How Much Does Life Insurance Cost?

When it comes to protecting the people you love, life insurance is one of the most important financial tools available. But for many, one big question comes to mind when they’re thinking about buying life insurance: “How much is it going to cost?”

The truth is, there’s no one-size-fits-all answer. Life insurance premiums are based on a number of personal factors, from your age and health to the type of policy you choose. But understanding the basics can help you make smart, confident decisions.

Keep reading for answers about how life insurance costs are calculated, what types of policies exist, how your health affects your options, and ways to reduce your monthly premiums.

What are the 3 main types of life insurance?

Before we discuss cost, we need to address coverage. Life insurance comes in different shapes and sizes, each with its own pricing structure.

1. Term life insurance
   • What is it? This is the most affordable and straightforward option. Term life covers you for a specific period—typically 10, 20, or 30 years. If you pass away during the term, your beneficiaries receive a payout. If you outlive the policy, it expires with no cash value.
   • Ideal for? Families, homeowners with a mortgage, and anyone looking for solid coverage at a lower monthly cost.
2. Whole life insurance
   • What is it? Whole life is permanent coverage. As long as you pay your premiums, it doesn’t expire. Because of this lifetime guarantee, and the fact that it comes with a guaranteed death benefit and a cash value component that grows over time, it’s significantly more expensive than term coverage.
   • Ideal for? Individuals seeking to build long-term financial assets or create a lasting legacy.
3. Universal life insurance
   • What is it? This is a flexible form of permanent insurance that allows you to adjust your premiums and death benefit over time. It also builds cash value, but how much it grows can depend on interest rates or investments (depending on the policy).
   • Ideal for? People who want coverage with flexibility as their financial needs change.

Pro tip: Some permanent policies, like whole or universal life insurance, allow you to borrow against your accumulated cash value. Learn how borrowing from life insurance works.

What affects the cost of life insurance?

Life insurance companies base your premiums on risk. The more risk you pose to the insurer, the more you’ll pay. Here are the key things they look at:

• Age: Younger people pay less because they’re statistically less likely to die during the policy term.
• Health: Conditions like high blood pressure, diabetes, your medical history, and even your family’s health background can all raise your premium.
• Lifestyle: Smoking, frequent alcohol use, or dangerous hobbies (like skydiving) may increase your premiums.
• Coverage choices: A $1 million policy will cost more than a $250,000 one; a 10-year term will cost less than a 30-year term; and permanent policies (like whole life) cost more than term life insurance policies.
• Occupation: High-risk jobs, such as firefighting, law enforcement, commercial fishing, logging, construction, or long-distance driving may impact your premium.
• Gender: Women tend to live longer than men, and this is reflected in slightly lower premiums.

The combination of these factors helps determine which rate class you’re placed into, and that directly impacts what you’ll pay.

How your health impacts life insurance cost and eligibility

If there’s one factor that can make or break your life insurance rate, or even your eligibility, it’s your health.

Some insurers will require a medical exam or health questionnaire to assess your risk. They may look closely at:

• Chronic conditions like high blood pressure, heart disease, diabetes, or cancer (past or present)
• Tobacco and substance use, which can double or even triple your premium
• Body mass index (BMI) and weight-related health risks
• Prescription medications that give insight into your underlying health conditions
• Mental health history, particularly if recent hospitalizations or medications are involved

If you’re managing a condition well or have made healthy changes (like quitting smoking), that can work in your favor. Making even small health improvements before applying can lead to better rates.

Pro tip: If you’re worried about being denied due to health concerns, some policies don’t require medical exams at all — and in some cases, your policy could even help financially during treatment. Learn how life insurance can help with medical bills.

So, how much does term life and whole life insurance cost?

As explained above, term life insurance is generally the most affordable option, while whole life and universal life come with higher costs due to their permanent coverage and cash value features.

Here’s how that translates into real-world pricing:

• A healthy 30-year-old non-smoker might pay:
  • $20 per month for a 20-year term policy with $500,000 in coverage
  • $200–$300 per month for a whole life policy with the same coverage
• A healthy 50-year-old could expect premiums to be:
  • $70–$100 per month for term life insurance
  • $300–$600 per month for a whole life policy
• A 65-year-old may pay:
  • $150+ per month for a term life policy
  • $700+ per month for whole life coverage, depending on health

These are just estimates—your actual quote will be unique to you. Premiums rise with age, but term policies can still be affordable well into your 60s. Permanent coverage, although more expensive, may be suitable for estate planning or leaving a legacy.

Does where you live affect the average cost of life insurance?

Your location can influence how much you’ll pay for life insurance but not nearly as much as factors like age, health, or lifestyle.

Here’s what to keep in mind:

• Individual risk: Your age, health, and lifestyle will always be bigger price drivers than geography. Two people in the same state can still get very different quotes depending on their personal profiles.
• State regulations: Each state regulates insurance differently, which can influence how premiums are calculated. Some states require more coverage options or consumer protections, which can result in slightly higher rates.
• Cost of living: In areas with higher living expenses (like New York or California), pricing may reflect broader economic conditions.
• Insurance market dynamics: Insurers don’t price policies exactly the same in every state. Some companies are more competitive in certain markets, leading to lower rates.

Research indicates that New York is the most expensive state for term life insurance, with an average annual premium of $600. The least expensive is North Dakota, at just $250.

Based on 2024 data for average term life insurance premiums, states fall into three general pricing tiers:

Remember, even if you live in a higher-cost state, you can still find affordable life insurance, especially if you compare quotes or work with a broker who understands the market.

How much life insurance do you really need?

This is one of the most important decisions in the process. Too little coverage, and your family could be left vulnerable. Too much, and you may end up paying for more than you need.

A common rule of thumb is 10-15 times your annual income. But you’ll also want to consider:

• Outstanding debts (mortgage, student loans, credit cards)
• Future expenses (college tuition, elder care)
• Final costs (funeral and burial)
• Existing savings or investments  (which can offset what you need)

Life insurance is about replacing income and covering expenses that would otherwise fall to your family.

Not sure where to start? Working with a broker can help you land on the right coverage amount for your life stage and budget. And if you’re nearing retirement, it may be time to reassess your coverage needs.

5 tips to reduce your life insurance premium

Small decisions, like locking in coverage early, can make a big financial difference over the life of your policy. There are several smart strategies to keep your premiums affordable:

1. Act sooner rather than later: Apply while you’re younger and healthier. Rates increase with age.
2. Get healthy: Quit smoking, manage weight, and treat chronic conditions.
3. Choose term over perm: Term policies offer the most affordable coverage.
4. Compare life insurance quotes: Rates can vary widely between providers.
5. Work with a broker: An experienced insurance broker can help you compare policies across multiple insurers and match you with the right coverage—without overpaying.

Life insurance doesn’t have to be complicated

At The Baldwin Group, we’re here to make the process easier, smarter, and more tailored to you. Whether you’re buying for the first time and have a lot of questions or reevaluating your current life insurance coverage, we’re here to help you make sense of your options.

Best of all, we do the legwork for you. We’ll talk, get a better read about what you want life insurance for, understand your budget and your beneficiaries’ needs, and get to work.

When you work with us, you get:

• Access to multiple top-rated insurers (not just one company’s rates)
• Real quotes based on your actual profile—not generic estimates
• Friendly, pressure-free guidance from people who listen
• Guidance to help you avoid unnecessary coverage

Simply provide us with some basic information, and one of our licensed advisors will guide you through your options, with no pressure. Visit us online to get life insurance that fits your needs and budget.