When it comes to life insurance rates, many factors impact what you’ll pay. So, it’s a bit tricky to talk about an “average” rate. What one person pays each month can differ significantly from what someone else might pay.
Year after year, surveys show that Americans overestimate the actual cost of a life insurance policy. Understanding how prices are determined can save you money.
Let’s delve into the key factors that shape these costs to give a clearer picture of what you might expect to pay for life insurance in 2023.
Table of Contents
- How Are Life Insurance Costs Determined?
- Average Cost of Term Life Insurance in 2023
- Permanent Life Insurance Rates in 2023
- Life Insurance Cost FAQs
How Are Life Insurance Costs Determined?
Your risk factors determine your life insurance cost. After applying, the company reviews your overall profile and assigns you a risk class.
If approved, applicants fall into one of three classes: preferred, standard, and substandard.
- Preferred: Reserved for the healthiest individuals and offer the best pricing.
- Standard: For people with average health and life expectancy.
- Substandard: For high-risk individuals.
These individual factors influence what you’ll pay for coverage:
- Age
- Gender
- Height and weight
- Health
- Family’s health history
- Smoking status
- Job
- Hobbies
Learn more about the various risk factors that impact the life insurance purchase process.
| Tip: Not all insurance companies assess these risks the same way. Some insurers are more lenient with certain factors than others. Work with a broker, like Quotacy, who can comparison shop across multiple companies to find you the best rate. |
See what you’d pay for life insurance
Average Cost of Term Life Insurance in 2023
A term policy provides temporary coverage. You choose the term length and coverage amount that fits your needs and budget best.
Term insurance is typically the most affordable option due to its temporary nature and the most commonly owned life insurance product in the U.S.
Term length options range from 10–40 years. If you should die within the term, the entire coverage amount goes to your chosen beneficiaries.
10-Year Term Life Insurance Rates
Not only are 10-year term life insurance rates affordable, but the policy can be an ideal fit for many stages of life.
- Couples with a home: Help a surviving spouse or partner manage mortgage payments or allow for a full payoff.
- Young families: Cover expenses such as credit card debts, loans, and daycare.
- Families with older children: Support costs like education costs and weddings.
- Soon-to-be retirees: Help ensure your loved one has the retirement they hoped for.
The table below compares the monthly costs for a $250,000 10-year term policy across various ages. Rates are for applicants in excellent health who don’t smoke and qualify for Preferred Plus.
Only some qualify for the best rate class of Preferred Plus. For comparison, the table below provides quotes across different risk class possibilities for a 35-year-old applying for the same 10-year $250,000 term policy.
20-Year Term Life Insurance Rates
A 20-year policy is the most popular term length for life insurance. Often, individuals purchase life insurance primarily to protect their children’s financial well-being.
This length effectively covers the years your children are financially dependent, ensuring family financial security during these formative years.
The table below compares the monthly costs for a $250,000 20-year term policy across various ages. Rates are for applicants in excellent health who don’t smoke and qualify for Preferred Plus.
Only some qualify for the best rate class of Preferred Plus. For comparison, the table below provides quotes across different risk class possibilities for a 35-year-old applying for the same 20-year $250,000 term policy.
30-Year Term Life Insurance Rates
A 30-year term can be ideal in many situations, such as:
- Young professionals: You might opt for a 30-year term policy to secure lower premiums while you’re healthy and ensure coverage during your prime earning years.
- New homeowners: Aligning your term with your mortgage (commonly 30 years) ensures that your loved ones won’t struggle to make payments in case of your unexpected death.
- Long-term family protection: Ensures your kids have financial security into adulthood and your spouse isn’t economically burdened.
- Business owners: Protect your most important employees, business interests, and financial obligations, and guarantee stability for the business, even in your absence.
30-year terms are not available for all ages. The table below compares the monthly costs for a $250,000 30-year term policy. Rates are for applicants in excellent health who don’t smoke and qualify for Preferred Plus.
Only some qualify for the best rate class of Preferred Plus. For comparison, the table below provides quotes across different risk class possibilities for a 35-year-old applying for the same 30-year $250,000 term policy.
40-Year Term Life Insurance Rates
A 40-year term is the longest term length available, but only a few insurance companies offer it. It can be advantageous in certain situations, such as:
- Secure your lowest premium: Typically, health deteriorates over time, so buying a 40-year policy when you’re young locks in low rates through all stages of life.
- Extended family support: If you plan to have children later in life or wish to offer a comprehensive safety net for your family, this policy is ideal.
- Alternative to permanent life insurance: If you need long-term coverage but can’t afford the high cost of permanent life insurance, a 40-year term policy is a cost-effective alternative.
40-year terms are not available for all ages. The table below compares the monthly costs for a $250,000 40-year term policy. Rates are for applicants in excellent health who don’t smoke and qualify for Preferred Plus.
Only some qualify for the best rate class of Preferred Plus. For comparison, the table below provides quotes across different risk class possibilities for a 35-year-old applying for the same 40-year $250,000 term policy.
Interested in term life insurance? Explore more term life insurance rates by age.
Permanent Life Insurance Rates in 2023
Permanent life insurance policies have more bells and whistles than term, which is why they’re so expensive. Not all families need this type of coverage, but it can benefit those with the financial flexibility to pay the higher costs.
In addition to lifelong coverage, permanent life insurance policies may have other benefits, such as cash value accumulation and dividend-earning potential, depending on the product. Let’s explore the different types of permanent life insurance and their average cost.
Cost of Whole Life Insurance
Whole life insurance offers fixed premiums and steady cash value accumulation. You can access this cash through policy loans.
Whole life policies have different payment structures to choose from:
- Continuous premium: You make payments for your entire life (or until you’re 100), which spreads the cost over many years and lowers monthly prices. Cash value grows slowly but steadily. This is the default payment method.
- Limited-pay: You agree to pay your policy off within a certain number of years, typically 10, 15, or 20. For example, with a 20-pay policy, it’s considered paid-up after 20 years. No further premiums are required while the coverage continues for your entire life. Cash value grows much faster.
- Single-pay: You pay off the entire policy at once upon purchase. Coverage lasts your whole life. No more payments are required. Cash value grows quickly from the start.
Whole life insurance can either be participating or non-participating.
- A participating policy can earn dividends based on the insurance company’s earnings. As a policy owner, you can receive yours as cash, use them to reduce future premiums, or reinvest them to buy additional coverage.
- A non-participating policy does not earn dividends. Premiums are slightly lower on average and are used exclusively to maintain the policy and death benefit.
The table below compares the monthly costs for a continuous-pay $100,000 participating whole life policy across various ages. Rates are for applicants in excellent health who don’t smoke and qualify for Preferred Plus.
Only some qualify for the best rate class of Preferred Plus. For comparison, the table below provides quotes across different risk class possibilities for a 35-year-old applying for the same $100,000 whole policy.
Universal Life Insurance Cost
Universal life insurance is an adjustable, flexible premium life insurance policy that accumulates cash values based on current interest rates. It trades some of the guarantees of a whole life policy for flexible payment plans and a lower price. Many find the flexible nature of a universal policy attractive, but there’s risk involved.
How does UL work?
- Cash value accumulation is tied to the stock market, which can be very volatile.
- You can borrow against your policy or withdraw from your cash value.
- The death benefit is flexible. You can increase or decrease your death benefit as needed.
- Rates are not fixed and may increase over the life of the policy, so you need to monitor it closely.
- When the projections don’t reflect reality, increase your payments or decrease the death benefit. Otherwise, coverage can lapse.
The table below compares the monthly costs for a traditional $100,000 universal life policy across various ages. Rates are for applicants in excellent health who don’t smoke and qualify for Preferred Plus.
Only some qualify for the best rate class of Preferred Plus. For comparison, the table below provides quotes across different risk class possibilities for a 35-year-old applying for the same $100,000 universal life policy.
Learn more about the similarities and differences between whole vs universal life insurance.
Guaranteed Universal Life Insurance Cost
Guaranteed universal life (GUL) insurance is a type of permanent coverage that essentially functions as a term policy that lasts forever.
If you want a guaranteed death benefit and lifelong coverage but don’t need the expensive bells and whistles associated with other permanent products, GUL may be your perfect solution.
The table below compares the monthly costs for a $100,000 guaranteed universal life policy across various ages. Rates are for applicants in excellent health who don’t smoke and qualify for Preferred Plus.
Only some qualify for the best rate class of Preferred Plus. For comparison, the table below provides quotes across different risk class possibilities for a 35-year-old applying for the same $100,000 guaranteed universal life policy.
Guaranteed Issue Life Insurance Cost
Guaranteed issue life insurance is a small whole life insurance policy that requires no medical questions, no medical exam, and provides instant coverage. It’s also often referred to as final expense life insurance and guaranteed acceptance life insurance.
Features of guaranteed issue life insurance:
- To be eligible for this type of insurance, individuals must fall within a specific age range, typically between 50 and 80.
- Coverage options are limited, typically offering between $5,000 and $50,000.
- These policies have a graded death benefit.
- These policies don’t require medical exams and accept applicants regardless of health.
- Premiums tend to be significantly higher than policies that require medical underwriting.
The table below compares the monthly costs for a $25,000 guaranteed issue life policy across applicable ages.
Explore the basics of life insurance, including what it can cover, how you can use it, and who needs it.
Life Insurance Cost FAQs
When Should I Apply for Life Insurance?
We recommend applying for life insurance as soon as needed. Costs will only increase every year that you wait.
Buying a policy when you’re young doesn’t limit your options going forward. As you move through different stages of life, coverage needs will change and you can adjust yours accordingly.
Are There Strategies to Save on Premium Costs?
Generally, the younger you are when you buy a policy, the lower the premiums. Rates are generally fixed, so buying young means locking in a favorable rate. However, there are a couple other ways to save a bit more here and there:
- Some insurance companies let you backdate your age to save on premiums in the long run
- If you can afford to pay premiums annually instead of monthly, you’ll save about 3-5%
Will I Get the Same Price No Matter Where I Apply?
No. Your rates can vary across insurance companies. This is one reason why working with a broker is beneficial.
Brokers are not employed by a single insurer; instead, they have contracts with multiple insurers, which allows them to shop around on your behalf.
Can I Reapply for a Better Risk Class?
Yes. If your health or lifestyle has improved since purchasing a life insurance policy, you can reapply. You may qualify for a more favorable risk class, making you eligible for lower premiums.
It’s important to ensure that your new policy is fully active and in effect before you cancel your current one.
How Much Coverage Should I Have?
Life insurance is not one-size-fits-all. Ideally, you have enough coverage to replace your income and pay off large debts. This ensures your loved ones are protected financially should you die unexpectedly.
Use our life insurance calculator to determine how much you need and get quotes instantly.
Compare Quotes from the Nation’s Top Carriers
Don’t let the unknown cost of life insurance be a barrier to providing financial protection to those who depend on you. Applying for life insurance isn’t an obligation to purchase in the end.
If the final price from the insurance company doesn’t align with your expectations or budget, you can walk away. Take the first step today by getting quotes from multiple carriers all in one place.
After you apply online, your Quotacy agent goes to work for you. Our agents don’t work on commission. They’re goal is to help you find a policy that fits into your budget so you can protect your loved ones.
Note: Life insurance quotes used in this article are accurate as of September 27, 2023. These are only estimates and your life insurance costs may be higher or lower.
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