Average Life Insurance Rates Of 2022 – Forbes Advisor – Forbes

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Life insurance can safeguard your family’s quality of life if you pass away, so it’s wise to consider adding it to your financial portfolio. If you’re worried that you can’t afford it, first check out actual quotes.

Finding affordable life insurance is likely easier than you think, as many people incorrectly believe it’s way more expensive than it is. Over 50% of people overestimate the cost of life insurance by three times or more its actual amount, according to a study by LIMRA and Life Happens, both industry-funded groups.

We analyzed average term life insurance rates based on age, term length and payout amount. Your exact cost will depend on your health and age, among other things, but our overview of average life insurance rates will give you an idea of what you can expect to pay.

Average Life Insurance Rates Takeaways

Life insurance is not one-size-fits-all. Rates vary based on a variety of factors, including the policy type, length and death benefit you choose—plus your pertinent personal information.

With level term life insurance, your premium will stay the same every year during your term period, so you can count on it to be a fixed item in your budget now and in the future. As you’ll see below, quotes will rise based on your age when you purchase a policy.

Age and gender

At age 30, term life insurance rates for males are around 19% more expensive than for females, for a $500,000, 20-year term policy.
Waiting from age 30 until age 40 to buy can raise your quotes up to 36% more ($408 compared to $300, for a male buyer).
If you hold off buying term life insurance until age 50, quotes can be up to 212% higher compared to buying at age 30 ($936 compared to $300, for a male buyer).

Term length

Choosing a 20-year term policy over a 10-year one costs around 40% more ($252 compared to $180 for a 30-year-old female buyer) but doubles your time covered by life insurance.
Picking a 30-year term over a 10-year term costs nearly 90% more ($336 compared to $180), but triples your years of coverage.

Coverage amount

Selecting a $500,000 policy over a $250,000 policy for a 20-year policy will cost you about 50% more ($252 compared to $168 for a 30-year-old female), however, it doubles your policy payout.

Average Term Life Insurance Rates by Age

It’s wise to buy term life insurance when you’re younger, before rates increase and your policy options decline. With every year that passes your life insurance quotes will go up, even if you’re in excellent health. By waiting to buy life insurance you also run the risk that you’ll develop a health condition that will cause an even higher rate when you buy a policy.

We see here how life insurance rates for seniors age 70 cost over 1,000% more than a policy purchased by a 30-year-old. Also of note, a term of 30 years is not generally available to those age 60 and above.

Term life insurance rates per year for a 30-year-old male

Term life insurance rates per year for a 30-year-old female

Term life insurance rates per year for a 40-year-old male

Term life insurance rates per year for a 40-year-old female

Term life insurance rates per year for a 50-year-old male

Term life insurance rates per year for a 50-year-old female

Term life insurance rates per year for a 60-year-old male

Term life insurance rates per year for a 60-year-old female

Term life insurance rates per year for a 70-year-old male

Term life insurance rates per year for a 70-year-old female

Average Term Life Insurance Rates by Term Length

The length of your policy will affect rates, as the longer the policy lasts, the likelihood of the insurance company having to pay goes up. We looked at average annual rates for 30-year-old males and females buying a policy with a term of 10, 15, 20 or 30 years.

Term Life Insurance Rates for 10-year term policy

Term Life Insurance Rates for 15-year term policy

Term Life Insurance Rates for 20-year term policy

Term Life Insurance Rates for 30-year term policy

Average Term Life Insurance Rates by Payout Amount

Knowing how much life insurance you need is essential. As the amount of the death benefit rises, so will your costs. We analyzed average annual rates for a 30-year-old at varying term lengths for policy payouts from $100,000 up to $3 million.

10-year term life insurance annual rates

20-year term life insurance annual rates

30-year term life insurance annual rates

How Life Insurance Rates Are Determined

Life insurance companies really want to determine one thing: How long are you likely to live?

The information they gather helps to estimate an answer to that complicated question and to calculate the cost of your policy.

What you pay for life insurance depends on the type of life insurance you buy, how much coverage you get, your age and health and the company’s underwriting procedures, among other things. Every life insurance company has its own system for pricing a policy, so comparing rates among multiple companies will help you find the best fit for your needs and budget.

Below are 10 factors that can influence your life insurance rates.

Age: One of the most important factors in calculating rates. As you age, the probability that the insurer will have to pay out goes up, leading to higher quotes.
Gender: Females have a longer life expectancy, so typically will pay less than males of the same age and health.
Height and weight: If your height and weight are within the certain limits, you’ll receive better rates than if you’re deemed overweight or underweight, both of which could cause health problems.
Past and current health: How healthy you are significantly affects your rates. Pre-existing conditions are taken into account to determine if they will decrease your life expectancy.
Family health history (siblings and parents): If your family medical history shows serious illnesses, especially hereditary diseases, you could be saddled with higher quotes.
Nicotine and/or marijuana use: Smokers, other nicotine users (including vaping and the patch) and marijuana users have a higher risk of developing cancer and respiratory diseases, so they’ll be quoted higher rates.
History of substance abuse: Abusing drugs or alcohol can lower your life expectancy, resulting in higher life insurance rates.
Driving record (particularly DUIs and speeding tickets): Driving under the influence, driving at high rates of speed and/or causing accidents makes you a higher risk and results in increased rates.
Credit: Credit is a factor in some risk scores that life insurers use.
Criminal history: Having a felony on your record can impact your ability to get a policy. Even if you can buy a policy, a felony will generally increase your costs, especially if you’ve served time as your life expectancy has likely declined.

Beyond the above factors, a primary factor influencing what you’ll pay is the type of life insurance policy you choose.

Life insurance comes in two primary types: term life insurance and permanent life insurance. Permanent life has the advantage of lasting until you die, but is generally more expensive than other types of life insurance. Term life is a more popular choice due to its affordability.

Methodology

Term life insurance rates are for healthy non-smokers of average height and weight. We averaged the four cheapest quotes we found online. Your own rates will be different depending on your age, health, driving record and other factors.

Compare Life Insurance Companies

Compare Policies With 8 Leading Insurers

Average Life Insurance Rates FAQ

Does your credit affect life insurance rates?

Expect insurance companies to possibly perform a soft credit check to review details of your credit report for anything that may give them pause. For instance, if you have a bankruptcy, this can make you a higher risk and affect your life insurance quotes. The score itself may or may not be used, it depends on the life insurance company’s rating system.

Also, some companies use credit scores, or elements of credit reports and other reports, to predict “mortality” life expectancy and they sell this information to life insurance companies. For example, LexisNexis, an analytics company, offers its Risk Classifier score, and TransUnion, an information and insights company, has TrueRisk.

At what age should you shop for term life insurance?

There is no perfect age to shop for life insurance, but a good rule of thumb is to buy life insurance as soon as possible when you have a need for it.

Buying term life insurance while younger (and healthier) can lock you in on a reasonable cost for the length of your policy. If you discover you need more life insurance as you age, you can always buy additional coverage or try laddering life insurance.

Who pays more for life insurance, males or females?

If all other factors are equal, males generally pay more for life insurance due to a shorter life expectancy than females. We found that on average, for a 20-year $500,000 term life insurance policy, 30-year-old men paid about 20% more than women. For the same policy at age 50, males pay 30% more than females.

There’s an exception in Montana, which requires gender-neutral life insurance rates.