How Much Does Life Insurance Cost?

Like a fire extinguisher, life insurance is one of those things you buy once, stick on the wall, and hope you never, ever have to use. It’s cheap and easy to buy and the peace of mind alone could be well worth the cost. 

But what is the cost of life insurance? Does a $500,000 policy cost an arm and a leg? What are the major factors driving the cost of monthly premiums? How much do you really need, and how can you score a great deal?

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What Is the Average Life Insurance Cost?

The average cost of life insurance is about $26 per month, according to Policygenius.

But don’t take that number and run with it, because your life insurance cost could range anywhere from the cost of Hulu to $1,500+.

A life insurance company determines your individual life insurance cost based on at least seven major factors — and an eighth that nobody’s really discussing yet. 

7 Factors That Affect the Cost of Life Insurance 

At the end of the day, life insurance companies are trying to figure out how likely you are to die while your policy is active. Sounds grim, but that’s just how the life insurance industry works. 

As such, the span of life insurance rates is huge. A 20-year-old in perfect health may only pay $7 a month for life insurance, while a 53-year-old chain-smoking skydiver may pay $1,482 for similar coverage. 

Chances are that your age and lifestyle fit somewhere between those two archetypes, so let’s explore the seven (or really eight) major factors that might impact your life insurance premiums. 

1. Age

It’s no surprise that the cost of life insurance increases with age. But by how much? 

Estimates vary, but PolicyGenius says it’s between 4.5% and 9% per year. Interestingly, the cost of life insurance coverage barely changes between ages 20 and 30, but from 30 onward it starts rising. 

2. Gender

Sorry to break it to you, gentlemen, but on average we pay 24% more for life insurance policies than women. A healthy 30-year-old female will pay around $23 per month for a $500,000 term life insurance policy while a male with an identical health profile will pay $30, according to Policygenius. The cold and simple reason for this is that men have a lower life expectancy. 

If you identify as transgender or non-binary, you should know that most life insurance applications only have two options: male or female. During the underwriting process (where they dig up more of your info), most providers will end up calculating your premiums based on your gender assigned at birth. 

Identifying as LGBTQ will not impact your eligibility for life insurance, says Policygenius. 

3. Hobbies

Life insurance providers tend to charge higher premiums to folks who engage in “high-risk activities.” Those can include horseback or motorcycle riding, extreme sports, hang gliding, and any other activity that could reasonably increase your risk of a serious accident or death.

And before you tell a little white lie on your application, you should know that your life insurance company may be looking at your social media to find the truth. In fact, you might even consider your social media presence to be the eighth — and newest — major factor that affects how much you’ll pay for life insurance. 

That may sound unfair — even illegal — but in 2019, New York’s top financial regulators officially began allowing life insurance companies to use your social media data against you.

“Social media data provides insurers with an opportunity to gain insights into a customer's risk exposure in real time,” writes Michael de Waal in Insurance Thought Leadership.

So before you post a TikTok of yourself swan-diving out of a Cessna, consider that your future life insurance provider may find it — and you might see your life insurance rates increase when they do. 

4. Pre-existing conditions and family medical history

Your and your family’s medical history will play a huge role in how your life insurance premiums are calculated. If you or a blood relative has a history of cancer, diabetes, or heart disease, you can expect to pay higher-than-average premiums for a life insurance policy. 

5. Policy type

The two main types of life insurance are term life and whole life. Term life lasts a finite amount of time, usually between 10 and 30 years. Whole life lasts as long as you pay the premiums, meaning you’re essentially covered until you pass away. 

Having whole life insurance doesn’t necessarily guarantee that your family will receive a payout, since you may still die from an uncovered cause (e.g., suicide, smoking-related illness, or high-risk activity). But it’s still much more likely to pay out since it’s effectively permanent. 

As a result, whole life insurance is significantly more expensive, while term life insurance rates are typically quite low. While the average 30-year-old will pay just $26 per month for a term life insurance policy, that same person will pay $451 per month for whole life insurance. 

READ MORE: Term vs. Permanent Life Insurance: Key Differences

6. Policy term, length, and coverage

For the average 30-year-old female in good health, a 10-year/$100,000 term life insurance policy will cost around $7 per month.  

If she were to upgrade that to a 40-year/$10 million term life policy, her monthly premiums would go from around $7 to $662, according to PolicyGenius’s life insurance rates calculator. 

Needless to say, the length of time you want a fixed rate, and your total coverage amount, will have a massive impact on your life insurance policy premiums. 

7. Whether or not you smoke or skydive

You probably thought I was joking earlier when I referenced a chain-smoking skydiver, but I wasn’t. That’s because most life insurers will specifically ask if you a) smoke or b) skydive. If you partake in either, you can expect to see vastly higher premiums — if you’re approved for a life insurance policy at all. 

If you want to see what your rate might be based on your personal factors, you can use a platform like Policygenius to be matched with potential insurance providers.

How Much Life Insurance Do You Need?

Thankfully, there are a few rules of thumb to help you quickly estimate how much coverage you need in a life insurance policy. 

As a first step, let’s remind ourselves what life insurance is used for so we can put this whole conversation into context. 

The whole point of life insurance policies is to alleviate the financial burden on the loved ones we leave behind. So if you were to pass away tomorrow, what would your family need help paying for in the absence of your income? 

If you’re single with no kids, no debt, and plenty of savings, you may not need life insurance at all. Your surviving family can just use your assets to cover your funeral expenses (provided you left them control in the will).

For everyone else, you can determine roughly how big a life insurance policy you’ll need by using either the 10x method or the DIME method. 

• 10x method: This involves taking your annual income and multiplying it by 10. Some say this method isn’t nearly accurate enough since it doesn’t take into account debts, kids, etc. But it’ll provide you with a ballpark coverage amount to start collecting life insurance quotes online.
• DIME method: This involves adding up your total debt (e.g., credit cards, student loans), annual income (multiplied by the number of years you’ll have folks dependent on you), mortgage balance, and the cost of education for all of your kids. 

If you want a more exact figure than either 10x or DIME can provide, consider speaking with a financial advisor who can make precise recommendations for life insurance coverage needs based on your current and future finances. 

READ MORE: How Much Life Insurance Do I Need for My Family?

How To Lower Your Life Insurance Costs

Maybe you’ve already gathered some quotes online and realized just how much life insurance is going to cost you.

We hear you. Nobody wants to pay another steep monthly bill in perpetuity, so here are some of the best ways to get your life insurance premiums down as low as possible: 

Shop around

There are many life insurance companies out there, and each of them will have their own approach to calculating life insurance rates. That’s why we recommend getting at least six life insurance quotes before committing since you never know who will give you a surprisingly low rate.

Lock in a fixed rate while you’re young

When you purchase term life insurance, your premiums are guaranteed to not go up during the life of the policy. That means if you lock in a $17/month rate on a 30-year term policy while you’re 29, you’ll still be paying $17/month throughout your 40s and 50s.

Be careful what you post on social media

There’s strong evidence to suggest that insurance companies are using AI bots to scrub social media accounts and look for risk factors like smoking, skydiving, speeding, or other activities they deem “high-risk.”

Some say this is a violation of consumer privacy laws and that regulations are soon to follow. But for the time being, it might be wise to control your image on social media while you’re shopping for a policy, in order to get better life insurance quotes. 

Final Thoughts

If you get it while you’re young, life insurance is cheap. For a healthy young female it costs less than a Chipotle burrito, and even a low-cost $100,000 plan can provide you and your family added peace of mind for years. 

But as prices rise in your 30s, you’ll want to assess your needs and lock down a rate sooner than later. 

If you're looking to compare quotes from different life insurance providers, you may want to start with Policygenius. It'll use your info to match you with providers, so you can compare personalized quotes side-by-side.

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