adminIf you’re looking for life insurance, there are dozens of companies, term lengths and coverage amounts to choose from.
Price will no doubt factor into your decision and may even determine what type of policy you choose. For a snapshot of those prices, NerdWallet compared average life insurance rates for men and women at different ages and health tiers, across multiple coverage options.
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How much is life insurance?
The average cost of life insurance is $26 a month. This is based on data provided by Quotacy for a 40-year-old buying a 20-year, $500,000 term life policy, which is the most common term length and amount sold. But life insurance rates can vary dramatically among applicants, insurers and policy types.
How life insurance rates are determined
Life insurance premiums are based primarily on life expectancy. In general, the younger and healthier you are, the cheaper your premiums.
Insurers typically classify applicants using terms like super preferred, preferred and standard, with super preferred being the healthiest category. Insurers then calculate premiums based on your risk class.
Each insurer has its own evaluation process — known as life insurance underwriting — and weighs factors differently. That’s why it’s a good idea to compare quotes from multiple insurers.
These are the main things insurers assess when setting your rate:
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Your age. Generally, younger people pay less for life insurance. This is because as you age, your life expectancy goes down, and the likelihood of your insurer having to pay out your policy goes up. That’s why it’s wise to buy life insurance as early as possible; the longer you wait, the more your rates will increase based solely on age.
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Your gender. Because women have longer life expectancies, women will almost always pay less than men of the same age and health. Life expectancy in the U.S. is 79.9 years for women and 74.2 years for men, according to the latest data from the Centers for Disease Control and Prevention
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Your smoking status. Since smokers are at a higher risk of developing health issues such as respiratory disease, life insurance for smokers tends to be more expensive.
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Your health. This includes any pre-existing conditions, as well as your blood pressure and cholesterol levels. Insurers will also look at your height and weight.
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Your family medical history. Your insurer may ask if you have a family history of serious health conditions such as heart disease, cancer or diabetes.
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Your driving record. If you have DUIs, DWIs and major traffic violations on your record, your insurer might consider you a high-risk life insurance applicant and charge higher rates.
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Your occupation and lifestyle. If you have a hazardous or high-risk job, such as a police officer working on the bomb squad or a race car driver, you can expect to pay more than someone with a desk job. Similarly, if you participate in risky activities like skydiving, you might be charged a higher premium.
The type of life insurance you choose also affects the average cost of life insurance:
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Term life insurance is the least expensive because it lasts a set number of years and simply offers coverage without building cash value.
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Permanent life insurance typically lasts a lifetime and includes a cash value component that allows you to borrow against your policy or withdraw funds later in life. Because of the cash value and the potentially longer coverage period, you’ll pay substantially more for permanent policies than for term life policies.
Finally, adding life insurance riders to your policy can increase your premium. For example, a child rider worth $10,000 can cost an additional $50 to $75 per year, according to Quotacy.
What doesn’t impact your life insurance premium
These factors have no effect on the rate you’re offered:
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Your ethnicity, race and sexual orientation. While insurers assess your age and gender, they can’t discriminate based on these elements of diversity.
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Your credit score. Although your credit score won’t affect your life insurance premium, you can expect your insurer to look at your credit history going back seven years. If you have a bankruptcy on your record, you might be deemed to have a higher risk of mortality, which may affect premiums.
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Your marital status. Unlike many auto insurance companies, life insurers don’t have different rates for married applicants.
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The number of life insurance policies you have. Just know that you need to justify purchasing large amounts of coverage across multiple policies.
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The number of beneficiaries you name. Whether you have one life insurance beneficiary or five, this won’t impact your rate.
Average cost of term 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.
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