How Much Does Term Life Insurance Cost?

Life insurance covers your family financially if you die and are no longer able to support them. A term life insurance policy would provide you with the most coverage for the least amount of money. Term life insurance, also known as pure life insurance, is a form of life insurance that guarantees payment of a predetermined death benefit if the insured individual dies within the policy term.

Term life insurance is simple to manage and reasonably priced, as opposed to permanent life insurance, which lasts for the remainder of your life and has a cash benefit. A term policy is the best form of life insurance for most people because of its low cost and flexibility.

What is Term Life Insurance? 

A life insurance policy primarily serves as a source of support for your family in the event of your death. Term life insurance works by ensuring the family’s financial stability for a fixed period of time, referred to as the policy term, covering you until the term expires. 

If you die before the term is over, then your beneficiary will receive a death payout. The death payout is a tax-free lump sum of money. Beneficiaries may use this cash benefit to pay for your healthcare and funeral expenses, consumer debt, or mortgage debt, among other items. However, there is no compensation if the policy expires before your death.

Terms normally range from 10 to 30 years. You pay a monthly or annual fee to keep the policy active. When you purchase term life insurance, the insurance agent calculates the premiums based on the policy’s worth (the payout amount) as well as your age, gender, and health. A medical exam may be required in some cases. Your driving record, current medications, smoking status, profession, interests, and family background could also be questioned by the insurance provider, to secure your risk factors.

The coverage ends when the premiums are no longer paid, or the term expires. However, when the policy ends, the policyholder has the option of renewing the policy for another term. This converts the policy to permanent coverage. At the time of renewal, the premiums will be recalculated based on your age and other factors. 

Who Should Be Purchasing Term Life Insurance?

If your family or loved ones depend on you financially or will be liable for your debts if you die, you should have life insurance. Under these circumstances, term life insurance is the best option to receive coverage. However, if you have a complicated financial situation or lifelong dependents, a permanent life insurance policy might be more fitting. 

If you are reaching a major milestone, such as marriage, birth of a child, or if you are taking on a substantial loan, such as a mortgage, it is important to purchase term life insurance. The older you get, the need for insurance lessens because you lose dependents and ideally, pay off your debts.

Benefits of Term Life Insurance

Aside from its affordability, term life insurance provides versatility that permanent life insurance does not. Eventually, you should be able to save enough money to support your loved ones and cover end-of-life costs without the assistance of an insurance policy, otherwise your dependents will no longer be financially dependent on you. 

The option to select the term length and coverage amount of term life insurance means you only pay for the insurance you use for as long as you need it. You can also buy multiple term life policies, so you can keep different insurance policies if, for example, you need a 30-year policy to cover your family and a 10-year policy to protect against a business loan.

Unlike permanent life insurance, term life insurance does not have an investment-like component. However, term life offers the most essential purpose of life insurance — financial security — without additional, complicated features to handle.

Term Life Insurance Types 

There are many forms of term life insurance; the right one for you will be decided by your particular circumstances.  

1. Level Term Policies, also known as Level-Premium Policies

These provide coverage over a fixed period of time ranging from 10 to 30 years. The death benefit and premium are both fixed. Since actuaries must prepare for rising insurance costs over the duration of the policy, the premium is higher than for annual renewable term life insurance.

2. Yearly Renewable Term (YRT) 

Yearly renewable term (YRT) plans have no set term and can be extended year after year without having proof of insurability. The premiums vary from year to year; as the insured individual gets older. As the insured ages the premiums rise. Since there is no fixed term, premiums can become extremely costly as people age, making the policy unappealing too many.

3. Decreasing Term Policies

These plans have a death benefit that decreases on a fixed schedule each year. For the length of the policy, the policyholder pays a fixed level premium. Decreasing term plans are often used in conjunction with mortgages to balance coverage with the diminishing principal of the home loan. 

When you’ve settled on the policy that’s right for you, make sure to thoroughly study the companies you’re considering to ensure you’re receiving the best term life insurance available.

How Much Does Term Life Insurance Cost?

Term life insurance premiums are less expensive than permanent policy premiums because it covers the family for a fixed period of time rather than your whole life. Term life insurance is typically the least expensive type of life insurance available because it provides a premium for a limited period and only a death benefit. 

Term life insurance covers the family for a fixed period of time, known as the term. If you die within the lifetime of the policy (typically 10, 20, or 30 years), the death benefit is paid to your beneficiary. If you do not, the policy will expire. Term life insurance is intended to be simple and inexpensive. A 35-year-old female pays $24.39 on average for a 20-year, $500,000 term life insurance policy. However, each life insurance application is unique, and medical conditions or bad habits can increase the cost of your coverage.

Interest rates, the insurance company’s financials, and state laws may all have an effect on premiums. Companies also sell better rates at “breakpoint” coverage ranges of $100,000, $250,000, $500,000, and $1,000,000.

The tables below illustrate the average cost of term life insurance plans that last 10, 20, or 30 years for people aged 20 to 60 with varying coverage levels. Although these tables can help you understand how the cost of life insurance differs with age, you can get a more personalized life insurance quote by using a life insurance policy calculator and comparing rates with an independent insurance agent.

10-year Term Life Insurance Policy – Average Monthly Premium Cost by Age

AGE	SEX	$250,000	$500,000	$750,000	$1,000,000	$2,000,000
20	Male	$13.16	$19.95	$27.13	$30.74	$55.22
	Female	$11.26	$15.84	$20.96	$23.56	$41.96
25	Male	$13.11	$19.81	$26.81	$29.57	$52.97
	Female	$11.23	$15.81	$20.81	$23.26	$40.73
30	Male	$13.02	$19.70	$26.63	$29.58	$52.98
	Female	$11.36	$16.03	$21.14	$23.70	$41.53
35	Male	$13.37	$20.19	$27.42	$30.33	$54.42
	Female	$11.92	$17.38	$23.16	$25.36	$44.61
40	Male	$16.79	$26.50	$36.84	$42.17	$77.98
	Female	$14.44	$22.26	$30.49	$34.80	$63.59
45	Male	$22.34	$37.36	$53.13	$64.38	$122.30
	Female	$19.99	$33.40	$47.20	$54.27	$102.34
50	Male	$32.24	$55.78	$80.76	$97.93	$189.27
	Female	$27.11	$47.75	$68.71	$81.56	$156.56
55	Male	$47.79	$85.14	$124.91	$150.45	$294.08
	Female	$37.07	$65.65	$95.66	$119.15	$231.56
60	Male	$76.16	$138.49	$204.93	$256.38	$504.45
	Female	$55.97	$102.31	$150.66	$191.17	$373.32

20-year Term Life Insurance Policy – Average Monthly Premium Cost by Age

AGE	SEX	$250,000	$500,000	$750,000	$1,000,000	$2,000,000
20	Male	$16.97	$27.32	$38.17	$45.93	$85.54
	Female	$13.86	$20.89	$28.53	$33.97	$62.05
25	Male	$16.64	$26.67	$37.09	$44.82	$83.41
	Female	$13.78	$20.81	$28.31	$34.18	$62.16
30	Male	$16.90	$27.46	$38.28	$46.81	$87.28
	Female	$14.30	$21.88	$29.91	$36.21	$66.13
35	Male	$17.75	$28.97	$40.55	$50.44	$94.35
	Female	$15.65	$24.39	$33.67	$41.56	$76.80
40	Male	$22.90	$39.02	$55.62	$69.75	$132.90
	Female	$19.77	$32.42	$45.71	$56.80	$107.19
45	Male	$33.26	$59.10	$85.75	$110.40	$214.33
	Female	$26.88	$46.36	$66.44	$83.51	$160.73
50	Male	$50.61	$93.23	$136.94	$174.13	$340.64
	Female	$39.51	$71.03	$103.64	$128.87	$250.87
55	Male	$80.59	$150.72	$223.28	$282.34	$556.00
	Female	$57.39	$105.66	$155.68	$200.45	$393.04
60	Male	$138.74	$262.16	$390.43	$493.42	$973.60
	Female	$100.43	$189.08	$280.82	$351.76	$692.16

30-year Term Life Insurance Policy – Average Monthly Premium Cost by Age

AGE	SEX	$250,000	$500,000	$750,000	$1,000,000	$2,000,000
20	Male	$23.50	$39.96	$57.13	$71.57	$136.90
	Female	$18.73	$30.23	$42.53	$53.11	$90.30
25	Male	$23.23	$39.37	$56.15	$70.81	$135.45
	Female	$18.94	$30.46	$42.78	$53.67	$90.30
30	Male	$24.25	$41.44	$59.25	$74.01	$141.74
	Female	$20.08	$33.70	$47.53	$59.12	$110.94
35	Male	$26.22	$44.53	$63.89	$81.10	$155.83
	Female	$22.67	$37.52	$53.37	$66.76	$128.14
40	Male	$36.37	$64.42	$93.72	$119.90	$232.84
	Female	$29.62	$51.24	$73.95	$94.46	$179.74
45	Male	$56.60	$103.11	$151.75	$195.96	$383.84
	Female	$42.61	$75.86	$110.89	$142.83	$269.18
50	Male	$90.01	$170.25	$252.46	$319.80	$628.35
	Female	$65.82	$122.46	$180.78	$228.02	$422.26
55	Male	$159.54	$307.92	$459.10	$597.62	$1,179.45
	Female	$113.17	$208.58	$310.08	$397.82	$754.22
60	Male	N/A	N/A	N/A	N/A	N/A
	Female	N/A	N/A	N/A	N/A	N/A

The most common term policy is a level term life insurance policy, which ensures that the premium remains unchanged for the duration of the policy. Term life insurance quote are based on: 

• Health – People with health problems or a family history of medical issues paid more. 
• Age – Applicants over the age of 50 pay more than those under the age of 25. Each year you get older, your life insurance premiums rise by an average of 4.5-9 percent. 
• High-risk Activities – Dangerous work and hobbies make you more difficult to insure, so you’ll pay more. 
• Coverage Amount – The higher the death insurance amount, the higher the premium. 
• Term Length – The longer the program is in place, the more expensive it becomes. 
• Riders – Adding some riders to a policy to customize it can make it more costly. 

Do you get your money back when your term life insurance policy expires? 

If a term life insurance policy holder outlives the policy, their money will not be recovered. Meanwhile, entire life insurance rates can be ten times higher. This is because the insurer’s risk is much smaller for term life policies. A term life insurance policy, for example, may have the following structure: a healthy 45-year-old holder pays fixed monthly premiums of $60 for 20 years, with a $500,000 death benefit payout.

How to Find Low-Cost Term Life Insurance 

Since the cost of your life insurance policy is dictated by your individual profile, and since each life insurance company handles each health condition differently, there is no one insurer guaranteed to provide the cheapest life insurance for anyone. The best way to find the most competitive term life insurance rates is to shop around with various providers.

Here are several additional ways to save money on life insurance: 

• Consider paying premiums on an annual basis. Many insurers give applicants a discount if they agree to pay annually. 
• Improve your fitness. Insurers usually encourage you to retake the medical test one to two years after your policy starts, so if you’re dissatisfied with your rates, consider quitting smoking or getting in better shape.
• Choose a policy with a shorter period or less scope. It’s not perfect, but if you can’t afford the requisite life insurance coverage, some insurance is preferable to no coverage at all.

Rates for Term Life Insurance vs. Rates for Whole Life Insurance

Term life insurance is five to fifteen times less costly than whole life insurance, making it the most cost-effective alternative for your family’s financial security. Whole life insurance is more expensive because it lasts the insureds entire life, as long as the premiums continue to be paid. Whole life insurance also has a cash value feature that works similarly to a tax-deferred investment plan. This ensures that entire life insurance plans will become so expensive that 45 percent of them are cancelled within the first ten years of coverage. Term life insurance is the most cost-effective alternative.

A healthy 35-year-old nonsmoker will normally get a 20-year level-premium policy with a face value of $250,000 for $20 to $30 per month. Purchasing a whole life equivalent will result in considerably higher monthly premiums, likely in the $200 to $300 range. Since most term life insurance plans expire before paying out a death payout, the insurer’s total risk is smaller than that of a fixed life policy. Because of the lower risk, insurers will pass on cost savings to consumers in the form of lower premiums. 

In Summary

Because of its low cost, term life insurance is also the best policy choice for most people. If you can’t afford your policy premiums, you forfeit your life insurance, which is why whole life insurance isn’t necessarily the best option for most people.

The cost of term life insurance varies according to age, fitness, and family health background. Purchasing policies while you are young and in good health is the most cost-effective way to receive term life insurance. Since each life insurance provider underwrites each application differently, shopping around is the best way to find the best insurer for your needs.