Average Cost of Life Insurance

December 30, 2020
Jonathan Fritz
B.A. Risk Management
Life Insurance Agent

Recently we asked nearly 3,000 term life insurance shoppers to guess the price of their life insurance coverage. The results have shown that roughly 71% guessed too low, 23% guessed too high, and 6% guessed the cost of life insurance within $1.

After 17,782 guesses 4% guessed too high, 28% guessed too low, and 3% guessed correctly.
For the year of 2019, we recorded all life insurance quotes from our customers in a database. This allows us to show the average cost of life insurance based on real life insurance prices from life insurance companies.

Average Cost of Life Insurance Overall

AgeAverage Cost of Life Insurance

The above charts show the average cost of life insurance as it increases from age 20 to age 70.

Average Cost of Life Insurance by Generation

As you can see from the charts, life insurance rates rise as you get older. The monthly rate is higher at age 50 than it is at age 30 but by how much?

  • The average cost of life insurance increases by 17% from age 20 to age 30
  • The average cost of life insurance increases by 61% from age 30 to age 40
  • The average cost of life insurance increases by 104% from age 40 to age 50
  • The average cost of life insurance increases by 94% from age 50 to age 60
  • The average cost of life insurance increases by 229% from age 30 to age 50

All prices on this page are for term life insurance. Whole life insurance prices are not included in this study as the rates are much higher, and it is a less common type of life insurance.

Average Cost of a 20-Year $500,000 Term Life Policy

The most common term life insurance policy requested is a 20-year term with a $500,000 death benefit. These prices are for a healthy non-smoker male. This common coverage amount proves to be very affordable for most people.

AgeCoverage AmountAverage Cost

What Determines the Cost of Life Insurance?

Life insurance companies classify applicants into different health ratings. Health ratings determine how much you pay for life insurance. You are assigned to a health rating based on the following factors.

  • Age - The older you are the more expensive it is.
  • Gender - Women have a longer life expectancy than men, therefore life insurance is more expensive for a man.
  • Height and Weight - Your BMI is an indicator of overall health. The higher your BMI, the more you will pay.

During the underwriting process, you may be moved to a different health classification based on the following.

  • Pre-existing health conditions (like high blood pressure or heart disease)
  • Prescription report - Certain medications are indicators of health conditions.
  • Driving record - Numerous tickets or something major like a DUI will cause you to pay higher premiums.
  • Family medical history - If your mother or father died young from a terminal illness such as cancer, it can cause you to have to pay more for life insurance.
  • Occupation - Certain occupations are more dangerous than others.
  • Hobbies - Hobbies like motorcycle racing, hang-gliding, scuba diving, and sky diving all lead to higher annual premiums for life insurance.

If you are moved to a different (lower) health class, your monthly premium will be higher. This is how life insurance rates can become very expensive. Older applicants with health conditions have the highest prices. A good life insurance agent will do what is called field underwriting. This is when they know that certain health conditions will cause a health class change. A good agent will save you time by placing you in the correct rate class based on your specific health history.

Average Cost of Fully Underwritten vs Simplified Issue Life Insurance

More life insurance companies are allowing applicants to bypass the life insurance exam if they are in good health. This is often referred to as no exam life insurance. But this can also refer to a type of term life insurance called simplified issue life insurance. This type of life insurance does not require a health exam, but it does require a medical questionnaire as well as numerous health background checks.

Average Cost of Term Life Insurance With and Without an Exam

For this cost comparison, we used Sagicor's express issue simplified issue product and compare the prices to North American's fully underwritten term life product.

AgeCoverage AmountSagicorNorth American
30$400,000 - $600,000$30.18$27.92
35$400,000 - $600,000$25.03$32.74
40$400,000 - $600,000$44.45$48.10
45$400,000 - $600,000$111.35$70.57
50$400,000 - $600,000$142.52$106.92
55$400,000 - $600,000$305.40$165.09
60$400,000 - $600,000$294.80$240.81

The Actual Cost of Life Insurance

You may be in excellent health and find your actual life insurance premiums are cheaper than average. Or, you could find you don't qualify for the best rates due to a medical condition or tobacco use. It all depends. It depends on how much life insurance you need to buy. It depends on the term length. It depends on whether it is a term or whole life insurance policy. The actual cost of life insurance depends on your life insurance needs.

Finding the Cheapest Rate

Yes, a 10-year term policy with a low death benefit will be the cheapest policy, but does it cover your financial needs? We advise our customers to first determine their needs, then compare quotes. This is the way to find the best prices.

Comparing Life Insurance Quotes - Life Insurance Calculator

Select your age, coverage amount, term length, and overall health to see actual term life insurance rates.

Life Insurance Premium Calculator

Over 13,596 quotes generated to date!
The following rates are for a 30 year old man in very good health looking for a 15 year $250,000 term life policy.