FROM THE LEARNING CENTER

How to Choose the Right Type of Life Insurance Policy for Your Age

by Bestow Team | December 03, 2021

7 Minute Read

Has anyone told you that they’re proud of you today? Well, allow us to give you the accolades you deserve. You are here planning for the future, thinking of your loved ones, and getting serious about life insurance coverage. High fives all around!

Choosing a life insurance policy is a big step. Between all the insurers that are out there, the various types of policies to choose from, and the seemingly cryptic language used to describe life insurance, selecting the best policy for your needs can feel a bit overwhelming. 

But fear not. We are here to demystify the whole process and help explain how life insurance rates are calculated. By the end of this article, you’ll walk away with a better understanding of how things like your age, medical history, and health can impact your monthly life insurance premiums. Translation:

When it comes to the subject of life insurance, get ready to be the most knowledgeable person at the party.

At What Age Should You Have Life Insurance?

If your bedtime is before midnight and you have a favorite brand of antacid, it might be a good time to consider getting yourself a life insurance policy. Maybe you’re recently married, thinking about buying a house or starting a family, or taking on other substantial financial obligations.

If you’re younger and still eating spicy foods with reckless abandon, you might be asking yourself when you should get life insurance. The answer might surprise you. It turns out that the best time to snag a life insurance policy just might be right now. Life insurance premiums are often influenced by factors like age and health conditions. Younger people may qualify for lower-cost term life insurance rates. Purchasing life insurance while you are in excellent health can offer affordable financial protection well into the future. 

How Much Life Insurance Should You Get?

When it comes to calculating the amount of life insurance coverage you need, a popular school of thought says to “multiply your income by ten.” This method is a good jumping-off point, but there are a lot of other factors to consider when estimating your life insurance needs. Think debt, mortgages, student loans, kids, elder dependents, etc.

What about younger people without that laundry list of financial obligations? If you fall into this category, picture yourself five, ten, even twenty years from now. Consider purchasing a life insurance policy that covers future you and the fancy stuff inside your beach house (hey, dream big, right?). If you get life insurance now, with your current health history, you might find yourself able to cover that prospective life at a more affordable monthly rate.

Life insurance premiums are usually determined by five factors: age, gender, policy type, health history, and hobbies. If you’re a healthy 30-year-old male who enjoys a quiet night of reality tv, you’re likely to see lower rates than a 60-year-old male with some health concerns and a love for motorcycle riding. Make sense?

Monthly Premiums: Average Term Life Insurance Rates

If you’re looking for the best bang for your buck, term life insurance rates tend to be the most affordable life insurance option. “Term” refers to the period of coverage time. In other words, this type of life insurance has an expiration date. The shorter the term length, the more affordable the overall rates tend to be. If you pass away during the term of the contract, often ten, twenty, or thirty years in length, the insurer pays out the agreed-upon death benefit to your specified beneficiaries. 

10 Year Term Life Insurance Rates

AgeSex$500,000$750,000$1,000,000$2,000,000
20Male  $20.65 $28.18 $31.78 $58.09
  Female $15.92 $21.09 $23.42 $41.70
25 Male $19.91 $26.95 $29.52 $53.33
  Female $15.79 $20.78 $23.13$40.65 
30 Male $19.75 $26.72 $29.52$53.34 
  Female $15.96 $21.04 $23.74$41.79 
35 Male $20.27 $27.51 $30.28 $54.86
  Female $17.38 $23.16 $25.17 $44.63
40 Male $26.41 $36.72 $42.15 $78.59
  Female $22.71 $30.51 $34.92 $64.14
45 Male $37.44 $53.25 $64.21 $122.72
  Female $32.77 $46.26 $53.84 $101.98
50 Male $55.53 $80.39$97.85$190.01
  Female $47.40$68.21$81.28$156.85
55 Male $85.16$124.94$150.42 295.35
  Female $65.90$96.05 119.46$233.44

20 Year Term Life Insurance Rates

AgeSex$500,000$750,000$1,000,000$2,000,000
20Male $28.03 $39.25$45.51$85.59
  Female $20.67$28.21$33.45$61.89
25 Male$27.16$36.78$45.08 $83.06
  Female$21.24$28.02$34.41$61.71
30 Male$27.42$38.23$46.63$87.57
  Female$21.74$29.91$36.10$66.50
35 Male$30.66$40.57 $52.31$95.29
  Female$25.69$33.63$43.09 $77.44
40 Male$39.80$56.80$70.78 $135.86
  Female$32.76$46.23$57.30$108.89
45 Male$61.05$85.59$114.07$214.60
  Female$47.79$66.47$86.54 $161.07
50 Male $93.22 $136.92$174.39$343.08
  Female$71.20$103.90 $128.60 $251.50
55 Male$152.57$223.81$289.00$561.14
  Female $108.91$155.97 $207.65$395.38

30 Year Term Life Insurance Rates

AgeSex$500,000$750,000$1,000,000$2,000,000
20Male $39.83$56.95$70.23$134.97
  Female$29.38$41.28 $51.74 $83.42
25 Male$38.92$55.47$69.61 $133.50
  Female$29.70$41.65$52.39 $83.42
30 Male$41.56 $59.45 $73.65$141.60
  Female$33.51 $47.37$58.35$98.90
35 Male$44.55$63.93$81.62$157.53
  Female$37.35$53.12$66.49$126.42
40 Male$64.95$94.53 $121.14 $236.57
  Female$52.12$75.27$95.47$196.94
45 Male$103.06$151.69$196.19 $386.68
  Female $77.66$113.60$145.46 $300.14
50 Male$169.79 $251.78$319.57$633.43
  Female$122.50$180.84$228.90$422.26
55 Male$308.58$460.10$601.87 $1,198.20
  Female$209.85$312.01$400.34 $754.22

 

Quotes reflected are an example from Policy Genius. Your actual premium will be determined by underwriting review. 

 

How Much Do Permanent Life Insurance Policies Cost?

Permanent Life Insurance premiums can cost a pretty penny. The average life insurance rates of permanent policies tend to be much higher than those of term policies, even if you’re young (looking at you, Gen Z). The higher price tag can be due to a number of factors, including the fact that permanent policies have a guaranteed payout and (sometimes) a cash value you can borrow against.

Whole Life Insurance Policies

If you fancy yourself an investor and don’t mind complexity, you might be interested in a type of permanent life insurance policy called a whole life insurance policy. While term life insurance is straightforward and fairly affordable, whole life insurance is more nuanced and comes with higher premiums. As the policyholder, you agree to pay a bit more than the costs of insurance and administration in exchange for an agreed-upon death benefit. That extra money you pay to the insurance company is then put into a cash-value account with a fixed interest rate, much like a savings account. Unlike a savings account, this accumulated interest is not taxed unless you withdraw more cash than you paid in.

Should you get whole life insurance? It’s a great question and one we suggest running by your insurance agent (and possibly your financial advisor), especially if you’ve maxed out your 401(k) plan or are a high earner looking to diversify your portfolio, but if you’re looking for a quick cost comparison, check out the table below.

Average Cost Of Whole Life Insurance

Age at purchase20-year-term ($500,000 policy amount)Whole life ($500,000 policy amount)
30 $193 $3,802
40 $289 $5,467
50 $654 $8,347
60 $1,676 $13,487

 

Quotes reflected are average annual life insurance rates for women. Sourced from Nerd Wallet. Quotes reflected are an example. Your actual premium will be determined by underwriting review. 

 

Universal Life Insurance Policies

Universal life insurance is another permanent life insurance policy option with, well, options. With universal policies, you can change your premiums and death benefit. That’s a feature that can be beneficial (flexibility is nice) but also risky (potential that your account becomes underfunded). 

Much like whole life insurance, you pay your premium and then some. The minimum premium payment covers the agreed-upon death benefit, and the remainder of your payment goes into a cash account, only this one boasts a market-dependent interest rate rather than the fixed interest rate of whole life insurance policies.

Average Cost Of Universal Life Insurance

Age at purchase20-year-term ($500,00 policy amount)Universal life
30 $193 $1,499
40 $289 $2,243
50 $654 $3,837
60 $1,676 $6,299

 

Quotes reflected are average annual life insurance rates for women. Sourced from Nerd Wallet. Quotes reflected are an example. Your actual premium will be determined by underwriting review. 

 

How Are Life Insurance Rates Determined?

Now that you have a better handle on some of the different types of life insurance, you might be wondering how a life insurance company determines your premium price. The person who sets your insurance rates is officially referred to as an underwriter 

The underwriting process usually takes anywhere from four to five weeks and, in many cases, involves a medical exam and a blood draw. The underwriter analyzes your health status and family history to determine your premium costs. They look at tobacco use, blood pressure results, cholesterol levels, and risk of heart disease to determine the level of risk involved in offering you a policy. If you are in good health, chances are the pricing will be more affordable. 

Term Life Insurance Without a Medical Exam

If you read the above and thought “I don’t want to wait that long,” or “ew, needles,” we’ve got good news: there is another way. Bestow lets you apply for term life insurance online (right from your phone or computer), with no medical exams ever. Policies offered by Bestow range from ten to thirty years and you can complete an application in as little as 5 minutes. Just answer a few questions online to see if you qualify and you could have coverage today. It’s that easy. 

The information provided is not intended to offer any tax, legal or financial advice. It is always a good idea to consult your tax, legal and financial advisors regarding your specific situation. Furthermore, this article does not ensure your eligibility for any specific product.