Average cost of term life insurance

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One of the most daunting questions you will have to ask yourself is “what happens to my family if I’m gone?” It is common to worry how your family will continue their lifestyle without your source of income.

Life insurance can help ensure that your family is taken care of if the worst happens. With life insurance, your family can receive money to help cover expenses when you are gone¹. And while you may think that life insurance is expensive, in reality life insurance can be affordable.

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How much is term life insurance?

One of the first questions people ask about life insurance is, how much does it cost? After all, it’s common to be price sensitive when it comes to insurance policies, and this is even more so the case when it comes to finding a life insurance policy.

Life insurance can be affordable for the average person. The average monthly cost for $500k in term life insurance for a 20-year period is about an average of $38 per month for a 35-year old healthy, non-smoker².

However, if this statistic doesn’t apply to you, you may still be wondering how much you will end up paying for life insurance.

Life insurance prices

There are numerous factors that life insurers typically take into consideration when calculating the price of a life insurance policy. Pre-existing conditions, coverage amounts, term length, location, and more all typically play a part in life insurance prices³. The type of life insurance policy you may be able to choose can also play a large role in life insurance prices. It’s important to know that there are three types of life insurance: term, whole⁴, and universal⁵.

Term life insurance

Term life insurance is the most straightforward form of life insurance. In fact, some employers may offer it as an employment benefit. With term life insurance, your life will be covered by the insurance policy for the duration of the term set by the policy. For example, the term may last 10, 15, 20, or 30 years. If the policyholder passes away during the term, the beneficiary will receive the payout as stated in the policy⁶. Once the term ends, the policy will end along with it. At the end of the pre-established term, there may be the option in the terms of the policy to continue the policy at a higher and/or fixed rate if the insurer allows. On the other hand, if the policyholder chooses to opt for a new policy with another insurance company once the term ends, they may be paying a higher premium than in their previous term due to changes in age or health⁷. 

Whole life insurance

The second type of life insurance is whole life insurance. Unlike term life insurance, whole life insurance lasts the entire lifetime of the policyholder (as long as the appropriate payments are made on the premium)⁸. Whole life insurance may provide more stability for policyholders, as there is a level of comfort knowing that the policyholder is insured for the rest of their lifetime⁹.

Whole life insurance may build a cash value over time¹⁰. If a whole life insurance policy is canceled, the policyholder may receive the cash value of the policy¹¹.

Universal life insurance

The last major type of life insurance to consider is universal life insurance. This type of life insurance policy typically offers more premium flexibility when compared to the other two types of life insurance. Universal life insurance¹² provides a death benefit and the ability to accumulate a cash value. The policyholder can typically adjust the death benefit and the payout amount can be increased or decreased within a certain limit¹³.

During the initial years of this type of life insurance policy, typically the premium will primarily go towards cash value with a small portion of the premium going towards the cost of the insurance itself. Later in the policy, the majority of the premium will go toward purchasing the insurance, with a small portion of the premium going towards the cash value.

Life insurance cost by age

Another big question typically raised when looking to buying life insurance is, how much does life insurance cost as a policyholder ages? Perhaps unsurprisingly, one of the most important factors in determining life insurance cost is age. As we age and get closer to life expectancy, the chances of death increase. This unavoidable reality has an effect on the monthly premium payments that policyholders need to pay. For example, a 20-year-old man who purchases a $250,000 policy may pay less than a 60-year-old man who purchases a $250,000 policy, all else equal. Therefore, it may be worth considering a life insurance policy sooner rather than later¹⁴.

Buying life insurance at an early age may be beneficial for many additional reasons beyond a lower premium cost. Many life insurance products have a maximum issue age, which may make some older people ineligible.

What does life insurance cost for an individual?

Guardian Direct offers term life insurance to individuals though Ladder, our trusted life insurance partner. Family members can be named as beneficiaries of the life insurance policy to ensure that your family will be taken care of, and our quick and easy application process makes purchasing your individual life insurance policy simple.

Links to external sites are provided for your convenience in locating related information and services. Guardian, its subsidiaries, agents and employees expressly disclaim any responsibility for and do not maintain, control, recommend, or endorse third-party sites, organizations, products, or services and make no representation as to the completeness, suitability, or quality thereof.


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  1. All life insurance policy guarantees are subject to the timely payment of all required premiums and the claims paying ability of the issuing insurance company.

  2. https://www.valuepenguin.com/average-cost-life-insurance#average(August 2021), last accessed September 2021

  3. https://www.investopedia.com/articles/investing/102914/7-factors-affect-your-life-insurance-quote.asp, (August 2021), last accessed September 2021

  4. Permanent life insurance consists of two types: whole life and universal life. Cash value grows in a participating whole life policy through dividends, which are declared annually by the company's board of directors and are not guaranteed. Cash value grows in a universal life policy through credited interest and decreased insurance costs. The cash value of both policy types benefits when the policyholder pays an amount above the required premium

  5. https://www.fbfs.com/learning-center/8-factors-that-can-affect-life-insurance-premiums, (August 2020), last accessed September 2021

  6. https://www.usnews.com/360-reviews/life-insurance/term-life-insurance, (September 2020), last accessed September 2021

  7. https://www.usnews.com/360-reviews/life-insurance/term-life-insurance, (September 2020), last accessed September 2021

  8. All life insurance policy guarantees are subject to the timely payment of all required premiums and the claims paying ability of the issuing insurance company.

  9. https://www.forbes.com/advisor/life-insurance/whole-life-insurance, (June 2021), last accessed September 2021

  10. Some whole life polices do not have cash values in the first two years of the policy and don’t pay a dividend until the policy’s third year. Talk to your financial representative and refer to your individual whole life policy illustration for more information.

  11. Policy benefits are reduced by any outstanding loan or loan interest and/or withdrawals. Dividends, if any, are affected by policy loans and loan interest. Withdrawals above the cost basis may result in taxable ordinary income. If the policy lapses, or is surrendered, any outstanding loans considered gain in the policy may be subject to ordinary income taxes. If the policy is a Modified Endowment Contract (MEC), loans are treated like withdrawals, but as gain first, subject to ordinary income taxes. If the policy owner is under 59 ½, any taxable withdrawal may also be subject to a 10% federal tax penalty.

  12. Universal Life Insurance may lapse prematurely due to inadequate funding (low or no premium), increase in cost of insurance rates as the insured grows older, and a low interest crediting rate. This does not apply to universal life policies which have a secondary guarantee, but if the secondary guarantee requirements are not met the policy will most likely lapse.

  13. https://www.investopedia.com/terms/u/universallife.asp, (June 2020), last accessed September 2021

  14. https://www.investopedia.com/articles/personal-finance/100615/getting-life-insurance-your-20s-pays.asp, (June 2021), last accessed September 2021