of term life insurance. 

This option is best for people who may be a bit closer to financial freedom or who needs to get the lowest rate.

15 Year Term

This policy is going to be in the middle range of the life insurance rates. 

15 year terms are like the middle of the road, you still get your rates locked in for 15 years but leave yourself enough room to make changes if you have an unexpected life event.

20 Year Term

A 20 year term is probably the option that people purchase most.  

It is going to be the second highest in terms of your life insurance cost per month, but it will also give you the second longest time to have level term life insurance rates. 

30 Year Term

Your final option will usually be the 30 year term option, this option will cost the most when it comes to term life insurance.

You will also get the most savings out of this plan because it locks your rates in for the longest period of time.

I always recommend a thirty year term option if you can afford it.

Sample Rate Chart Based On Term Length

These monthly rates will be based on a 33 year old male and female in perfect health looking for a 250,000 term policy.


Term Length


Rates For Male


Rates For Female


2 Year Term (No Exam)


$15.00


$11.00


10 Year Term


$10.62


$9.86


15 Year Term


$11.40


$11.18


20 Year Term


$14.27


$12.37


30 Year Term


$22.97


$19.11

Cost of Life Insurance By Health Rating

It is best to think of your health rating like a credit score, the higher your health rating, the better your overall monthly premium will be.

If your health is rated Ultra Preferred, you will get the best rates, if they are Table Ratings you will have the most expensive rates. 

Below is a breakdown of each rating.

Ultra Preferred

This is going to be the highest rating you can receive and it isn't going to be offered by every company.

For this rating you will need to be at the Perfect BMI or Height & Weight, have no pre-existing conditions, be a non-tobacco user, not taking any prescriptions, no risky traveling, no risky jobs and no risky driving.

The companies will probably also inquire about the health of your parents and siblings in regards to things like heart issues or diabetes to determine if you qualify for this rate.

Ultra Preferred will give you the most affordable rate.

Preferred Plus

Getting approved for a preferred plus rating is going to give you the second most affordable rate.

Just like Ultra Preferred, not all insurance companies will offer this underwriting health rating.

For preferred plus you will still need to be in perfect health, however you can probably be taking one medication that is allowing your condition to be under control.  

Preferred

Preferred is where almost all insurance companies start in regards to health ratings.

You will still need to be in a good range as far as height & weight, you can't be taking any medications and you probably can get away with your family not being that healthy.

This is going to be the 3rd most affordable outcome.

Standard Plus

Standard Plus will not always be offered as an outcome, but it allows you to get an in between rate.

To qualify for standard plus you will be probably taking one medication that allows your symptoms to be under control. 

You will need to be closer to the preferred height & weight guidelines and you will probably need to have no other major medical conditions.

Standard

When it comes to ratings I would usually give all of my customers the standard rate.

It isn't that obtaining a preferred rate is out of the question, it's just that most people will fall under a standard health rating.

The best thing about insurance companies is that if I submit you standard, but you qualify for preferred, they will approve you with the preferred rate.

With a standard health rating you are probably taking more than one medication, you qualify for the standard height & weight charts and you probably have family history of things like diabetes or heart disease. 

You still need to have any current medical conditions like cholesterol or blood pressure under control.

Table Ratings

Each company will have a different setup for how table ratings work.

Just like with other ratings, some companies, specifically no exam life insurance companies like Bestow, will not offer table ratings.

Table ratings will be either letters or numbers, I have seen tables go from A - N or from Table 2 - 14.

Just know that the higher the table number or further away the table letter, the higher your rates are going to be. 

Table ratings are usually going to be for people that have multiple medical conditions along with height and weight issues. 

For example: 

Someone who is looking for life insurance for diabetics might be a type 2 diabetic, with high blood pressure and high cholesterol.

Along with being outside of the standard height and weight guidelines they are going to be looking at a table rating.

Keep in mind that every insurance company will have its own criteria for each level of underwriting.

While one company may underwrite you as having standard health, another might give you a table rating.

Term Life Insurance Rates Escalate As You Age

Most people don't think about aging and getting older, while others obsess over it, some people are afraid to age and other want to age gracefully.

When it comes to life insurance, the earlier in life that you purchase it, the lower your rates will be and the more savings you will have over time.

Life Insurance Cost for Young Adults

As a young adult you will often see people saying things like, "you don't need life insurance if you don't have dependents," or "you have all the time in the world to think about life insurance."

Unfortunately those to statements are very false and you should always have life insurance in place.

When thinking about life insurance for young adults you have to remember that if you pass away, someone still has to cover your funeral and final expenses.

Also, the younger you purchase it, the more affordable it will be and you can also protect yourself from getting a pre-existing condition and not being able to get coverage later.

I often recommend purchasing a 30 year term life insurance policy when you are young because it will give you the longest amount of coverage and the maximum savings.

Life Insurance Cost for Middle Age Adults

Getting coverage when you are in your 40's or 50's can be a bit more complicated and definitely will be more expensive.

At this age, most of us will probably be on some sort of medication, and according to a study conducted by AARP, the vast majority of Americans age 50+ (76%) say they are currently taking at least one prescription drug on a regular basis.

This means that if you don't have life insurance already, you shouldn't expect to have the cheapest rate.

When you start looking at life insurance rates you need to understand that you should be trying to get the best rates someone in your age range and health can obtain.

Don't compare your rates to a 30 year old because they won't be the same.

Life Insurance Cost for Seniors

As a senior, your life insurance options can become rather slim.

Most of the products will be either for Guaranteed Universal Life or Whole Life Insurance.

This is mainly because you are probably only looking to cover your burial or final expenses or want to have an affordable rate that will last for the rest of your life.

The above two products really can assist you with finding that type of coverage, but getting approved for coverage is going to be even harder because you are probably going to be on more medications.

Sample Rate Chart Based On Age Group

These monthly rates will be based on a male and female in perfect health looking for a 250,000 20 Year term policy.


Age


Male


Female


20


$13.61


$12.07


30


$14.05


$12.50


40


$21.32


$18.01


50


$47.47


$37.40


60


$132.53


$93.54


64


$220.61


$145.29

After reviewing this chart you can easily see that waiting too long to get covered isn't a great idea.

Getting covered immediately is always the best option.

Cost Of No Exam Vs Traditional Life Insurance 

Oddly enough, no exam life insurance quotes are getting much closer to the cost of a traditional life insurance policy.

If you are a young adult I would recommend going that route first because it is much faster and easier process.

We have found no exam to be the best life insurance policy that someone can buy, especially when you first start looking for life insurance.

This is mainly from the fact that you can get instant life insurance without dealing with an agent, and you can also get real time underwriting, or what is known as Simplified Issue Life Insurance.

Below we compare the two products in regards to overall cost.

These monthly rates will be based on a 33 year old male and female in perfect health looking for a 20 Year term policy.

  • Male
  • Female


Coverage Amount


Exam


No Exam


$100,000


$9.60


$11.00


$200,000


$13.20


$17.00


$300,000


$15.92


$19.00


$400,000


$19.23


$24.00


$500,000


$21.05


$27.00


$1,000,000


$36.09


$51.00

Hopefully you have noticed that life insurance cost for a no exam policy isn't that far off from a policy that will require an exam.

Especially for women, the rates are very similar.

I definately recommend considering the no exam option first because it will be much faster especially if you are younger.

However, if getting the lowest price is your main concern, then going with a policy that requires no exam will be your best option... for now.

Cost Of Whole Life Vs Term Life Insurance 

This battle rages on all the time, I did a roundup post about term life vs whole life that I think you might rather enjoy.

The final synopsis was that term life is going to be the best option for most people because it is way more affordable and a much easier product to understand.

In general, I would say stick to term if you aren't sure about the other products or just need general life insurance coverage.

To be honest, the monthly premium rates for whole life policies can be 10 times more than with a term life policy.

For Example:

Right now I have 2,000,000 in term life policy and I pay $124.00 per month for the policy.

If I were to get a whole life policy for the same amount of coverage it would cost me: $673.00 per month.

Yes, $673.00 per month, I am not sure about you but paying that per month, for me, would definitely not work.

Tips To Reduce The Cost Of Life Insurance 

I created an excellent post with over 20+ ways to get cheap life insurance; however, I wanted to go over just a few of them below.

Buy Coverage As Soon As Possible

It might seem like am rehashing this idea of buying coverage at an earlier age; however, I can't stress this enough.

Buying life insurance when you are young is the best opportunity for you to maimize savings. 

Quit Smoking

If you can quit smoking you will save yourself thousands of dollars of the lifetime of your insurance policy.

As I stated above, the life insurance cost for tobacco users can be over 50% more expensive than the cost of life insurance for a non-tobacco user.

I say just quit cold turkey, that seems to be the best solution for long term results.

Buy More Coverage Initially

The more coverage you get up front, the less likely you will have to get more coverage later at a higher rate. 

Life events happen all the time, you get married, you have kids, you lose someone, you graduate college or you get a promotion.

All of these things can create a situation where you feel like you should have more life insurance. 

If you buy enough coverage in the beginning, you won't have to change your policy every time a life event happens.

Lose Some Weight

If you are in perfect health, but a bit overweight, it can cause you to only qualify for a standard and sometimes a table rate.

When you lose some weight, not only will your overall health improve, but your ability to get covered for a lower monthly premium of life insurance can happen as well. 

I always recommend shopping for new coverage if you lose a large amount of weight to get a lower premium. 

Buy For The Longest Term

Locking your rate in for the longest period time is always the best option.

If you have been looking at the sample rates throughout this post you will notice that if you buy young you save the most over time.

Purchasing a 30 year term in your 20s or 30s will lock your rates in until you hit your 50s and 60s.

Just imagine all the savings you will have while your friends are pay much more because they purchased their life insurance later. 

Taking Action

Hopefully I have been able to answer the question of how much does life insurance cost.

No matter the stage of life you are in, life insurance is absolutely a need for you and for your family and loved ones you could leave behind.

The process has become much more simple, you are able to get quotes and apply online within just a few minutes.

There is no longer any reason to procrastinate about buying life insurance.

Use our quote widget on the right, or click any of the buttons like the one below for some quick quotes and to get covered today.

Thanks For Reading My Post... Before You Go!

What did you think of my post?  Did I miss anything?

sa el, sa re ami el, co-founder of simply insurance

Sa El is the Co-Founder & CEO of Simply Insurance. He is a Licensed Life and Health Insurance Agent with over 10 years of experience in the industry. He is an Entrepreneur, Insurance Educator and Field Underwriter. Sa is on a Journey to get 1 Million Families insured.

Sa El is the Co-Founder & CEO of Simply Insurance. He is a Licensed Life and Health Insurance Agent with over 10 years of experience in the industry. He is an Entrepreneur, Insurance Educator and Field Underwriter. Sa is on a Journey to get 1 Million Families insured.

All posts by Mark Mathon

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