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A $500,000 policy is a commonly purchased amount of life insurance. It’s often enough to pay off a mortgage, help cover children’s college education costs, and pay for final expenses.

When deciding if a $500,000 policy is right for you, here are the three most common questions:

  • Can anyone get a $500,000 life insurance policy?
  • When does a $500,000 of coverage make sense?
  • How much does a $500,000 life insurance policy cost?

To answer these questions, let’s take a closer look at some scenarios and example pricing for different age groups, genders, and term lengths.

Can anyone get a $500,000 life insurance policy?

Life insurance companies require financial justification for the coverage amount being applied for.

When determining if you can qualify for a certain amount of coverage, the life insurance company will typically multiply your annual income by a factor based on your age. If the amount you’re applying for is under this number, financial justification shouldn’t be an issue.

Example: If Applicant’s annual income is $50,000, then below represents estimation life insurance companies will use to determine financial justification.
Age of ApplicantMultiplier UsedMaximum Life Insurance Coverage
30 or under25$1,250,000
31 to 3522$1,100,000
36 to 4020$1,000,000
41 to 4518$900,000
46 to 5015$750,000
51 to 5512$600,000
56 to 6010$500,000
61 to 657$350,000
66 to 705$250,000
Over age 703$150,000

This method of determining maximum life insurance coverage is not inflexible. These limits can be exceeded on a case-by-case basis if other factors are in play, such as business or college education needs.

Also important to note is that the table above portrays total life insurance coverage. If you already own a life insurance policy that you plan on keeping, then you may not qualify for a second life insurance policy with a $500,000 face amount. It depends on how much coverage you have with your original policy.

When does $500,000 of coverage make sense?

A $500,000 term life insurance policy makes sense in many scenarios. This death benefit can cover many expenses left by a provider dying unexpectedly.

The house your family lives in is often the largest asset you own and largest source of debt. According to research done in 2020, the average mortgage debt per U.S. household is $215,655.

The cost of a college education isn’t declining. If you plan on paying for your child to graduate college, the total estimated cost to send one child to an in-state college for 4 years is $132,800.

A $500,000 life insurance policy can cover your big goals, like a house and college. It can also help pay for final expenses that may occur, such as medical bills and a funeral.

When buying a term life insurance policy, the term length should match the length of your longest obligation. For many, this is the length of the mortgage loan. For others, it may be however many years until you’re no longer financially responsible for your youngest child.

One of the great things about buying life insurance through Quotacy is that our quoting tool is easy to use and you can see pricing instantly without giving up any contact information. You can adjust the coverage amount and term lengths to see how it affects your quote before you apply.

Image of a quote for a $500,000, 20 year term policy.

If something happens to you, term life insurance will financially protect the loved ones you leave behind.

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How much does a $500,000 life insurance policy cost?

The cost of a life insurance policy is determined by a number of factors such as gender, age, health status, and the policy coverage and term length you choose. A $500,000 term life insurance policy is an affordable option.

I’ll illustrate the cost of a $500,000 policy across various ages and risk classes. Term length options vary from 10 to 40 years, but I’ll show the most common to keep things simple.

Cost of a $500,000 Term Life Insurance Policy
Insured: Male, Age 30
Risk Class10-Year Term Monthly Premium20-Year Term Monthly Premium30-Year Term Monthly Premium
Preferred Plus$16.17$19.39$29.89
Preferred$19.76$24.81$38.93
Standard Plus$22.95$31.36$48.78
Standard$25.92$35.47$19.71
Preferred Tobacco$49.30$68.42$113.05
Standard Tobacco$67.15$89.67$147.05
Cost of a $500,000 Term Life Insurance Policy
Insured: Female, Age 30
Risk Class10-Year Term Monthly Premium20-Year Term Monthly Premium30-Year Term Monthly Premium
Preferred Plus$12.12$16.37$25.32
Preferred$14.02$19.70$30.66
Standard Plus$11.58$26.68$43.68
Standard$22.09$29.56$47.41
Preferred Tobacco$39.10$55.24$84.15
Standard Tobacco$52.70$67.87$147.05
Cost of a $500,000 Term Life Insurance Policy
Insured: Male, Age 35
Risk Class10-Year Term Monthly Premium20-Year Term Monthly Premium30-Year Term Monthly Premium
Preferred Plus$16.17$21.15$34.79
Preferred$20.82$26.18$41.22
Standard Plus$11.58$31.36$58.56
Standard$26.34$39.97$68.14
Preferred Tobacco$54.82$84.14$141.95
Standard Tobacco$76.92$118.14$179.77
Cost of a $500,000 Term Life Insurance Policy
Insured: Female, Age 35
Risk Class10-Year Term Monthly Premium20-Year Term Monthly Premium30-Year Term Monthly Premium
Preferred Plus$14.24$17.87$29.23
Preferred$18.49$22.41$34.62
Standard Plus$19.97$29.49$58.56
Standard$22.09$33.31$53.88
Preferred Tobacco$43.34$70.54$101.57
Standard Tobacco$57.37$89.24$135.99
Cost of a $500,000 Term Life Insurance Policy
Insured: Male, Age 40
Risk Class10-Year Term Monthly Premium20-Year Term Monthly Premium30-Year Term Monthly Premium
Preferred Plus$23.71$29.74$50.54
Preferred$28.69$35.90$59.27
Standard Plus$33.99$31.36$84.39
Standard$25.92$56.24$95.68
Preferred Tobacco$76.92$129.62$212.49
Standard Tobacco$112.20$176.79$271.14
Cost of a $500,000 Term Life Insurance Policy
Insured: Female, Age 40
Risk Class10-Year Term Monthly Premium20-Year Term Monthly Premium30-Year Term Monthly Premium
Preferred Plus$18.91$24.56$40.23
Preferred$21.25$30.05$46.78
Standard Plus$27.02$31.36$66.89
Standard$30.14$56.24$73.51
Preferred Tobacco$61.62$101.57$150.44
Standard Tobacco$87.12$121.97$198.04
Cost of a $500,000 Term Life Insurance Policy
Insured: Male, Age 45
Risk Class10-Year Term Monthly Premium20-Year Term Monthly Premium30-Year Term Monthly Premium
Preferred Plus$30.60$46.67$79.35
Preferred$34.97$55.16$93.83
Standard Plus$47.09$74.96$133.37
Standard$51.79$88.67$152.20
Preferred Tobacco$120.27$205.27$341.70
Standard Tobacco$173.40$277.09$424.57
Cost of a $500,000 Term Life Insurance Policy
Insured: Female, Age 45
Risk Class10-Year Term Monthly Premium20-Year Term Monthly Premium30-Year Term Monthly Premium
Preferred Plus$27.11$37.62$60.90
Preferred$30.17$42.89$70.64
Standard Plus$38.25$58.39$97.91
Standard$42.12$66.95$108.17
Preferred Tobacco$93.49$150.44$236.30
Standard Tobacco$133.02$206.34$298.34
Cost of a $500,000 Term Life Insurance Policy
Insured: Male, Age 50
Risk Class10-Year Term Monthly Premium20-Year Term Monthly Premium30-Year Term Monthly Premium
Preferred Plus$44.62$71.43$128.11
Preferred$51.90$83.78$151.45
Standard Plus$70.46$118.74$212.97
Standard$81.57$131.88$244.02
Preferred Tobacco$175.52$300.47$523.59
Standard Tobacco$253.72$390.14$584.80
Cost of a $500,000 Term Life Insurance Policy
Insured: Female, Age 50
Risk Class10-Year Term Monthly Premium20-Year Term Monthly Premium30-Year Term Monthly Premium
Preferred Plus$36.59$57.80$97.24
Preferred$42.38$65.42$110.43
Standard Plus$55.80$84.74$149.55
Standard$61.42$99.02$174.52
Preferred Tobacco$138.54$220.14$364.22
Standard Tobacco$169.27$291.54$465.37

If something happens to you, term life insurance will financially protect the loved ones you leave behind. You can take pride in knowing you’re shielding them from financial harm should you die unexpectedly.

A $500,000 life insurance policy is one of the most commonly purchased amounts, but $500,000 may not be the right amount for you.

Our life insurance needs calculator can help you determine the right amount of coverage you need. Check it out here: life insurance needs calculator.

If you prefer to talk with an advisor to determine how much life insurance you need, contact us directly here at Quotacy. Our agents are happy to go over your needs, but won’t push you into buying coverage you don’t need.

Note: Life insurance quotes used in this article accurate as of April 5, 2021. These are only estimates and your life insurance costs may be higher or lower.

 

About the writer

Headshot of Natasha Cornelius, a life insurance writer, for Quotacy, Inc.

Natasha Cornelius

Marketing Content Manager

Natasha is a writer and content editor at Quotacy. She is also co-host of Quotacy’s YouTube series. She can't get enough of life insurance and outside of work is also working toward her Chartered Life Underwriter designation. Connect with her on LinkedIn.