According to the AIG Life Insurance IQ Study, 51% of Americans either don’t know if they have a life insurance policy or don’t have one at all. Although 70% of respondents acknowledged that life insurance could protect their family’ chances at living a financially secure life, many still go uninsured.
What many don’t realize is that life insurance premiums are most affordable when you’re young and healthy. And you’ll never be younger or healthier than you are today which means your premiums are at the lowest they’ll ever be. In recent years, premiums have also become more affordable for older consumers and those with health conditions, too.
Whether you’re buying your first insurance policy, or getting a second policy to supplement an inadequate employer-sponsored policy, learn more about the options that are available.
How to Get Life Insurance Quotes
You can certainly go from website to website, getting quotes from each individual insurance company. But it’s also possible — and faster — to get quotes from multiple providers in one place. This lets you do side-by-side comparisons so you can choose the best coverage at the most affordable premium.
Sites like Ladder and Bestow make the process easier to help you find a policy that works for your budget. The tool below from our life insurance partners can help you find quotes that are tailored to you. Just click on your state of residence, and the tool offers a safe, secure way to shop for life insurance, while saving you plenty of time in the process.
Compare Average Rates
Next to getting quotes from multiple sources, it’s also important to compare rates between different policy types. For now, we’ll focus on term life insurance.
Term life insurance is less expensive than whole life — usually 10% or less for a comparable death benefit. It also has easily adjustable coverage, based on your life events.
For comparison, we’ll use Quotacy, an insurance marketplace, to look at premiums for term policies in three policy increments:
- $1 million
We’ll also compare these increments across different term lengths (10 years, 20 years, and 30 years), based on ages 25, 35, 45, 55, and 65.
Term Life Insurance Quotes for Males
|Age at Policy Purchase||Death Benefit||10-year Term Monthly Premium||20-year Term Monthly Premium||30-year Term Monthly Premium|
|65||$250,000||$101.76||$199.16||Custom Quote Only*|
|65||$500,000||$191.29||$385.08||Custom Quote Only*|
|65||$1 million||$362.69||$743.72||Custom Quote Only*|
*Available by custom quote only since a 30-year policy extends to age 95, practically guaranteeing a death benefit payout. The insurer will need to do a full underwrite to offer a quote.
Term Life Insurance Quotes for Females
|Age at Policy Purchase||Death Benefit||10-year Term Monthly Premium||20-year Term Monthly Premium||30-year Term Monthly Premium|
|65||$250,000||$64.97||$134.30||Custom Quote Only*|
|65||$500,000||$122.14||$257.70||Custom Quote Only*|
|65||$1 million||$223.86||$485.77||Custom Quote Only*|
What Term Life Insurance Quotes Reveal
The quotes in the tables above reveal notable factors that impact a term life insurance quote. Here are a few takeaways:
- Premiums are higher for men than for women.
- The male-female variance increases with age.
- Premiums are significantly higher with a longer policy term.
- Premiums are significantly higher when purchased later in life.
Notice that for 30-year term policies for 65-year-olds, a custom quote is required regardless of the death benefit. Once again, that’s because it’s very likely that the insurance company will need to pay the death benefit at some point in the term.
This is precisely why it’s so frequently recommended that you purchase life insurance as early in life as possible.
Other Factors That Affect Life Insurance Premiums
While it’s true enough that age and gender are two of the most basic factors in determining life insurance premiums, there are many, many more.
This is a complicated factor since the possibilities are so extensive. You can have relatively minor health conditions, like well-controlled hypertension, that result in only a slight increase in your monthly premium.
More serious health conditions, like diabetes, heart disease, or kidney disease, can cause premiums to climb higher. The same is true with one-time events, like a battle with cancer.
If you have or have had any of these conditions in the past, your application will likely be reviewed on an individual basis for risk factors, based on your personal situation. You might also be asked to undergo a medical exam.
When you experienced certain health issues is another factor. For example, a cancer episode 10 years ago will have a lesser impact on your premium than a recent diagnosis. Other health-related factors are your weight-to-height ratio, as measured by your body mass index (BMI), and any medications you’re taking.
Family Health History
Even though this is a factor that’s completely beyond your control, it can influence your premium. Most insurance applications ask if anyone in your immediate family has or had any major health conditions.
Immediate family will generally be limited to your parents and siblings. This includes severe health conditions, like cancer, heart disease, diabetes, or kidney failure. Most life insurance companies are primarily concerned with family members who developed major health conditions before reaching age 70, and particularly those that resulted in an early death.
Smoking and Tobacco Use
Smoking and tobacco use is the single biggest premium determinant that’s within your control. And from a life insurance premium perspective, being a nonsmoker is perhaps the biggest advantage you can give yourself.
The best way to illustrate the impact of smoking is by comparing the premium rates for smokers versus nonsmokers, between men and women. The table below shows quotes for a $500,000 20-year term life policy.
|Age at Policy Purchase||Male Nonsmoker||Male Smoker||Female Nonsmoker||Female Smoker|
Notice that the premiums for smokers are several times higher than nonsmokers.
For example, the premium for a male smoker at age 25 is nearly three times the rate for a nonsmoker. The multiples are approximately the same for female smokers. At age 35, that rises to four times the premium level, where it continues at the same multiple at higher ages.
A 35-year-old male would pay an additional $63 per month for the same amount of life insurance coverage — essentially, paying more than $750 annually for the “privilege” of being a smoker.
The dramatically higher premiums for smokers illustrate the impact of smoking on longevity, and the need for insurance companies to accommodate the greater risk through higher premiums.
According to the Centers for Disease Control, smoking causes over 480,000 deaths per year. Below are examples of how smoking increases your risk of developing certain serious health conditions.
- Coronary heart disease: 2X to 4X
- Stroke: 2X to 4X
- Lung cancer: 25X for men and 25.7X for women
- Chronic obstructive pulmonary disease: 12X to 13X
You should also know that life insurance companies consider occasional smoking, cigar smoking, tobacco chewing, and use of e-cigarettes (vaping) in the same light.
Two other pastimes that have a similar effect on life insurance premiums are excess alcohol consumption and illicit drug use. Both of which increase the likelihood of an early death.
It’s not as easy to conceal these habits as you might think. For example, excess alcohol consumption can come to light through one or more DUIs/DWIs, or even alcohol-related incarceration.
Illicit drug use can be determined by a criminal background check, or even through blood tests taken over the years that have revealed the presence of the substances in your bloodstream.
Admittedly, this one catches most people completely by surprise. That’s largely because the vast majority of occupations don’t represent any kind of risk factor. A small group of occupations have been determined to be high risk.
According to the Bureau of Labor Statistics the 10 most hazardous occupations (in order of most fatal work injury rates) are:
- Logging workers
- Fishers and related fishing workers
- Aircraft pilots and flight engineers
- Refuse and recyclable material collectors
- Driver/sales workers and truck drivers
- Farmers, ranchers, and other agricultural managers
- Structural iron and steel workers
- First-line supervisors of construction trades and extraction workers
- First-line supervisors of landscaping, lawn service, and groundskeeping workers
Those are just the 10 most hazardous. But there are other occupations, like police officers and firefighters, that are also considered to be higher risk occupations.
If you fit into one of these occupational classifications, you’ll pay an adjusted premium based on your occupation’s high risk of death.
Risk Factors Affecting Your Life Insurance Premium
High-risk hobbies. What you do in your spare time impacts your life insurance premiums. Certain activities, like skydiving, racing of any type, deep-sea diving, backcountry skiing, rock climbing, and many others, are considered high-risk.
Your driving record. If you have multiple moving violations, or one or more at-fault accidents, you’ll pay a higher premium, especially if you have a DUI/DWI on your record.
Your credit history. Life insurance companies have detected a connection between poor credit and higher rates of mortality. This could be the result of financial stress impacting credit, but also with the potential to affect your health and behavior.
Your criminal record. If you have any convictions in your past, especially within the last few years, it could have an impact on your premium. The age and nature of the incident are significant. For example, a criminal conviction 25 years ago might have no impact at all. But one from five years ago, might.
Whole Life Insurance
Some consumers might be interested in whole life insurance. If so, all the above risk factors that determine premiums for term life coverage, apply to whole life insurance.
The main differences between whole life insurance and term life is:
- Whole life is permanent. Once you sign up for a policy, it can’t be canceled except for non-payment of a premium.
- Whole life includes a cash value accumulation. Part of your premium goes into the cash value of your policy. The cash value also earns interest, which further increases the balance. You can take loans against that cash value.
- The premium never changes. Whether you pay annually, quarterly, or monthly, your whole life insurance premium will remain the same for the rest of your life. This is unlike term life insurance, where the premium will adjust if you renew the policy after the original one expires.
- Whole life insurance costs a lot more. Whole life insurance is generally 10 to 15 times higher than term insurance for an equivalent death benefit. The main difference between the two premiums is the portion of whole life premiums that go toward your cash value.
Below are samples of whole life quotes from Quotacy, on similar policy amounts at different ages for both males and females.
*Image courtesy of Quotacy
Although insurance agents often promote the idea of the cash value feature of whole life insurance, it’s largely exaggerated. The returns on whole life cash value are less than what you can get in traditional investments, like index-based ETFs. Much of the whole life premium goes toward commissions and fees — especially in the first few years of the policy.
How to Purchase Life Insurance
When applying for life insurance, supply as many details about your personal profile as possible, particularly about your health, occupation, hobbies, smoking status, and family health history. The more accurate the information you provide, the more reliable the premium quote you’ll receive.
If you have any health conditions or activities that might affect your premium, submit an application with the best life insurance companies who can accommodate specific risk factors you have. Some insurance companies are known to specialize in special situations. For example, some insurers offer tailored life insurance policies for those over 50.
It’s strongly recommended that you first look at term life insurance. Term life insurance is a more affordable option, and you can change your coverage amounts at any time. For example, it’s helpful when you have a young family. In this scenario, you’ll need more life insurance, but will likely have a small budget to work with. Term life will let you buy more coverage that you can adjust up or down as things in your life change.
Whether you apply for term or whole life, the process starts by getting a quote. From there, you’ll likely need to fill out a more detailed application with the insurance company that will be providing your policy. They may or may not require you to submit to a medical exam.
Once you’ve chosen a life insurance policy, the insurance company will request the first premium installment upfront. By making a payment, your policy goes into effect as of the date of application, subject, of course, to the insurer’s approval.
Life Insurance FAQs
Most financial advisors recommend you have at least 10 times your annual salary in life insurance coverage. For example, if your salary is $50,000, $500,000 is the minimum recommended.
Employer-sponsored life insurance is a good benefit to have, but in most cases, it’s insufficient. Typically, it only covers one or two times your annual salary. Another downside to relying on employer-sponsored life insurance is that it’s tied to your employment. If you leave your job or are terminated, you’ll lose your life insurance.
It might not matter if you don’t have any dependents, like a spouse, children, or anyone else who might be dependent on your income. But if you do, having no life insurance puts their financial survival at risk in the event of your death. Life insurance can help provide for your loved ones after your death — or at least cover your final expenses.
You might need to consider a guaranteed acceptance life insurance policy. This is the policy type an insurance company offers if you don’t qualify for traditional life insurance.
The death benefit is limited to not more than $50,000, and often a lot less. The premium is also high compared to the death benefit. At the very least some life insurance coverage can help if you’re in poor health, and can provide sufficient funds to cover your final expenses.
Finding Right Life Insurance Policy
Life insurance is an incredibly flexible financial service. You can choose how much coverage you need or want, how long you want to keep it for (in the case of term), and even have a lot of control over the premium you’ll pay.
We strongly recommend — as do most financial advisors — that you go with a term life insurance policy. It’s not just that it’s less expensive, but that frees your cash flow for other purposes, like investing it yourself or securing a new home.
Premiums vary by gender, age, personal profile, and even geography, so shop around to get the most coverage at the lowest cost.