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How much life insurance do I need?

Life insurance should replace your income if the unthinkable happens. When figuring out what you need for life insurance coverage, consider your future costs. That includes your mortgage, outstanding bills, children’s college, funeral costs, childcare, and other costs that your loved ones will have. When gauging how much you need, here are some costs to think about:

Once you figure out those costs, you’re able to get a better gauge of what your loved ones will need.

Types of life insurance

Permanent Life Insurance

Permanent life insurance provides coverage for life - no matter how long you live. You have coverage as long as you make your premium payments. Permanent life is usually more expensive and offers lower death benefits than term life, but you’re guaranteed that your loved ones will get a death benefit. Permanent life also provides cash value. You can borrow from your policy, but you should only tap into it for a one-time emergency. Your policy will also lose that money, and you’ll get penalized.

Term Life Insurance

Term life insurance offers coverage for limited years and doesn’t have any cash value. Unlike permanent life, you can’t tap into it while you’re alive unless you have a rider, such as a critical illness or chronic disease rider. Those riders let you take out more from your policy to help pay for care. Term life policies could be five years or as much as 30 years. You’ll likely pay more for term life depending on your age and length of the policy.

Final Expenses Insurance

Final expenses insurance is a lower cost alternative to permanent and term life. As the name suggests, the coverage handles your final expenses, such as the cost of your funeral. The coverage is also known as burial insurance or funeral insurance. You shouldn’t view a final expenses policy as a way to provide for your loved ones in the long run. Instead, it’s merely meant to pay for your funeral and other final expenses.

I want to learn more about Life Insurance.

How much does life insurance cost?

Life insurance costs vary by type of plan, your age, your gender, your health status, and many other factors, including the riders. Some of the costs you have no control over. However, you can work to improve your health and quit smoking. Those actions can help reduce rates. Here are the average term life insurance costs for multiple categories:

Annual premiums for $500,000 term life policy

Source: CompuLife Quotation System, April 2019N/A - Quotes not available
10 Years20 Years30 Years
30-year-old nonsmoker in excellent health$270$352$514
30-year-old nonsmoker in regular health$355$463$689
30-year-old smoker in regular health$743$998$1,591
40-year-old nonsmoker in excellent health$386$567$858
40-year-old nonsmoker in regular health$524$769$1,169
40-year-old smoker in regular health$1,261$1,973$2,973
50-year-old nonsmoker in excellent health$775$1,215$2,064
50-year-old nonsmoker in regular health$1,054$1,651$2,825
50-year-old smoker in regular health$2,708$4,265$6,820
60-year-old nonsmoker in excellent health$1,547$2,889N/A
60-year-old nonsmoker in regular health$2,059$3,860N/A
60-year-old smoker in regular health$5,384$9,005N/A
Source: CompuLife Quotation System, April 2019N/A - Quotes not available
10 Years20 Years30 Years
30-year-old nonsmoker in excellent health$318$421$640
30-year-old nonsmoker in regular health$430$558$874
30-year-old smoker in regular health$955$1,284$2,084
40-year-old nonsmoker in excellent health$435$646$1,037
40-year-old nonsmoker in regular health$605$886$1,430
40-year-old smoker in regular health$1,526$2,397$3,796
50-year-old nonsmoker in excellent health$932$1,507$2,610
50-year-old nonsmoker in regular health$1,305$2,043$3,537
50-year-old smoker in regular health$3,539$5,631$8,240
60-year-old nonsmoker in excellent health$2,243$4,104N/A
60-year-old nonsmoker in regular health$3,035$5,524N/A
60-year-old smoker in regular health$7,963$13,015N/A

Average annual premiums for $1 million term life policies in California

Source: CompuLife Quotation System, April 2019N/A - Quotes not available
10 Years20 Years30 Years
30-year-old nonsmoker in excellent health$427$568$905
40-year-old nonsmoker in excellent health$624$973$1,467
50-year-old nonsmoker in excellent health$1,346$2,170$3,541
60-year-old nonsmoker in excellent health$2,922$5,572N/A
Source: CompuLife Quotation System, April 2019N/A - Quotes not available
10 Years20 Years30 Years
30-year-old nonsmoker in excellent health$520$731$1,138
40-year-old nonsmoker in excellent health$744$1,178$1,878
50-year-old nonsmoker in excellent health$1,711$2,899$4,880
60-year-old nonsmoker in excellent health$4,242$7,924N/A

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