05 Feb 2019

What Is the Average Monthly Cost of Life Insurance?

What Is the Average Monthly Cost of Life Insurance?

The cost of Life Insurance is based on numerous factors, such as age, health, and type of insurance. A Universal or Whole Life policy for a twenty-five-year-old person with no health issues is going to be much less expensive than the same type of a policy for a thirty-five-year-old person who is considered overweight. Premiums are designed to help offset the benefit of the policy. The higher the risk factors relating to insuring an individual, the higher the premium will be.

The Varying Types of Life Insurance

Life Insurance is packaged in several different forms. Each has its purpose and specific audience. The two major forms are Term Life Insurance and Whole Life Insurance (or Permanent Life Insurance). It is important to understand the pros and cons of each type of policy before discussing the premiums associated. Both have various levels of coverage; your wants and needs determine which level is best for you.

Term Life Insurance

Term Life is meant to provide a death benefit to a person’s family should the person die within a set term. For instance, if a person has a 30-year mortgage on a home, he or she may choose to purchase a 30-year term policy with a set benefit equivalent to the payoff amount of the mortgage. People tend to purchase these types of policies to cover items such as mortgages or even college expenses for children.

Just a few of the options for Term Insurance include:

  • Guaranteed Level Term. – The most common form. Pays a death benefit within the term period.
  • Return of Premium Term. – If certain conditions are met, you get your premium back at the end of the Term.
  • Decreasing Term. – This form of Term Insurance is popular for those with mortgages. As the mortgage amount owed decreases, so does the value of the policy over the Term of the policy.

Due to the limited likelihood that the policy benefit will actually be paid, the premium for such policies are often much lower than other forms of Life Insurance.

Whole Life Insurance

Whole Life policies are very similar in nature to a Term Policy. The primary difference is that instead of coverage over a specific period of time, the policy lasts for the lifetime of the insured. Also, like Term Insurance, Whole Life has many different forms:

  • Whole Life – A standard policy is fixed rate and death benefit. They can be used as part of an estate plan to ensure wealth is properly distributed to beneficiaries.
  • Universal Life – This policy allows a person to raise or lower the premium and benefit as time progresses. In addition, there are tax-deferred savings options. Insurance that allows it to be used much as an IRA or 401K.
  • Variable Life – This policy allows a person to invest part of the cash value of their policy. Much more complex and usually requires the services of a financial advisor.

Monthly Cost of Life Insurance

With any level of insurance, it is best to determine how much you can afford. First, take the approach of setting a budget.

For Term Policies, assuming the owner of the policy is under 30, and in good health, a 30-year Term Policy can be purchased for somewhere between $50 and $100 a month. The higher the benefit, the more the monthly cost will run. Therefore, a person looking to maintain $100,000 in Term coverage will pay much less than a person looking for $500,000 in Term coverage.

Regarding Whole Life policies, the key factor is the policy will eventually mature, and the insured will receive the full benefit, whether he or she is alive or dead. Therefore, the monthly premium will be higher to allow for this maturity. That being said, it is reasonable to assume that a person who is healthy and under, 30 to $250,000 of coverage will likely pay between $75 and $150 a month.

In addition to health, factors that will also determine cost include where you live, the amount of insurance desired, and the insurance company or agency you choose to do business with.

To learn more about the monthly premium for each different type of Life Insurance coverage, contact the professionals at HealthQuoteInfo.com at 1-855-614-5057. Our licensed insurance experts will be happy to answer any questions you have.

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