How much does life insurance cost?

How much is life insurance? The answer is… it depends. The average cost of life insurance varies based on what type of policy you choose and how much coverage you sign up for. For example, a healthy 30-year-old woman can buy a 30-year, $250,000 Haven Term life insurance policy for about $16 per month. If that same woman purchased a whole life insurance policy, it would be closer to $200 per month. (Read on to learn more about the cost and value of these two different insurance options.)

The cost of life insurance also depends on your health, how old you are when you sign up for the policy and what kind of features your policy offers (called riders). Still, we’re happy to report that, in many cases, a term life insurance policy will cost less per month than what you’re paying for streaming media subscriptions. Or that new sweatshirt you’ve been eyeing. Or any of the other items on this list of eight everyday expenses that cost more than term life insurance.

This means that the life insurance cost can be an affordable part of nearly any budget. The average life expectancy in the United States is 78.6 years, according to the Centers for Disease Control and Prevention, but you don’t buy life insurance because you’re worried that you might not beat the average. You buy life insurance because you want to plan ahead and help ensure your partner, children, parents and any other beneficiary has the money needed to do things like cover your funeral costs, pay off your outstanding debts, maintain their standard of living without your income and achieve dreams like graduating from college.

And if you buy life insurance right now, you’ll save money. (That isn’t a sales pitch. That’s math.)

Here’s what you need to know about how much life insurance costs and how to choose an affordable life insurance policy for you and your loved ones.

Getting life insurance now could save you money

A lot of people make the mistake of thinking that life insurance is something they won’t have to deal with until later. Maybe when the kids are a little older. Maybe when they have kids — because people without kids don’t need life insurance, right? (Wrong.)

But you’re probably thinking about purchasing life insurance now. That’s a smart move, because the younger you are when you purchase your policy, the more money you can save on your premiums over time and the cost of life insurance will be lower.

Putting off the life insurance decision could turn out to be an expensive choice. Here’s an example of how your life insurance rates may change by age:

Let’s say that you are a 38-year-old woman in excellent health. If someone like you were to take out a 20-year, $500,000 Haven Term policy,  you’d pay $21.47 per month (depending on your state of residence) to protect your loved ones. That’s an expense of $257.64 per year or $5,153 over the life of the policy.

Now let’s say you wait ten years. You’re now 48. You might no longer be in excellent health. You’d no longer need a 20-year policy, but you might go for a 10-year-policy, or for 15 years to get you closer to retirement age. To get a 10-year, $500,000 Haven Term policy you’d end up paying a monthly rate of $53.09 if you’re in “good” health or $67.25 if underwriting classifies you as “average” health. That’s more than three times the cost of life insurance per month — and you’re also risking going a full decade without life insurance.

When you’re considering life insurance, it pays to be an early adopter, and it’s also better for the financial health of your dependents. Term life insurance premium payments are less expensive when you’re young and healthy. If you’re concerned about helping your beneficiaries cover things like your children’s college expenses and your own funeral costs in the event something happens to you, make a plan to research coverage options, identify your life insurance needs, and get life insurance as soon as possible.

Like, this week. (You can do it!)

But before you start filling out our online life insurance calculator and getting life insurance quotes, we need to discuss what types of life insurance are available and how they might fit into your budget.

Choosing the best life insurance for your budget

There are a lot of different types of life insurance out there, and keeping track of all the different variations can be confusing. Here’s a quick overview of your options offered by insurance companies:

Term life insurance is designed to cover you for a designated period of time, typically 10,15 20, 25 or 30 years. It comes in two common types:

• Medically underwritten term life insurance: A good choice for people who are in generally decent health and want to save money on premiums. In many cases, you will need to complete a life insurance medical exam to finalize your term life policy.
• Simplified issue term life insurance: A good choice for people who, for various reasons, don’t want to take a medical exam. Your term life insurance rates may be a little higher because of less insight the insurer has into your overall health, but you’ll still be able to protect and provide for your beneficiaries at a rate that’s less than permanent life insurance policies. Learn more about no-medical-exam life insurance from Haven Simple.

Permanent life insurance covers you for the entirety of your life and is more expensive than term life insurance. Permanent insurance includes a “cash value” element that can be borrowed against or used to cover life insurance premium costs. Permanent life insurance comes in two common types:

• Whole life insurance: Permanent life insurance that guarantees coverage for your entire life
• Universal life insurance: Permanent life insurance in which monthly premiums and insurance coverage can be customized over time

Whenever possible, try to choose a policy that comes with guaranteed level premium payments from a reliable insurance provider, which offers a monthly premium or annual premium rate that lasts for the duration of the policy (no surprises!). This helps ensure that your policy will stay affordable over time. Level premiums are a common feature of many term and permanent life insurance policies.

In many cases, a term life insurance policy will be the best choice for both your personal needs and your budget. Why? Because the purpose of life insurance is to help ensure your partner and dependents have the income they need to cover current and future living expenses (like children’s college costs) and to make sure your loved ones have enough money to pay for your funeral and other final expenses. Most financial experts recommend that you have affordable term life insurance coverage during the years your family needs it most. Once the mortgage is paid off or your kids are adults, you should have had the time to build a nest egg, save for retirement and no longer need the protection of life insurance.

For those who want extra credit reading, let’s take a deeper look at the various types of life insurance. If you don’t know which insurance product is right for you, this section will break down the different options for buying life insurance.

Term life insurance

Term life insurance comes well-recommended by financial experts because of its affordability. As the name suggests, this type of life insurance covers you for a set period of time (the “term”). Common term lengths are 10, 15, 20 and 30 years. Typically, this is during the years your family needs it most — until the mortgage is paid off or the kids are no longer financially reliant on you. Most policies come with guaranteed level premiums, which means your monthly life insurance premiums will remain the same for the duration of the policy.

Remember, even if you don’t have a partner or kids of your own, you may still want to consider a term life insurance policy. Becoming an insured person who can provide a death benefit to designated beneficiaries such as parents or siblings means taking the stress off your family and extended family as they deal with your final expenses or unpaid debts, including co-signed private student loan debt.

Term life insurance comes in a couple of different types:

Medically underwritten term life insurance

If you’re decently healthy, medically underwritten term life insurance is often one of the most affordable types of coverage. The premium pricing is customized to each individual and is based on factors like your age, physical health, gender and lifestyle choices such as smoking.

With Haven Life, you can easily apply online for this type of term life insurance and receive an immediate decision on your eligibility. In most cases, you’ll need a short medical exam to finalize coverage, which can be taken at a time and place that’s convenient for you. There are some cases where a medical exam will not be needed thanks to advancements in underwriting technology, which is determined based on eligibility and the information in your application. It’s essential to be honest when completing your term life insurance application. The issuance of the policy or payment of benefits may depend upon the answers given in the application and their truthfulness.

What people are actually paying for Haven Term coverage:

• 15-year, $500,000 policy for a 38-year-old woman in excellent health: $17.63 per month (depending on your state of residence)
• 30-year, $250,000 policy for a 33-year-old man in excellent health: $19.82 per month (depending on your state of residence)

Not sure how much life insurance coverage you really need? Try calculating your needs.

Simplified issue term life insurance

Simplified issue life insurance is a type of term life insurance policy that does not require a medical examination to finalize and start coverage. These policies are typically limited in coverage amounts, and it might be hard to take out a policy of more than $500,000.

A Haven Simple policy, issued by MassMutual subsidiary C.M. Life, can help you access no-medical-exam life insurance. (Remember: It’s essential to be honest when completing your term life insurance application. The issuance of the policy or payment of benefits may depend upon the answers given in the application and their truthfulness.)

To buy Haven Simple (or any type of simplified issue life insurance policy for that matter), all you’ll need to do is complete a short online application to determine eligibility. Remember that the convenience of avoiding medical underwriting comes at a cost because, by definition, the insurer knows less about you and your health.

What you might pay for Haven Simple coverage:

• 15-year, $500,000 policy for a 38-year-old nonsmoking woman in excellent health: $24.15 per month
• 15-year, $250,000 policy for a 33-year-old nonsmoking man in excellent health: $14.61 per month

Permanent Life Insurance

Permanent life insurance is a type of coverage that lasts for the remainder of your life. Instead of paying for coverage for just 20 or 30 years, like you might do with a term life insurance policy, a permanent life insurance policy ensures that you’ll have life insurance coverage until you die — as long as the premiums are paid.

Here’s the other big difference between term and permanent policies: With a term life insurance policy, your premium payments go towards the death benefit your beneficiaries receive if you die before the term is up. With a permanent life insurance policy, part of your premium payments go towards the death benefit and the rest of the money helps build “cash value.” This money can be left to accumulate, withdrawn, borrowed against, used to pay future premiums, transferred to the death benefit, etc — but when you die, your beneficiaries receive the death benefit, not the cash value. Please note that loans or partial surrenders may have tax implications and will reduce the total death benefit and cash value of your policy.

Because of the lifelong coverage and cash value component, a permanent policy costs much more than term life insurance (which can make it cost-prohibitive). On the flip side, a permanent policy might be a good option for those who want life insurance to be part of their long-term financial strategies. For example, it can be a good option for a parent who wishes to provide for a special needs child upon their death, whenever that may be, because the cost of care often remains high throughout that child’s life.

Whole life insurance

Whole life insurance is a type of permanent coverage that provides coverage for your entire life and includes a cash value component that can grow over time. This cash value feature of permanent life insurance policies is attractive for some buyers because it allows you to have a product that includes both a guaranteed death benefit and a cash accumulation feature that can be used to supplement your financial planning needs, like saving for college or retirement. Whole life insurance, like term life, has level premiums, but they are substantially more expensive, with one estimate finding that whole life insurance is 5 to 20 times more costly than term life insurance.

Universal life insurance

Universal life insurance is similar to whole life insurance (that is, it lasts for your lifetime and has a cash value), but with a twist: As you age and your needs change, you can choose to change the terms of your policy. For example, you may opt for lower premiums earlier in the policy while your income is still growing and then opt for a lower face value later in life, when you have fewer financial obligations to cover.

Universal life insurance has numerous other “customizable” options, making it a more complex product that often requires the assistance of a financial professional to help you manage.

Factors that affect the cost of life insurance

If you’ve been paying attention to all of those life insurance rate estimates, you probably noticed that there’s no single answer to the question “how much does life insurance cost?” There are literally dozens of potential answers. Your life insurance rates will be determined by several unique factors, starting with the two big ones:

• Whether you want term life insurance or permanent life insurance
• How much coverage you’d like your dependents and beneficiaries to receive ($100,000? $250,000? $500,000?)
• How long you need your term coverage to last for (typically 10, 15, 20 or 30 years)

Here are a few more factors that go into the cost of your annual premium:

• Age
• Gender (women usually have lower premium prices than men)
• Occupation
• Health history
• Family health history
• Lifestyle choices like smoking, drug use and even multiple motor vehicle infractions (which means that being a responsible driver could save both your life and your life insurance costs)

You won’t be able to cut your life insurance rates by, like, getting younger (the fountain of youth remains undiscovered) but there are a few ways you can save money on your life insurance policy — and many of them are relatively easy to implement.

How to save on life insurance rates

Choose the type of coverage you need

The type of life insurance you purchase has a significant impact on your monthly or yearly rate for coverage. Simplified issue may come with the convenience of “no medical exam,” but that convenience comes at a price. Whole life lasts for your entire life and has a cash value feature but can be too costly for cash-strapped individuals. Medically underwritten term life insurance offers affordable pricing but will often require a medical exam. (But at Haven Life we promise to try and make the medical exam as convenient as possible.)

Buy the right amount of coverage

Don’t pick a coverage amount at random. The more coverage you need, the more you’ll pay for your life insurance policy — so be thoughtful about your coverage choices. If you really only need $500,000 to adequately cover your mortgage, for example, there is no reason to increase your monthly premium by selecting a $2 million policy; if it’s a 20-year mortgage, taking out 30 years worth of life insurance coverage might not make financial sense. A life insurance calculator can help you determine the right amount of coverage for your financial situation.

Don’t put off buying a policy

Remember: if you get your policy while you’re younger (and healthier), you are going to reap the advantage of a lower premium. This is one of the easiest and best ways to save money on life insurance — but that’s not the only reason to get a life insurance policy while you’re young. We’ve got a list of eight reasons to get life insurance in your 30s, including “to protect your small business” (if you’re a freelancer or entrepreneur), “to cover final expenses” (if you’re… um… mortal) and my favorite reason, “to check it off your to-do list.”

Choose a healthy lifestyle

A non-smoker will enjoy significantly lower premiums than a smoker — so quitting smoking will be good for both your health and your wallet! (Most insurers require at least one to two years smoke-free before you will be classified as a non-smoker for underwriting purposes.)

Making healthy eating choices can also help lower your BMI, blood pressure and cholesterol — all of which will be taken into consideration when you buy medically underwritten term and permanent life insurance policies.

And don’t forget about sleep. Getting a good night’s sleep can reduce stress levels, boost your immune system, help you make healthier choices during the day and give you more relaxed quality time with those loved ones for whom you’re taking out that life insurance policy.