The Average Cost of Life Insurance

A senior couple is discussing their insurance policy.
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Life insurance is designed to help your survivors pay for expenses associated with your burial or cremation and to help your family maintain the same lifestyle after your death. The cost of life insurance varies based on a number of factors including age, gender, health, and amount and type of insurance required. As with any financial decision, comparison shopping often will yield the best information about the price range for your situation, allowing you to then determine the the average cost among various options.

Age and Health

Two of the key factors in determining the cost of life insurance are age and health. The younger and healthier you are, the less you will probably pay. This is because insurers base rates on how soon they expect to have to pay your claim. In an example provided by Mozdex, a 50-old-man might pay $930 a year for a life insurance policy while a 60-year-old man might pay $2,545 a year for the same policy.

Gender and Lifestyle

Two other factors affecting the cost of life insurance are gender and lifestyle. Statistically, women live longer than men, so insurers often charge lower rates to women. Avid adventurers, such as those who sky dive or fly in airplanes frequently, will tend to pay more than those without these occupations or hobbies. Smokers, the definition of which varies among companies, also pay more than non-smokers.

Insurance Types

Another factor affecting rates is insurance type. Although subcategories exist, the two primary categories are term or whole life (sometimes also called cash value). A whole life insurance policy builds a cash value based on investments made by the insurance company. Typically, your premium remains the same and the policy can be paid in full after a set number of years. Term provides insurance for a specific time while you are paying premiums. Term is less expensive than whole life insurance, because there is no cash value and the policy expires after a set number of years.

Amount of Insurance

Another factor affecting the cost of insurance is the amount you want. The higher the amount of insurance, the higher the premium. In an example provided by Mozdex, a 40-year-old man might pay $,2260 annually for a $2 million term policy, while paying only $1,160 annually for a $1 million term policy.

Average Cost

To determine the average cost for your situation, you would do research with several insurance companies based upon your gender, health, lifestyle and insurance type. Web sites such as and can save time. Add the annual premiums quoted by all the insurers and divide by the number of insurers to obtain an average. When choosing an insurance company, consider more than just cost. Financial strength, based on letter grades from rating services such as Moody's and Standard and Poor's, is also important.

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