How Much Does Life Insurance Cost?

Posted on February 25, 2021

You’ve made the decision to purchase life insurance, and you’ve started to shop around to learn more about your options.

There are differences in some of the benefits offered, or what’s required to receive coverage, but the main difference you find is the price of life insurance coverage. Premiums can vary widely from one insurer to another, and can differ based on any additional coverage you include.

When selecting your life insurance carrier and coverage, it’s important to balance all the features and benefits provided by each carrier with the cost.

To help you understand more of what to expect when you purchase life insurance, we’ll run through the average cost of life insurance, how that cost is calculated, and what factors don’t influence the cost of your life insurance premiums.

What Is the Average Cost of Life Insurance?

While the cost of life insurance premiums varies widely from carrier to carrier and between individual policies, the average cost of monthly life insurance premiums is surprisingly affordable to many people.

For many, especially younger and more healthy individuals, life insurance premiums will cost less per month than car insurance coverage. And because the options available when purchasing life insurance are flexible, individuals often can find coverage for much lower prices than they anticipate.

However, there are a variety of factors that influence how much you will pay in life insurance premiums each month.

What Factors Influence the Cost of Life Insurance Premiums?

Although the overall average cost of life insurance premiums is relatively low, especially when comparing it to other types of insurance coverage, there are multiple variables that impact the amount each individual pays.

Here are some of the most common factors that influence the cost of life insurance premiums:

Coverage Amount and Term Length

Just like any other insurance policy, the amount of coverage you elect to purchase affects how much you pay for that coverage.

If you want your beneficiaries to receive $250,000 upon your death, for example, it will cost you much less over time than if you want them to receive $1 million in benefits.

How much insurance you purchase is one of the greatest factors that influences the cost of your premiums. The higher the benefits your family will receive, the more your coverage will cost you.

Additionally, the term length of your policy impacts how much you will pay.

If you want to purchase whole life insurance, which will provide benefits regardless of your age when you die, it will cost more than purchasing term life insurance. And, the shorter the amount of time you purchase term life insurance, the less you’ll pay.

When it comes to term life insurance, insurance companies estimate the risk that you’ll die within the term when determining your cost. 

Say, for example, you purchase a policy at 35 years old. It’s much more likely that you will die by 65 than by 55, so insurers will charge you more for a 30-year term policy than they will for a 20-year term policy.

Your Health

The healthier you are at the time you purchase your policy, the less insurers will charge you for coverage.

If you are in poor health, or suffer from a pre-existing condition such as diabetes, heart disease, or cancer, insurers calculate that your risk of dying early is much more likely than that of someone who is in great health. Not exercising, being overweight, being a smoker, and having high blood pressure or cholesterol also make your health insurance more costly.

Insurance companies use both your self-reported information and health screenings to calculate your premiums. Additionally, you will be asked to provide information on your family history of chronic diseases and early death to your chosen insurance company during the application process.

Your Age

Purchasing life insurance earlier in life is less costly on a monthly basis than purchasing insurance when you are older. 

The reason for this is two-fold: You are considered less likely to die during your policy’s term if you’re purchasing term life insurance, and the longer you pay into a whole life policy, the more the cost of the policy is spread out and the less it costs in the long run.

Your Hobbies and Occupation

When you apply for life insurance, the underwriting process factors in a series of variables about your habits and health to determine your cost.

If you are in a risky occupation, where you face more danger on a daily basis, your premiums are going to cost more. Firefighters, members of the military, and commercial pilots, for example, run more risk of dying on the job at a younger age than accountants or bankers, for example. 

What you do in your free time also plays a role in whether you are determined to be more likely to die early and, as a result, to have higher insurance premiums.

Participating in high-risk hobbies regularly such as mountain climbing or skydiving will mean you are going to pay more money for life insurance coverage.

Your Gender

Because women tend to live longer, on average, than men, they are often given lower insurance rates. 

For transgender individuals, there is no official policy regarding whether you will be quoted based on your actual gender or the gender you were assigned at birth, meaning the rates you will be quoted will vary depending on the insurance company.

What Factors Don’t Influence the Cost of Premiums?

It may seem as if how much you pay for life insurance is determined by a mixture of a lot of different variables, and that everything’s up for grabs.

However, there are a few things that don’t impact the cost of life insurance premiums.

Where You Live

The premiums for other types of insurance, such as auto and home insurance, are greatly influenced by where you live. 

Some areas, for example, are more prone to flooding or accidents, making it more costly for an insurance company to insure homes and cars in those areas.

The cost of life insurance, however, isn’t dependent upon where you live. Your geographic location has zero bearing on your insurance premiums, so even if you live in a place that’s prone to disasters or other incidents, your premiums will be the same as someone with your exact same profile who lives hundreds of miles away.

How Many Beneficiaries You Have

When you purchase your life insurance policy, you designate beneficiaries. These are friends and family, or even charitable organizations, who will receive the monetary benefits of your life insurance policy when you pass.

Whether you have one beneficiary or five, your premiums aren’t going to change any.

The amount of coverage you purchase in your policy determines how much each beneficiary receives, as your total coverage amount is divided among those beneficiaries using the percentages you designate. 

Purchasing $500,000 of coverage means that the insurance company pays out $500,000 of coverage, regardless of whether that’s one person receiving all $500,000, two people receiving $250,000 each, or 10 people receiving $50,000. However, some insurers may place limits on the amount of beneficiaries you can name in your policy, so be sure to check with your chosen insurer if you have multiple people you want to receive your benefits.

How Many Policies You Have

Many people carry just one life insurance policy or, at most, two. Some individuals who receive life insurance coverage through their employer may elect to purchase their own individual coverage.

Having more than one life insurance policy does not impact how much you pay for that coverage.

In fact, having multiple policies, especially if each of those policies has lower overall benefits than you’d purchase in one single policy, may help you pay lower premiums in the long run. This is called stacking or laddering of life insurance policies, and can prove beneficial if you’re looking for higher coverage amounts but you’re on a budget.


Everyone purchasing life insurance wants to know how much it’s going to cost them. 

For many, the fear of paying high premiums keeps them from purchasing insurance, but a little knowledge of the life insurance industry and how premiums are calculated can go a long way toward helping you understand just how much it will cost you to receive coverage.

Insurance companies use a variety of factors when calculating their premiums, with the type and amount of coverage, your age at the time you purchase the policy, and your overall health being among the biggest variables. However, just because you are quoted one premium by an insurance company doesn’t mean that’s the amount you can expect to pay from other insurers.

Taking your time and shopping around with various life insurance companies can help you find more affordable coverage for the same amount of benefits.

If you’re looking for assistance comparing life insurance quotes and finding the coverage that’s right for you, Insurdinary can help! Compare premiums and plans, get a personalized quote, and apply for coverage quickly. Get a quote today!

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