Looking to get a term life insurance policy? It can be a great way to protect your family. It can be affordable life insurance, typically providing a larger death benefit payout for your money. It can be the simplest form of coverage. And, it can be easy to buy. There are also two main drawbacks compared to other types of policies: Term protection is temporary, and it doesn't build cash value. Assuming you're okay with that, we'll show you some average policy costs for men and women of different ages, tell you about the factors that affect your rates and things to look for in a policy. 

The best way to start learning about rates is by getting an actual quote. This calculator will estimate your need and give you a complimentary term life quote in under a minute, with no obligation:

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See how much you need and get an instant quote.

If the cost is less than you thought, you're not alone

The Life Insurance Marketing and Research Association (LIMRA) found that most people believe the price of term life insurance is three times higher than the actual cost. Younger Americans are even more likely to overestimate the cost of protection, saying it's five times the actual price.1 But as you can see, it's possible to get $1,000,000 of life insurance for under $40 a month.

Average monthly costs for term life insurance

AGE

GENDER

$500,000

Guardian

$1,000,000

Guardian

30

Female

$22

$27

$36

$48

 

Male

$28

$35

$47

$61

40

Female

$33

$40

$57

$73

 

Male

$39

$51

$69

$92

50

Female

$71

$86

$128

$167

 

Male

$93

$124

$173

$234

SOURCE: https://www.policygenius.com/life-insurance/affordable-life-insurance/ Rates valid as of 1/11/2021

This chart shows average rates quoted in January 2021 for a 20-year "level term" life insurance policy, which means premiums stay the same for the length of the policy. These rates range from 3.6¢ per $1,000 to 18.6¢ per $1,000 – a spread of over 500% – with a median cost of 11.1¢ per $1,000. That's a lot of average stats in one sentence. What does it all mean for you? Probably not a lot because you're not an "average," you're an individual. When you buy a policy, life insurance companies will set your actual rates according to criteria that are entirely dependent on you and your needs.

Sidebar/callout:

The average annual life insurance premium per U.S. household is $993.4

How much will you pay? Get an instant term life quote.

The three main factors that affect term life rates: It's all about you.

1

2

3

Your coverage amount

Your term length

Your life expectancy

1. Coverage amount: the more you get, the higher your rates. But…

Term life insurance tends to be affordable, in the sense that you can get a given amount of coverage typically for much less than it would cost with a permanent whole life policy. Still, more coverage will cost more. But if you're trying to decide between a higher or lower benefit amount, it may help to know that a higher death benefit can be more cost-effective than a lower one. Take another look at the rate chart, and you'll see that for $500,000 of coverage, a 40-year-old male pays 7.8¢ per $1,000. But when the death benefit is doubled to $1,000,000, the cost goes down to 6.9¢ per $1,000 of insurance.

How much do you actually need? That's an entirely personal decision, based on where you are in life and how many people rely on your income. However, there are several ways to get an estimate. Our life insurance calculator uses the "Human Life Value" method, which looks at what you're earning now plus what you expect to earn in the future. (That's why it asks about your earnings.) Between the ages of 18 and 40, it multiplies current income by about 30; as you get older and have fewer working years left, that multiple decreases.2 There are other methods to estimate your needs:

Consider multiplying your income by 10

Take your annual salary, add a "0" at the end, and there's your amount. $50,000 salary equals $500,000 coverage, $75,000 equals $750,000, and so on. While this estimation method is very simple, it doesn't actually take into account your true expenses and needs. That leads us to the next formula, which is just a bit more complex.

Consider multiplying your income by 10 – and add college for each child

This approach gives you the added reassurance of knowing your children may have more opportunities. How much should you add? Account for somewhere between $100,000 and $150,000 per child. If you split the difference – and have two kids – that's an extra $250,000.

Consider using the DIME formula.

DIME stands for Debt, Income, Mortgage, and Education – four of the big things to consider when making a detailed estimate of your life insurance needs:

  • Debt: Total all your debts other than your mortgage, and add about $7,000 for funeral expenses.
  • Income: Take your salary and multiply by the number of years you think your family needs protection – or at least as long as you have children at home. 
  • Mortgage: Look at your last statement and get the payoff amount. If you have a 2nd mortgage or HELOC (Home Equity Line of Credit), add that in too.
  • Education: The anticipated cost for sending each of your children to college: between $100,000 and $150,000 per child.

Total them all up – then subtract any savings or existing life insurance – and that's your estimated need. If you go through the exercise of estimating according to each method, you'll find they each give you a different amount. How do you choose? One more rule of thumb: go with the number that makes you feel best about the protection you're providing for your loved ones.

2. Term length: A longer coverage period costs less – in the long run

You can get term life policies that last for 1, 5, 10, 15, 20, and even 30 years, but let's assume you need coverage for 20 years. If you compare two equivalent $1,000,000 policies – one for 10 years, the other for 20 – you'll see the 20-year policy has higher monthly premiums. Unfortunately, that leads some people to think they can save money with a 10-year policy. However, over two decades, a single 20-year policy will almost always cost less than two consecutive 10-year policies. Why? Because even though your rates will be lower for the first 10-year term, the policy you get a decade later will cost significantly more. One of the most basic rules of life insurance is that it typically costs more as you get older. Also, a lot can happen in a decade. For example, your doctor could find that you have high blood pressure. Even if well-controlled, that kind of diagnosis can cause rates to go up. 

3. Life expectancy: Assessing your risk to the insurance company

Why does life insurance get more expensive with age? Because life expectancy goes down – a key factor used to determine rates. There's generally less risk to insuring a younger, more physically fit person because they are less likely to die in a given time frame – be it months, years or decades – compared to an older, less healthy person. That's more than just common sense: It's a fact proven by actuarial science, the discipline that applies mathematical and statistical methods to assess risk in insurance and other industries. When you apply for a policy with a substantial death benefit, there's an application and underwriting process:  Insurers gather your information, consider your age, and evaluate your health with questions and, typically, a medical exam which includes blood work to check cholesterol levels and so on. Other items are also considered, including lifestyle and gender: Risky habits and dangerous hobbies (e.g., tobacco use, scuba diving) can make life insurance more costly. Conversely, women tend to live longer, so they generally enjoy lower rates. 

What about "no health exam" policies? Sometimes you'll hear about life insurance that doesn't require a medical exam or even health questions. These "guaranteed acceptance" policies tend to offer limited face amounts and can cost much more per $1,000 of coverage than a medically underwritten policy. After all, the insurance company has to assume that applicants have issues with their health status. So while a guaranteed acceptance policy can be an option for seniors who want to cover their final expenses, it may not be a good solution for younger, healthier wage-earners who want enough life insurance coverage to provide for a family.

Look for a policy with these extras

A term policy can last up to 30 years, and a lot can happen in that time. Your health could change. You could lose your ability to work. Consider these coverage options, or riders, that can add protection and flexibility to your base policy for relatively little added cost1.

Term conversion rider

This lets you convert to a permanent whole life policy with the same health rating – and no new medical exam. If your health takes a turn for the worse, conversion may help provide the lasting protection you want for your family. 

All Guardian Level Term policies provide this feature for the first five years, with the charge included in the premium. You can add an Extended Conversion Rider (ECR) which lets you convert to a whole life policy for the entire length of the term.

Waiver of premium rider2

If you become disabled and can't work, this rider can pay your life insurance premiums and help keep your policy in effect. 

Guardian's version of this rider includes a 7-year "own-occupation" definition, which means that even if you're able to do some work, payments may be waived if you can't work in your profession or occupation. Guardian also offers an enhanced Waiver Plus rider: in conjunction with ECR, this lets you convert to a permanent policy after five years of disability – and your insurance premiums will still be waived as long as the disability continues. 

 

What if you're not sure term life is right for you:

Term life is likely your most affordable option, but it may not always be the option that fits your needs. Maybe you want permanent protection. Or you don't like the idea of paying premiums for 20 or 30 years with nothing left at the end. In that case, it may be worth looking at other options. While whole life insurance rates are generally higher than those for term coverage, this type of policy can provide life-long coverage with wealth-building cash value3,4.  Consider speaking with an experienced professional who will listen to your needs and dig deep to learn more about your situation. They can help you decide how much coverage is right for you and guide you through the different term and permanent options that best fit your needs. How do you find such a professional? Ask a friend or colleague for a recommendation. Or, we can put you in touch with a Guardian financial representative

What if you are sure term life is right for you:

If group term life insurance is available to you through work, that can be a place to start, and you may enjoy favorable group rates. However, many companies limit the amount of coverage offered to employees. And in some cases, coverage may not be portable, which means you may not be able to take it with you if you leave your employer. If you don't have workplace coverage or want to supplement it, it can be easy to shop for term life coverage online. Many life insurance companies, including Guardian, make it simple to get a life insurance quote online, compare rates, and apply for coverage.

Frequently asked questions about the cost of life insurance

What should term life insurance cost?

The average annual life insurance premium per U.S. household is $993.4. According to a recent survey of insurers and rates, the median cost for a 20-year term policy was 11.1¢ per $1,000 of coverage3. However, that number is an average life insurance cost for all applicants between the ages of 30 and 50. The actual rate you'll pay will vary based on a range of conditions and items, including the policy type, benefit amount, length of term, gender, health, and more.

What is the cost of a $500,000 Term life insurance policy?

In 2021, the average monthly cost of life insurance for $500,000 of 20-year term life insurance for a non-smoking male in good health is $28 at age 30; at age 40, it's $39; at age 50, $93. Women tend to live longer and enjoy lower insurance rates, so the cost is $22 at 30; $33 at age 40; and $71 at 50.3

At what age should you buy life insurance?

If you anticipate a significant life event, such as marriage or the birth of a child, it can be a good time to start shopping insurers for a life insurance quote. Every individual of adult-age with child care or financial obligations should consider getting a policy from a life insurance company to help pay for those obligations in the event of his or her death. And it may not make sense to put off getting life insurance: conditions favor younger purchasers, who are more likely to get a lower rate.

What is better, term or whole life?

Both policy types can provide valuable financial protection in the event of an unexpected death. However, whole life insurance offers several benefits compared to a term life policy: the insurance policy is permanent, it has a wealth-building cash value component, and it can provide more ways to help protect your family's finances over the long term. On the other hand, term insurance can typically offer a larger death benefit for your premiums paid. You should consult with a financial professional for guidance on the best option for your needs.

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Disclaimer

1.https://www.limra.com/en/newsroom/news-releases/2020/2020-insurance-barometer-study-reveals-a-significant-decline-in-life-insurance-ownership-over-the-past-decade/

2. The Human Life Value method of estimating life insurance needs:

 Age

Maximum Life Insurance

18-40

30 times income

41-50

20 times income

51-60

15 times income

61-65

10 times income

66-70

1-time net worth

71-80

1/2 times net worth

81+

case by case

3. https://www.policygenius.com/life-insurance/life-insurance-cost/

4.Sources: S&P Global Market Intelligence; Claritas Pop-Facts. Data based on ordinary premiums within the National Association of Insurance Commissioners regulatory statements. From https://www.nerdwallet.com/blog/insurance/average-life-insurance-rates

1.  Riders may incur an additional cost or premium. Riders may not be available in all states.

2.  A Waiver of Premium rider waives the obligation for the policyholder to pay further premiums should he or she become totally disabled continuously for at least six months. This rider will incur an additional cost. See policy contract for additional details and requirements.

3.  All whole life insurance policy guarantees are subject to the timely payment of all required premiums and the claims paying ability of the issuing insurance company. Policy loans and withdrawals affect the guarantees by reducing the policy’s death benefit and cash values.

4.  Some whole life polices do not have cash values in the first two years of the policy and don’t pay a dividend until the policy’s third year. Talk to your financial representative and refer to your individual whole life policy illustration for more information.

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