As of November 2023, the average cost of life insurance is $23 per month for a 10-year contract that supplies a death benefit of $250,000, per MoneyGeek.com. That price is for a young, healthy adult male who doesn’t use tobacco or work in a dangerous setting every day.
But there are so many details at play when insurers calculate your life insurance premiums, we feel this average number is only a tiny snapshot of a much bigger, more complicated picture.
Today, the experienced team of life insurance agents at Einsurance.com is here to explain all you need to know about life insurance rates. Our goal is to educate consumers about this complex topic in a way that’s easy to understand; and our information is always completely unbiased.
Keep reading to learn about:
- Life insurance rate basics
- Term or whole life insurance: which is more affordable?
- Risk ratings: life insurance rates by age and gender
- Typical life insurance rates by term, age and gender
- Term life insurance rates
- Whole life insurance rates
- Using several types of life insurance
Life Insurance Rate Basics
As a consumer, when you sign a contract for life insurance you agree to make payments — called premiums — to the insurance company. If you pass away during that time the insurer will pay a death benefit to the beneficiary you name on your contract.
How it Works: Term vs. Whole Life
All insurance, including life insurance, is about risk. When a life insurer agrees to provide you with term coverage, they’re assuming a risk and betting you’ll live longer than the contract lasts. They’ll collect your payments and invest that money, and hopefully sign you up for a more expensive contract when this one ends.
When selling you a whole life policy, the insurer is betting you’ll live a long time. They’ll collect your premiums and invest some on your behalf to create a cash value you can use in emergencies. They’re assuming the risk that you’ll live long enough for the company to make profits on their investments.
Term or Whole Life Insurance: Which is More Affordable?
At first glance, term life insurance rates seem more affordable. With a term policy, you’ll pay a flat fee that ranges from $10 to $300 per month, depending on the death benefit you choose, and the risk rating determined by your insurer. (We’ll discuss risk ratings shortly.)
The term of your policy can be five years, 10, 20 or 30, depending on the contract. Just remember that these contracts are temporary. When the contract is over, you will be older and your price for life insurance will probably increase considerably.
You should use term life insurance to:
- Create an instant cash windfall for someone you love, in case you pass away
- Supply a means for paying off a mortgage so your loved ones can stay in a home if you pass away
- Pay off other debts (like a car payment or credit card debts) for your family
Pro tip: You can also buy life insurance on other important people in your life, as long as they agree to it. You can even insure key individuals in your small business, if they would be difficult and expensive to replace upon passing away. This is called “key person insurance” and is common among business partners.
Whole life insurance is meant to be permanent, or nearly-permanent. The premiums are more expensive every month, but the insurance company will invest part of these funds on your behalf. This way, you create a cash value that can be borrowed in emergencies.
Whole life policies can also be sold to life settlement brokers, or “cashed out” completely when the cash value is high. So, while the monthly cost is much higher, you’ll have access to these funds with a whole life policy.
Use permanent insurance to:
- Create long term savings for retirement or a child’s education
- Establish an instant cash windfall for someone you love, should you pass away
- Create access to cash you may need in the future
Any insurance agent will tell you that a whole life insurance policy is a long term investment. It takes a long time for them to create a meaningful cash value.
In short, if you’re looking for immediate, affordable protection, term policies are a great way to provide for your family right away.
Risk Ratings: Life Insurance Rates by Age and Gender
Insurance companies place customers — known as “insureds” — into risk groups. Young, healthy individuals will pay less than older or unwell individuals.
Females also tend to pay lower premiums. They usually live longer than males, and their occupations and behaviors are generally less risky.
We know gender-related issues are explosive topics right now, and some readers may object to this “grouping” behavior by insurance companies. Still, as a consumer, you should understand how insurance companies work. They have centuries of data to consider, and they spend billions of dollars studying these points every year.
Life Insurance Rates by Term, Age & Gender
In the table below, we’ve created a fictional display of life insurance rates by term, gender and age, to help you get a feel for what you might expect to pay for a policy. But remember, insurance companies consider many points when selecting your risk rating.
Typical Life Insurance Rates by Term, Age & Gender
|Age and gender||$100,000 Death Benefit for 5 Year Term||$100,000 Death Benefit for 10 Year Term||$10,000 Whole Life Policy||$100,000 Whole Life Policy|
|25 Year Old Female Non-smoker||$19/month||$29/month||$33/month||$90/month|
|25 Year Old Male|
|50 Year Old Female|
|50 Year Old Male|
|50 Year Old Male|
Again, this table does not represent statistical averages, it is educational only.
Still, consider the table above and you’ll notice that:
- Females usually pay slightly less for life insurance than their male counterparts
- The longer a term policy lasts, the higher the premiums may be
- Whole life policies cost considerably more than term policies for the same death benefit (but they offer other financial benefits and last your whole life)
- Your cost for a new life insurance policy will increase as you age
- Non-smokers pay much less for life insurance than tobacco users
Other Points that Affect Life Insurance Rates
Your life insurance rates may be higher or lower, depending on points like:
- Your location
- Marital status
- Your health
- Family health history
- Your credit score
- Risky employment situations
- Personal behavior and hobbies
Now, let’s explore more information about term and whole life insurance rates for consumers.
Term Life Insurance Rates
When you sign a contract for term life insurance, you agree to pay a certain premium every month for the duration of the contract. In that time, should disaster strike, the insurance company will pay a death benefit to a beneficiary of your choice.
As long as you pay your bill on time every month, your rate will not change during this contract period. If you accidentally miss a payment, the insurer will usually offer a grace period and allow you to catch up. If you’ve had the contract for a long time, they may even make the premium payment once on your behalf, rather than lose your business.
If you miss the payment entirely and do not contact the insurance company, they can cancel your contract for non-payment. If you try to buy another policy, expect to pay slightly higher life insurance rates.
How to Shop for the Best Term Life Insurance Rates
No matter your age or health status, the internet has made shopping for good term life insurance rates easy. Just visit your favorite search engine and enter “term life insurance.” You can also try our handy online tool to access dozens of quotes quickly and easily.
Just be sure to consider:
- The term (length) of the contract
- The death benefit amount
- And any special details that matter to you, like autopay options or user-friendly payment portals online
In the spirit of honest, unbiased content, we’d also suggest that you contact insurance companies with which you already do business. Call your homeowners, renters or auto insurance company and ask them about term life rates. If they’re currently seeking individuals of your age/gender to insure, they’ll offer you a good price. You might even get a discount on your other policies.
And be sure to shop around! Don’t accept the first quote you get.
Remember, term life insurance is usually much more affordable up front. But these policies will not build a cash value, they only offer a death benefit should you pass away.
Whole Life Insurance Rates
Whole life insurance rates are usually more costly. But these policies are permanent. Over time, they can offer other financial benefits.
As long as your payments are made on time, your whole life insurance rates will never change. When considering inflation over a long period, this could make the payment feel smaller over the years to come. For instance, a $50 payment in 1995 probably felt more expensive than that same $50 payment in 2023.
Using Several Types of Life Insurance
Throughout our lifetimes, we have various financial goals, just as we face various risks. The good news is that you can buy as many life insurance policies as you like and spend as much or as little your budget will allow. This is a concept best illustrated with a story.
Aiden’s Lifetime of Life Insurance Policies
Imagine a young man named Aiden. He’s 24, newly married, and has a brand new baby. Like many young fathers, Aiden rents a home and lives “paycheck to paycheck.” With diapers, formula and all the other costs of a new baby, his budget is limited.
Term Policies Offer Affordable Protection for This Young Family
Aiden shops around for life insurance and finds an affordable term policy that supplies $40,000 of protection for the next 10 years, at about $15 per month. He feels confident knowing his wife and infant will have some funds on hand should disaster strike, so he’s happy to sign the contract.
Nine Years Pass and They Need More Life Insurance
Let’s fast forward nine busy years. Aiden is now 33. He’s earned a degree and a few promotions since the last time he shopped for life insurance. His wife works part time now, and they have another child in school. They just bought their first starter home, for which they owe $200,000.
Suddenly, $40,000 of protection isn’t enough. Aiden wants to ensure his family has enough money to pay off the home, plus extra funds to support the family and even send the kids to college.
He shops around for life insurance and finds a term policy that will last 30 years (the same length as his mortgage), that offers $500,000 of coverage. His monthly premium is $109, but he’s happy to pay it. Let’s stick with the nine year pattern and imagine Aiden turning 42.
Aiden’s Financial Needs Continue to Change Over time
Aiden has been working hard to pay down his mortgage, and his eldest son is off to college next year. His wife is now working full time, and they’ve refinanced their home. Financially, they’re doing very well.
Aiden decides that he no longer needs $500,000 in term life insurance. He cancels the contract and buys a smaller policy. He’s older though, so his term life insurance rates are $60 a month for $150,000 of term coverage for the next 20 years.
With the leftover funds, he decides to invest in a whole life insurance policy. He knows the cash value will build over time and plans to use those funds for retirement.
At age 42, for $50 per month, he is able to buy $25,000 of whole life insurance. If he were to pass away right now, his wife would cash in both the $150,000 term policy and the $25,000 whole life policy, so she is comfortable with this plan.
Over the years, more changes will happen to this family and their need for insurance. Aiden’s wife may come into some money through an inheritance, and she may buy more life insurance. Perhaps they have many grandchildren, and they buy small term policies for each of them.
No matter what life throws at them, Einsurance.com is here to provide them with helpful life insurance quotes.
Try Our Online Quoting Tool for Great Life Insurance Rates
Now that you’ve learned the basics of term and whole life insurance rates, why not give our online quoting tool a try? We’ll introduce you to the insurance companies seeking your specific type of business and offering competitive prices.