What Is the Cost for Term Life Insurance?

Term life insurance rates can vary greatly depending on a number of factors such as your age, gender, health and occupation. That means the monthly cost for term life insurance could range anywhere from less than $20 a month to a few hundred dollars a month depending on these factors.  

Average monthly premiums for term life insurance 

The average monthly premiums for term life insurance can vary greatly depending on your age, gender, health and elements of risky behavior in your work or in life. 

Every life insurance company may consider different factors when determining their term life insurance rates, but generally, the factors that impact term life insurance costs include: 

Size of the life insurance policy 

The amount of coverage you need is the first indicator of how much your policy will cost. The more coverage you need, the higher the premiums are likely to be. 

Age of the life insurance policyholder 

One of the leading factors in determining life insurance rates is age. The younger you are, the healthier you are likely to be, so premiums tend to be lower for younger policyholders. 

Gender of the life insurance policyholder 

Because men tend to have shorter life expectancies than women, men can expect to pay slightly more for life insurance policies than women of the same age and similar circumstances. 

However, any health conditions acquired during pregnancy can affect life insurance premiums. 

Policyholder’s health 

Most term life policies will require a medical exam to assess your health. If you are in superb condition with no major health concerns, an exam can help you get the best possible rates for your term life insurance. 

How are life insurance rates determined? 

Overall, life insurance rates are determined by the amount of risk the policyholder presents to the insurance company. The process by which a company assesses the amount of risk using the factors above, among others, to determine an individual policyholder’s rate is called underwriting. 

The physical exam required by many insurance companies involves the policyholder being evaluated by a medical professional. The examination may include checking the policyholder’s height, weight, and overall physical health as well as blood and urine samples to check cholesterol levels and other signs of health risks. 

Can term life insurance policies convert to whole life insurance? 

Yes, term life insurance policies can be converted into whole life insurance; this process is known as term conversion. Individuals often purchase term life insurance shortly after getting married or having children as a low-cost way to provide a financial safety net for loved ones. 

Over time, however, many policyholders feel they need permanent coverage, such as through a whole life insurance policy. Most term life insurance policies allow you to convert some or all of your coverage into a permanent policy within a specific time frame, often without requiring another medical exam. 

Additionally, term life insurance policies do not need to be converted all at once. They can often be converted in portions. If you’re considering a term conversion, be sure to inquire about all your options so you can make an informed decision. 

Mixing term and whole life insurance 

Policyholders don’t necessarily have to choose one type of policy over another. Many people have multiple policies to satisfy different financial goals.   

For example, because term life is cheaper than whole life, a couple might choose to take out a larger term life insurance policy to provide a large financial safety net for their family until, for instance, their youngest child reaches adulthood. But they may also choose to purchase a smaller whole life insurance policy to start accumulating cash value to provide themselves with an additional potential source of liquidity.    

Finding term life quotes and rates   

There are many different life insurance plans and options to choose from, and everyone’s individual circumstances are so different that it often helps to speak to a financial advisor about your situation.   

Working with an advisor can help you get direct feedback in real time on what sorts of steps to take next to ensure that you find the right plan for your needs.