What Are The Average Term Life Insurance Rates?

If you've been considering a life insurance policy, knowing the average cost can be helpful for planning and budgeting. For example, a term life insurance policy will have different rates than a whole life insurance policy or other kinds of life insurance.

You're in the right place if you want to know the average range of term life monthly insurance rates – keep reading to learn more about term life insurance, what it costs, and factors that impact your premiums.

What is Term Life Insurance?

Term life insurance is a form of life insurance coverage that only provides a benefit for a specific term, or a set period of time. If you pass away during the term length, your beneficiary will receive a benefit. However, after the time period is over, you must renew the policy or get a new one if you'd like to continue receiving coverage.

Term life insurance usually lasts between 10 and 30 years, but this can depend on the particular policy. This is a more affordable option with lower premiums than whole-life insurance coverage.

In contrast, whole life insurance, also known as permanent life insurance coverage, does not have a term and, therefore, lasts for your entire life. Because you'll have coverage for longer, with a cash value component that allows you to borrow against it, whole life insurance costs significantly more than term life. As a result, the type of life insurance you choose will impact your premiums the most!

Factors That Impact Term Life Insurance Rates

So, what influences the premium cost of your term life insurance policy? Here are a few of the most common factors that could impact your rates:

• Age: When it comes to life insurance, younger applicants almost always pay less than older applicants. This is because as you age, your risk of death increases. Therefore, if you're over the age of 50, you can expect to pay more for a term life policy.
• Health: People with better health will have more affordable rates than those with preexisting conditions. If you have a chronic illness, your chances of death are higher than those without any diseases. This is why it can be a good idea to focus on your health through diet and exercise, in addition to quitting alcohol and smoking, before you undergo an insurance medical exam.
• Coverage Amount: If you want a higher benefit with more coverage, you'll pay more in premiums. For example, if you want a $500,000 benefit, your costs will be more than someone with a $250,000 benefit.
• Gender: Statistically, women live longer than men, so women typically have a lower premium rate than men.
• Occupation and Hobbies: If you're in a high-risk occupation like law enforcement or firefighting, you may pay more premiums for life insurance since you have a higher risk of injury and death. Likewise, if you often partake in risky hobbies, like skydiving or scuba diving, you can expect to pay more for term life insurance.
• Life Insurance Riders: Your premium can increase if you add riders to your policy. For example, a child rider valued at $10,000 could cost you up to $75 more annually.

Term life monthly insurance rates can be strongly impacted by the factors above. For example, someone who is 70 with diabetes and an extensive coverage amount will pay much more than a 25-year-old in perfect health who doesn't need as much coverage. A firefighter will also likely have a higher premium than someone in a low-risk occupation, like a teacher. What you pay will depend on all these factors and your particular policy!

What Doesn't Impact Your Life Insurance Premium Cost?

The following factors do not influence the cost of term life insurance:

• Your credit score: While your credit score won't impact your premiums, you can expect your insurer to check your credit history for the past 7 years. People with bankruptcy on their record may impact premiums since this comes with a higher risk of mortality.
• Your ethnicity, race, or sexual orientation: Insurers cannot discriminate based on these diversity factors.
• Your marital status: Unlike auto insurance, life insurers do not have different rates for married couples.
• How many life insurance policies you have: The number of life insurance policies does not influence premiums.
• How many beneficiaries you name: No matter how many beneficiaries you have, it won't impact your rate.

Average Term Life Insurance Rates by Age and Gender

In the chart below, you'll find examples of the average term life insurance costs for both men and women between 20 and 70 years old. You'll notice that the rates for men are slightly higher than for women – this is because women are more likely to live longer than men. At the age of 40, costs tend to rise more since age-related risks start coming into play.

Average Term Life Insurance Rates for Smokers

The chart below shows the average term life insurance rates for smokers. You'll notice that this is much higher than average rates for non-smokers. This is because smoking significantly increases your risk of illness and death.

Average Cost of Life Insurance by Term Length

So, how do the premium costs compare when it comes to different term lengths? You'll find this information for both men and women in the chart below – this is for a 40-year-old applicant in good health.

Average Cost of Life Insurance by Term Length for Smokers

In the table below, you'll find the average cost of term life insurance for smokers based on term length.

Why Term Life Insurance Is a Good Option

The main benefit of term life insurance is that you can get ample coverage for an affordable rate. If your budget is tight, but you need coverage based on your mortgage, kids, and other dependents, term life is straightforward.

For example, whole-life insurance policies typically range between $400 and $500 per month for a healthy 30-year-old with a $500,000 policy. On the other hand, term life insurance policies usually range between $15 and $30 per month. As you can see, there is a vast difference in the premium amount between these two different coverages.

For young families with a house and children, term life insurance is a perfect solution – costs are low, you can cover your debt, and it won't break the bank. It's a win, no matter how you spin it!

Do I Need to Buy Term Life Insurance?

In most scenarios, buying term life insurance is a good idea. Here are just a few reasons why you might need a term life policy:

• Someone, like a spouse or child, depends on your income for daily expenses.
• You have outstanding debts, like a mortgage or student loans.
• You're not yet self-insured. Self-insured means that you have enough money in investments that it grows enough each year to completely replace your income.

Most people, especially young people, check one or more of the boxes above. If this is the case for you, term life insurance is a must-have for your family's financial and long-term well-being.

Which Term Length is Right for Me?

The term length and amount are completely up to you, but experts recommend getting a policy worth at least 10 to 12 times your annual income. For many people, a term of 15 to 20 years takes care of this requirement.

Here's what you can think about as you decide which term length is best for you:

• How long will your children rely on your income for their daily expenses? For example, if you just had your first child, a 20-year policy might be best. On the other hand, if your kids are teenagers, a 10-year policy would suffice.
• How long will it take for you to build up your retirement savings so that they can replace your salary? While it's impossible to predict this for sure, it will depend on how far along you are in your financial planning journey.

How To Find the Best Term Life Insurance Rates

While term life insurance is already inexpensive, there are a few things you can keep in mind to make sure you get the best bang for your buck. Here are some ways to find the best term life insurance rates:

• Shop around: You shouldn't buy the first policy you see without shopping around first. Instead, compare insurance providers, look at each policy's terms, and ensure each policy has adequate coverage. You may find better coverage at a cheaper rate the more you can compare options.
• Work with a broker: An insurance broker can help you compare policies, identify potential discounts, and tailor coverage to your specific needs. In general, they help make the shopping process much more manageable.
• Work on your health: The better your health, the better your insurance premiums will be. This is why it's important to be in excellent health before you sign up for a life insurance policy. Get into a consistent workout routine, cook healthy meals at home, quit smoking, and reduce drinking. By taking all of these steps, your numbers will improve, and you'll get better insurance deals.
• Buy young: The younger you buy, the cheaper your rates will be. When it comes to both whole and term life, it's best to lock in your rates at a younger age. The older you are when signing up for life insurance, the more your monthly payment will be.

Conclusion

To recap, average term life insurance rates depend on your age, health, smoking status, term length, and overall level of coverage. You can expect to pay more if you have a longer term length with a high benefit amount. And, if you are a smoker, you can expect to spend much more on premiums than someone who is a non-smoker.

Likewise, if you are younger and in good health, you will likely lock in an excellent life insurance rate, which will last you many years.

If you need help deciding between whole and term life, choosing your level of coverage, or even getting a quote on a term life policy, contact Think Life today! Our knowledgeable insurance professionals are with you every step of the way.

FAQs About Term Life Insurance Rates

What is the cheapest term life insurance rate available?

Likely the cheapest term life insurance rate available is around $15 per month – this would be for a healthy, young person.

How are insurance rates calculated?

Life insurance rates are calculated based on your age, overall health, smoking status, gender, policy type, and level of coverage. Every insurer has its own process for evaluating applicants, and they often classify applicants into risk classes, determining your premium price.

Can I switch life insurance policies mid-term?

Yes, you can switch life insurance policies mid-term, but you should carefully consider whether the new policy is right for you regarding coverage and cost.

What happens if I outlive my term life insurance policy?

In many cases, the term life insurance policy expires, and you won't receive the death benefit if you outlive your coverage. In this situation, you have a few options – you can convert the policy into a permanent one, buy a new one, or renew your term. If you don't want to outlive your life insurance in the first place, consider a whole life policy – it lasts until your death, no matter when you die.