How Much Life Insurance Costs
Even though life insurance delivers several benefits, the cost of a policy can sometimes be intimidating. Paying monthly premiums for coverage that you may never use is also something that many people have a hard time wrapping their heads around. That is why it is important to get multiple quotes and look at all your options.
Much of the cost can be determined by the type of policy you select, the term length, the coverage amount, and your health, age, family background, and lifestyle. As you can see, multiple factors make up your monthly premiums. One of the largest determining factors of how much you pay is the life insurance coverage itself.
The type of policy you decide to go with will have a large effect on the cost of the policy itself. A term life insurance policy will normally be the most affordable life insurance option. A permanent life insurance policy, like whole life insurance, will be substantially more expensive but feature extra perks, like a cash component.
Below is a breakdown of the two life insurance products and the costs associated with each.
Term Life Insurance Cost
With term life insurance, you are expected to pay a monthly premium for an agreed-upon period of time. Should you pass away while your policy is active, the insurance company will pay out a death benefit to your beneficiaries. For most types of policies, the cost of coverage is dependent on the amount of coverage you get and the length of the term itself.
For those seeking affordable coverage, Insurify has term life insurance policies starting as low as $15/month for $100,000. Thanks to our simple and easy to use platform, you can quickly compare multiple qualified insurers in minutes to find the best plan for you.
Whole Life Insurance Cost
Unlike term life coverage, whole life insurance tends to be more expensive. Some policies can be as much as 5 to 15 times as expensive as term life insurance. While the price does tend to be higher, there are some added benefits to choosing a permanent plan:
Whole life policies last longer. Term life policies are limited in the length of coverage they provide, but whole life will continue on as long as the policyholder pays the premiums, making it more likely that the policy will still be active when you die.
Whole life comes with a cash value component. Whole life plans come with a cash value component and a life insurance component. Part of your premium goes toward the cash value, while the other part goes toward the death benefit or payout.
Premium rates also tend to be higher with whole life because of management fees that aren’t present with term life insurance.
How Age Affects the Cost of Life Insurance
While insurance companies will take into account your age when assessing your monthly premiums, there is something else you must consider. Life insurance rates will never be as cheap for you as they are today. Regardless of what you do, even the best life insurance companies will charge you a higher rate as you get older.
On average, every year you decide to delay buying life insurance, you risk the cost of your monthly premiums increasing by approximately 5–10 percent. That is one of the reasons why it is suggested that young people consider buying term life insurance when they are in their 20s and 30s.
Not only will you lock in a cheaper insurance rate while you are younger and in good health, but by doing so will save hundreds of dollars each year. It is important to shop around for quotes on a comparison site like Insurify until you find an affordable option that provides you with coverage that will last as long as you need it to.
How Health Factors into Life Insurance Costs
Your overall health is one of the most important factors when it comes to the price of your monthly premiums. The healthier you are, the less you will have to pay for coverage.
During the underwriting process, insurers ask several questions about your and your family’s health. In addition to the health questions, there may be a medical exam requirement, depending on how much coverage you are looking for and the type of insurance product.
Often underwriters will assess higher premiums for health-related factors such as:
High blood pressure
Recreational drug use
Having a medical history and pre-existing medical conditions can often lead to higher premium rates, too. That is one of the reasons financial professionals recommend shopping around to find an insurance company that will provide a policy with comprehensive coverage and an affordable rate.
For those who use marijuana, smoke cigarettes, or chew tobacco, you may also be assessed a higher premium as well. Luckily, there are several insurance providers who have special accommodations for smokers and former smokers. Shopping around for smoker-friendly insurance companies is easy with Insurify.