How much does life insurance cost?

How much does life insurance cost?

The cost of life insurance depends on things like your age, health, sex, lifestyle and the type of coverage you choose. Generally, if you’re younger and in good health, you’ll pay less. Women also tend to have slightly lower rates, thanks to their longer life expectancy, according to the Centers for Disease Control (CDC).

Unlike auto or home insurance, life insurance rates are more personalized, which makes it tricky to give an average number. Insurers look at your health history and risk factors, so premiums can vary significantly from person to person. Plus, your costs will change depending on whether you go with term life, whole life or another type of policy.

Since life insurance companies don’t usually share detailed pricing upfront, the best way to figure out your cost is to get quotes from multiple companies. To compare them accurately, make sure you’re using the same coverage amount and policy type for each quote — and be honest about your health and lifestyle. This way, you’ll get a clear picture of what your life insurance might actually cost.

What factors impact your life insurance cost?

When it comes to setting your life insurance premiums, insurers consider several key factors to determine both your eligibility and the cost of your policy. Knowing what affects your rates can help you better anticipate costs and make smarter choices when shopping for coverage.

At the heart of it, life insurance pricing is all about risk — specifically, how likely it is that the insurer will have to pay out a death benefit. The higher the perceived risk, the higher your premium. Insurers assess this risk through health screenings, lifestyle questionnaires and other underwriting processes. And honesty matters — misrepresenting your health or habits can lead to denied claims, canceled policies or even fraud allegations.

Here’s what insurers typically look at when calculating your life insurance rates:

• Health: Conditions like high blood pressure, chronic illnesses or a history of serious medical issues can raise your rates. Healthier individuals generally pay less. For those who struggle to get approved, options like guaranteed-issue policies are available with no medical underwriting for eligible applicants.
• Age: The younger you are when you apply, the lower your premium is likely to be. That’s because younger applicants pose less risk statistically, making age one of the biggest factors in life insurance costs.
• Gender: On average, women pay less for life insurance since they tend to live longer than men, which reduces the insurer’s risk.
• Coverage amount: The more coverage you want, the higher your premium. It’s simple math — larger death benefits mean bigger potential payouts for the insurer.
• Occupation: If you work in a high-risk job like firefighting, piloting or law enforcement, you may experience higher premiums due to increased risks associated with these professions.
• Lifestyle: Risky hobbies like skydiving, scuba diving or frequent travel to dangerous areas can drive up your rates. Insurers also look at habits like smoking or heavy drinking, which can significantly impact costs.
• Policy type: Term life insurance is usually more affordable because it covers a specific period. In contrast, permanent life insurance (like whole or universal life) costs more since it lasts a lifetime and often builds cash value over time.

While you can’t control factors like your age or gender, maintaining a healthy lifestyle, avoiding risky activities and choosing the right policy type can go a long way in keeping your life insurance costs down.

What doesn’t impact your life insurance premium?

Although there are many factors that contribute to your life insurance premium, there are also some criteria that don’t impact costs.

• Location: Unlike with auto or home insurance, your location will not affect the cost of your life insurance. You will need to provide your address on the life insurance application, but it has no impact on the cost.
• Credit score: Life insurance companies use a credit-based insurance score derived from your credit report, which is different from your standard credit score. This score helps assess risk, similar to the method used by auto and home insurers.
• Marital status: In almost every state, your insurance company can factor in your marital status when determining your auto and homeowners insurance premiums. However, marital status is not a rating factor for life insurance.
• Race or sexual orientation: Insurance companies do not factor race or sexual orientation to calculate rates, no matter the type of coverage.
• The number of beneficiaries you name: The number of life insurance beneficiaries you choose does not impact your premium. Still, you will have to decide how much of the death payout each beneficiary receives (and how they receive it). You can elect that your beneficiaries receive equal portions of your death benefit or grant each a specific percentage. Some life insurance policyholders may prefer their death benefit be paid as a lump sum, while others opt for installments. Regardless, these choices will not impact your rate.
• The number of life insurance policies you have: There are no laws that say you can’t carry multiple life insurance policies, and some people choose to have more than one. You will, of course, be paying more combined premiums if you carry multiple life insurance policies, but each policy does not affect the other.

Life insurance companies care most about factors that impact your life expectancy, such as your current health and family medical history, which could contribute to health issues in the future.

How much life insurance do I need?

The right amount of life insurance depends on needs specific to your life. Consider factors like your income, debts, living expenses, future costs such as college tuition and how many people rely on you financially. If you’re the primary earner with young children, you’ll likely need more coverage than someone without dependents or major financial obligations.

Here are a few common ways to estimate how much coverage you might need:

• 10-15x your annual income: A straightforward method is to multiply your yearly income by 10 or 15. It’s a quick way to get a general idea of the coverage your family might need, but doesn’t account for many factors. 
• DIME Formula: This approach focuses on four key areas — debt, income replacement, mortgage and education costs — to calculate a more personalized coverage amount.
• Needs-based approach: This method involves adding up specific expenses your family would face if you were no longer around, like funeral costs, outstanding debts and future living expenses.

While there’s no universal number that applies to everyone, thinking through these factors can help you choose a coverage amount that keeps your loved ones financially secure.

For a more detailed analysis, check out this guide: How much life insurance do I need?

At what age should I buy life insurance?

The right age to purchase a life insurance policy varies for everyone — and some people won’t ever have a need for life insurance — but buying a policy when you are younger generally results in lower premiums. Early purchase helps protect your insurability, especially if you have a family history of health problems. Securing a policy early can lock in a lower premium and provide more options than might be available later in life.

It’s important to note that if you purchase a term policy when you are younger, there's a possibility that you might outlive your coverage. In such cases, you may need to either convert your term policy to a permanent one, renew the coverage or purchase a new policy if you need continued financial protection. Starting your policy early is usually beneficial for long-term financial planning and stability.