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Life Insurance Costs and Payouts at Different Ages

Out of all the different types of insurance we can invest in, life insurance seems to be the least important for many people. However, life insurance could be one of the most important policies that we take out. It not only ensures that all our final expenses are paid, such as burial and funeral services, and that insurance beneficiaries are taken care of, but it can also provide many other benefits while we are living.

Find life insurance providers with the best payouts
Try looking into 2/3 companies to find the best policy and rates

There are several benefits to owning a life insurance policy, and one of the most important is that you know your family is taken care of when the inevitable happens.

Compare The Best Life Insurance Rates
Try looking into 2/3 companies to find the best policy and rates

What is life insurance?

A life insurance policy is a contract that you have with an insurance provider. In exchange for your payments, the insurance company will provide a lump-sum payment to your beneficiaries upon your death. Life insurance is available in various amounts based on your needs.

Basically, there are two types of life insurance: term life and whole life. Term life insurance provides you with coverage for a set period. Whole life or permanent life insurance provides lifetime coverage that never expires. There are also universal life insurance plans that differ from the two.

Term life insurance

Term life insurance helps provide financial protection over a duration of time such as 10, 15 or 20 years. When you have a traditional term life insurance plan, your monthly premium amount will stay the same throughout your term. Once the term is up, the policy may offer you continued coverage, which usually has a higher monthly premium. The main benefit of term life insurance plans is that they are usually more affordable than whole or universal life policies.

How does it help?

Term life insurance may be used to replace your lost income during your employment years. It can offer a safety net to your beneficiaries and help ensure that your family’s financial goals will stay intact. These goals can include paying off a mortgage, paying for college tuition, or the upkeep of a family business.

Although term life insurance can be used to replace potential income, life insurance benefits are always paid in a lump sum, so your beneficiaries will not receive ongoing payments.  

Whole life insurance

Whole life insurance is a form of permanent life insurance that is designed to provide the owner with lifetime coverage. Since the coverage lasts an entire lifetime and never expires, the premiums are much higher than term life insurance. The payments are usually fixed, and unlike term insurance, whole life has a cash value that the owner can borrow against. The cash value works similarly to a savings account and accumulates cash over time.

Whole life insurance policies can be used as part of an estate planning strategy and help preserve the money to be transferred to your beneficiaries in the event of your death.

Universal life insurance

Universal life insurance is a type of permanent insurance plan that can provide coverage throughout your life. Unlike whole life insurance policies, a universal life policy is flexible and allows you to either raise or lower your monthly payments or your coverage amount while the plan is in effect. However, these benefits come at a price which makes universal life insurance plans more expensive than whole or term life insurance.

Universal life insurance policies are often used to help with estate planning and preserve the wealth that is to be transferred to beneficiaries. Another use for this type of coverage is long-term income replacement, which will last longer than your employment years. There are some universal life insurance plans that are designed to focus on providing both death benefits and building up cash value over time that the owner of the policy may borrow against while they are living.

How rates differ for men and women

Life insurance companies base their rates for men and women on the national life expectancy statistics and averages. Studies over time have shown that women tend to live longer than men. Men also have a higher risk of mortality due to their high risk of developing life-threatening diseases such as heart disease, diabetes, cancer, strokes, pulmonary disease, and infections.

Since statistics show that women live longer than men, insurance companies will often charge men a higher premium to help ensure that the company receives enough payments to cover their costs. However, there are several other factors that insurance companies consider when it comes to determining your rate. Factors such as your lifestyle, health history and profession are taken into consideration and help to determine your premium costs.

Average life insurance rates by age and gender

The amount you pay each year for your term or whole life insurance depends on several factors. This can include health, lifestyle, and age. Your age when you apply for term or whole life insurance helps determine how much your premium is. Here are a few examples for annual premiums for various age groups.

Age 20

Men who are age 20 and take out a $100,000 term life insurance plan can expect to pay $111.72 per year for a 20-year plan and $147.60 per year for a 30-year plan. For a whole life insurance policy, a 20-year old male would pay around $724.56 per year.

Women who are age 20 and take out a $100,000 term life insurance plan can expect to pay $264 per year for a 20-year plan and $337.92 per year for a 30-year plan. For a whole life insurance policy, a 20-year old female would pay around $622.08 per year.

Age 30

Men who are age 30 and take out a $500,000 term life insurance plan can expect to pay $156 per year for a 20-year plan and $240 per year for a 30-year plan. For a whole life insurance policy, a 30-year old male would pay around $2,385 per year.

Women who are age 30 and take out a $500,000 term life insurance plan can expect to pay $208 per year for a 20-year plan and $335 per year for a 30-year plan. For a whole life insurance policy, a 30-year old female would pay around $4,142 per year.

Age 40

Men who are age 40 and take out a $250,000 term life insurance plan can expect to pay $210 per year for a 20-year plan, and $384 per year for a 30-year plan. For a whole life insurance policy, a 40-year old male would pay around $3,508 per year.

Women who are age 40 and take out a $250,000 term life insurance plan can expect to pay $185 per year for a 20-year plan and $314 per year for a 30-year plan. For a whole life insurance policy, a 40-year old female would pay around $3,008 per year.

Age 50

Men who are age 50 and take out a $1,000,000 term life insurance plan can expect to pay $1,692 per year for a 20-year plan and $3,301 per year for a 30-year plan. For a whole life insurance policy, a 50-year old male would pay around $21,483 per year.

Women who are age 50 and take out a $1,000,000 term life insurance plan can expect to pay $1,233 per year for a 20-year plan and $2,349 for a 30-year plan. For a whole life insurance policy, a 50-year old female would pay around $17,760 per year.

Age 60

Men who are age 60 and take out a $250,000 term life insurance plan can expect to pay $1,477 for a 20-year plan. For a $500,000 policy they would pay $2,793 per year, and for a $1,000,000 policy, they would pay on average, $5,393 per year. Thirty-year term life insurance is typically not available for this age group. A whole life insurance plan would cost $8,783 per year for a $250,000 policy, and $34,853 per year for a $100,000 policy.

Women who are age 60 and take out a $250,000 term life insurance plan can expect to pay $1,033 for a 20-year plan. For a $500,000 term life plan, they would pay $1,911 per year, and for a $100,000 policy they would pay, on average, $3,637 per year. Thirty-year term life insurance is typically not available for this age group. A whole life insurance plan would cost $7,293 per year for a $250,000 policy and $28,670 per year for a $100,000 policy.

Top three states for affordable life insurance

Life insurance rates are regulated by the law in each U.S. state, and that means that your life insurance premium can differ from one state to the next. The top three U.S. states that have the most affordable term life insurance rates are also those that have the highest life expectancy:

  • Hawaii residents have a life expectancy of 81.15 years. A 40-year-old non-smoking female can take out a $500,000 term life insurance policy for 10 years at an average of $15 per month.
  • Minnesota residents have a life expectancy of 80.9 years. A 50-year-old non-smoking male can take out a $500,000 term life insurance plan for 10 years at an average $40 per month.
  • California residents have a life expectancy of 80.82 years. A 20-year-old non-smoking female can take out a $500,000 term life insurance plan for 10 years at an average of $12 per month.

Top picks for life insurance

The top companies that sell the most life insurance, whether it is term or whole life, are some of the most popular insurance providers in the nation.

Northwest Mutual

Northwest Mutual has an A++ superior rating and offers term life, whole life, universal life and variable life insurance plans. The company also offers special features such as a hybrid term/whole life product known as CompLife.

New York Life Insurance Co.

New York Life Insurance Co. has an A++ superior rating. The company offers term, whole and universal life insurance plans as well as a variable plan and a corporate-sponsored life insurance option.

MetLife

MetLife has an A+ superior rating. The company offers term, whole and universal life insurance plans. Applicants are guaranteed acceptance of whole life plans.

Final thoughts

Owning a life insurance policy is a guarantee that your family will be taken care of when you die. The money that they receive can be used to help pay for your funeral and burial costs, any bills that you have left unpaid, the mortgage on your home, medical bills, and other debts that you would have paid for if you had remained alive.

Having a good insurance policy is an important step for adults. It doesn’t matter what type of insurance plan you choose to take out. Whether it is a term, universal, or whole life insurance plan, your policy will ensure financial stability for your loved ones and provide you with peace of mind.