How much does life insurance cost?

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If you’re reading this, chances are you already realize how important life insurance is to your family. A policy provides a valuable way to help financially protect the most important people in your life.

The good news is that securing financial protection by way of life insurance does not need to be a stress on your wallet. There is a type of life insurance out there that works for nearly every budget and financial situation. Term life insurance, in particular, can provide robust coverage for your family and is often affordable.

How affordable? A friend of mine, Beth, is 30 years old and healthy. She recently married, and she and her new husband are planning to have children in the next few years. Beth found out she can purchase a 30-year, $500,000 Haven Term policy, issued by MassMutual, for about  $27 per month.

That’s less than $1 per day.

That is good news for Beth…and good news for me because now I know Beth can afford to treat me to coffee on Friday mornings.

Choosing the right type of life insurance for your budget

There are many types of life insurance available, which can, admittedly, be a little intimidating when you’re shopping for coverage. That said, having a few options available helps you be able to pick the right type of coverage for your family and your financial situation.

Here, we’ll explain some of the common types of coverage and provide quotes for how much a policy might be. Keep in mind, most policies are subject to underwriting approval which could impact pricing.

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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.

Term life insurance comes in a few varieties.

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 personalized to you (hence the term “medically underwritten”) therefore it’s based on factors like your age, physical health, gender, and lifestyle choices such as smoking.

With tech startups like us at Haven Life, you can easily apply online for this type of term life insurance. If approved, you can start coverage that day. In most cases, you’ll need a 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. Keep in mind: it’s very important to be honest when completing the application. The issuance of the policy or payment of benefits may depend upon the answers given in the application and their truthfulness.

Estimates for medically underwritten term life insurance

  • 30-year, $250,000 policy for a 37-year-old woman in excellent health: $23 per month
  • 20-year, $750,000 policy for a 35-year-old man in excellent health: $29 per month
  • 30-year, $600,000 policy for a 30-year-old woman in excellent health: $32 per month
  • 15-year, $1,000,000 policy for a 40-year-old woman in good health: $46 per month

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 insurance policy that does not require a medical examination or medical underwriting. That can make it an attractive option for those who have a health condition that may be an obstacle to obtaining medically underwritten coverage. These policies are typically limited in coverage amounts of $250,000 or less. Occasionally, you can find a $500,000 policy.

The convenience of avoiding medical underwriting comes at a cost, however, because the insurer is taking on more risk without knowing details about your health history. As you’ll see below, many simplified issued policies cost at least twice as much per month than medically underwritten policies.

Estimates for simplified issue term life insurance

  • $250,000 policy for a 37-year-old woman in excellent health: $67 per month, according to Trustage (term length not indicated)
  • $300,000 policy for a 30-year-old woman in excellent health: $65 per month, according to Trustage (term length not indicated)
  • $300,000 policy for a 35-year-old man in excellent health: $98 per month, according to JennyLife. It expires when he is 80 (45-year term) and with “premiums only increasing every 5 years.

By the way, watch for level premiums that last for the duration of the policy. This helps ensure affordability over time.

Permanent life insurance

Permanent life insurance is a type of coverage that lasts for your lifetime. In other words, there is no set end to the coverage as there is with term life insurance. Two common types of permanent coverage are whole life and universal life.

Permanent policies also have a cash value that can increase over time. Because of the lifelong coverage and cash value component, permanent policies cost much more than term life insurance, which can make them cost-prohibitive. On the flip side, permanent policies might be a good option for those who want life insurance to be part of their long-term financial strategies and who are interested in other tax-advantaged financial products.

Whole life insurance

One type of permanent life insurance is whole life insurance. Whole life lasts for your entire lifetime and carries with it a cash value feature. Whole life insurance is substantially more expensive than term life insurance, with one estimate finding that whole life insurance is 5 to 20 times more costly than term life insurance. For this reason, if your family is younger or cost-conscious, permanent life insurance may not be as attractive as a term life policy.

Estimates for whole life insurance:*

  • $250,000 policy for a 37-year-old woman in excellent health: $262 per month
  • $750,000 policy for a 35-year-old man in excellent health: $983.78 per month
  • $1,000,000 policy for a 40-year-old woman in good health: $1,264.95 per month
  • $600,000 policy for a 30-year-old woman in excellent health: $490.83

Universal life insurance

Another variant of permanent life insurance is called universal life insurance. Universal life insurance is similar to whole life insurance (namely, it lasts for your lifetime and has a cash value), but with a twist. Universal life insurance can vary throughout your life with respect to the amount of your premium and the amount of your death benefit.

This means that as you age and your needs change, you may 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 complex product that often requires the assistance of a financial professional to manage.

Estimates for universal life insurance**:

  • 30-year, $250,000 policy for a 37-year-old woman in excellent health: $543 per month
  • 20-year, $750,000 policy for a 35-year-old man in excellent health: $865 per month
  • 15-year, $1,000,000 policy for a 40-year-old woman in good health:$1,221 per month
  • 30-year, $600,000 policy for a 30-year-old woman in excellent health: $529 per month

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The Haven Term policy is issued by MassMutual, an industry leader with over 160 years of experience.

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Factors that affect the cost of life insurance

As you can see, life insurance costs can vary based on the type of coverage you buy. Some of the factors are fairly obvious, such as length of coverage and amount. The longer the coverage lasts, the more you will pay in premiums as the risk to insure you increases over time. The amount of coverage is also a key determinant. Not surprisingly, the more coverage you want, the more you will pay.

There are other factors, though, that determine the price of your premium such as:

  • 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

How to save on life insurance

#1: Choose the type of coverage you really need

The type of life insurance you purchase has a significant impact on the amount you pay 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 there is a term length by which it expires.

#2: Buy the right amount of coverage

The length and face value (amount) of your coverage will directly impact your premium ratings. The longer the coverage, the most expensive it will be, which is why permanent policies cost much more than term policies. And, the higher the face amount, the more you’ll pay for that policy. 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 $1 million policy. A life insurance calculator can help you determine the right amount of coverage for your financial situation.

#3 Don’t put off buying a policy

Another way you can save is to make a smart decision about when to purchase your policy. If you get your policy while you’re younger (and healthier), you are going to reap the advantage of a lower premium. Remember my friend Beth? Young, healthy, 30 and only paying $27 per month.

#4 Choose a healthy lifestyle

And how about saving some money on your life insurance premiums and improving your health? You can do both if you stop smoking. Win-win! A non-smoker will enjoy significantly lower premiums than a smoker. But keep in mind, 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.

There is a lot of information to look at when deciding what kind of coverage to purchase and how much you should expect to pay for that coverage. While you cannot control all of the factors that affect life insurance cost, it is very helpful to know what goes into the mix. With an understanding guided by this information and by breaking down what your family needs are, you will be on your way to finding the best value and protection for your situation.

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* According to State Farm Insurance.

** According to State Farm Insurance; Basic death benefit paying monthly for all years of coverage with level benefit.

*** According to Fabric Instant quote tool.

Rachel Parisi is a freelance writer and attorney. She focuses her writing on insurance, financial services, and employee benefits. In her previous life, she served in the United States Air Force as a missile combat crew commander (think ‘Wargames’). Opinions are the writer’s own.

Haven Term is a Term Life Insurance Policy (ICC15DTC) issued by Massachusetts Mutual Life Insurance Company (MassMutual), Springfield, MA 01111 and offered exclusively through Haven Life Insurance Agency, LLC. Not all riders are available in all states. Our Agency license number in California is 0K71922 and in Arkansas, 100139527.

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