Table of Contents

Voluntary life insurance costs depend on several factors. Including age, gender, health, the type of coverage and the policy’s face value. Term life and whole life are the two most popular types of life insurance. With term life being the most affordable. Typical term life insurance rates range from about $30 to $60 per month for a middle-aged person.

Life Insurance Providers

Source: Life Benefits

When shopping for life insurance, don’t assume every national insurance carrier is showing you all the possible options. Some insurance providers and agents don’t offer every type of insurance, particularly variable products. By understanding your options, you can find the insurance provider that best suits your needs more easily.

Some top life insurance providers to consider include Policygenius, Northwestern Mutual, Allstate, MetLife Financial, and Prudential Financial.

Policygenius

Policygenius is the right choice for consumers seeking a combination of whole and term life insurance. To get the most coverage or at the most affordable pricing. It offers convertible term policies quickly online. But also has access to shop rates for whole life insurance among its host of insurance partners.

An online personal insurance broker that partners with top voluntary life insurance providers. They get customers the best policy for the best rate. The mission is to take the insurance-speak out of the purchasing process. This is to help policyholders feel confident their beneficiaries will get proceeds quickly.

Northwestern Mutual

Northwestern Mutual is the right choice for younger consumers seeking permanent insurance. Such as universal life, with flexible premiums and lower rates. The company places a strong focus on life products compared to other national providers; who mix life with property and casualty. By focusing on one area of personal insurance lines; it has more life products to choose from, including universal life.

As a mutual insurance company, Northwestern Mutual shares its profits with its policyholders. They offer a gamut of personal insurance and investments. Including life insurance, disability insurance, long-term care insurance, annuities, and mutual funds.

Allstate

Allstate is the right choice for individuals wanting to maximize the cash value growth in permanent life insurance; through mutual fund subaccounts. Its variable universal life allows younger insureds to get permanent insurance. It grows with their family needs over time. And it also meets their long-term investment objectives.

This company is a national insurance carrier that brings a personal touch to every insurance transaction. By offering home, auto, life, and commercial insurance through local agents. With the gamut of insurance products to choose from, consumers can bundle and save on premiums. For instance, when buying home, auto, and life insurance through their Allstate agent.

MetLife

MetLife is the right choice for anyone seeking to buy a term policy to cover an immediate need. But who is still into permanent life insurance. With MetLife, these individuals enjoy the ability to convert policies into permanent insurance. This allows budget-conscious consumers to get into a policy with a guaranteed choice to extend it for a lifetime.

It is one of the largest life insurance, annuity, and employee benefits providers in the world. Serving more than 90 million customers in more than 40 countries. The company’s focus is on the life and health components of insurance and financial planning. Allowing it to create innovative solutions for small business owners and benefits programs.

Prudential Financial

Prudential Financial is a good choice for families looking for estate planning solutions. That include seeking solutions for estate taxes; funding special needs trusts; and developing strategies for building legacies for generations and philanthropy. It is a premier life insurance and retirement planning company with offices around the world. The firm’s reputation of financial strength comes from 140 years of delivering promises to customers.

Voluntary Life Insurance Costs

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Life insurance costs are directly related to age, sex, health, and lifestyle. However, some policies have more bells and whistles such as type, term, and size and are more expensive in general. While you could spend as little as $20 per month for a small policy in your 20s; you might spend thousands every month for coverage once you hit 50 or 60.

Every insurance company has its own pricing for life insurance. With many having a greater underwriting desire for permanent insurance while others focus solely on term policies. If you want to purchase variable life insurance, make sure the subaccounts meet your investment objectives. And that you understand how fluctuations may affect your benefits.

Factors That Impact Voluntary Life Insurance Rates

When you purchase life insurance, you pay premiums to your insurer in exchange for a death benefit. That your beneficiaries receive when you die. Because life insurance pays a benefit at the time of your death. Premiums are based on the risk of you dying prematurely; or before the end of a designated term.

There are two types of risk factors that affect term life insurance rates:

Personal risk factors: Age, gender, or any factor that holds the potential for you to die early. You can have several risk factors or none at all. The insurance company rates every risk based on a value per $1,000 of coverage.

Policy factors: These are factors unique to the policy you purchase. For example, how much the policy pays; how long the term is; and what other benefits come with it all impact the cost of life insurance.

Personal Risk Factors Affecting Voluntary Life Insurance Costs

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Personal risk factors directly impact the cost of life insurance. These risk factors include age, gender, and whether you smoke or not. Your job and regular hobbies can also have an adverse effect on your life insurance costs. Failing to disclose pertinent information on a life insurance application is insurance fraud. And may result in a denied claim or policy cancellation.

Age and Life Insurance Costs

Every rate factor is related to the fundamental component of mortality. Nothing is more relevant to mortality than age. As a rule of thumb, younger people live for many more years than the elderly. The longer someone lives, the longer life insurance companies collect a $50 per month premium that pays the $100,000 death benefit. The older you are when you apply for a life insurance policy, the more expensive the premium is.

You should also note that the premium spread between females and male tends to increase with age. What that means is a heterosexual couple getting life insurance in their 20s is more likely to have very similar premium rates than the same couple in their 50s. The 50-year-old woman pays significantly less than her 50-year-old male partner.

Gender and Life Insurance Costs

Gender plays a significant role in life insurance premium costs. Generally speaking, rates for women are less expensive than they are for men since women tend to live longer. The average life expectancy at birth for a woman is 81.3 while, for men, it’s 76.3. These numbers do change as health trends change.

This is one reason that two people with the same health history might have different pricing when applying for a policy 12 months apart. For example, say two brothers, born a year apart, both apply for life insurance when they turn 20 years old. Despite having the same family history, health rating, and lifestyle, their life insurance rates may be different because of population health trends.

Smoking and Life Insurance Costs

Smoking is one of the biggest factors that makes life insurance premiums more expensive. For example, a male smoker in his 30s can expect to pay about two to three times as much for a policy than a nonsmoker. Also, it usually takes 2 or more years after you quit for an insurance provider to consider you a nonsmoker or former smoker.

While “smoking” is the common term most people use, the term is “tobacco use” on life insurance applications. While smoking tends to have the biggest adverse health effects, chewing tobacco and vaping also adversely affect your insurance premiums. Sorry, but saying grandpa lived to 100 while smoking cigars daily won’t help your premium rates.

Health Conditions and Life Insurance Costs

Poor health results in a lower life expectancy in most people. Ongoing health concerns such as hypertension, high cholesterol, obesity, and diabetes adversely affect life expectancy. The presence (and combinations) of these health conditions are personal risk factors that typically increase the cost of life insurance.

Every insurance carrier rates conditions differently and has its own factoring system for multiple conditions. Expect an insurance carrier to request medical records from primary care physicians and specialists to determine the level of concern for chronic and ongoing health issues.

Personal Health History and Life Insurance Costs

Prior health conditions can have a dramatic impact on your ability to get life insurance. Health history refers to those conditions that you’ve dealt with in the past but aren’t current issues, such as cancer, heart disease, stroke, and depression. How much time has elapsed since the health event plays a large role in how the insurance company weighs the risk and adjusts your life insurance premiums.

Take, for example, a condition such as ovarian cancer, which has an 85% recurrence rate. Life insurance companies will want to see years of stable health and blood work before considering issuing a policy. Becoming ineligible for life insurance due to health history is the biggest problem for most consumers. When they realize they want and need life insurance, they can no longer get or afford it.

Family Health History and Life Insurance Costs

Insurance companies also consider your family―blood relatives, typically limited to parents and siblings―health history. Insurance companies are generally most concerned with health conditions that resulted in the death of a family member before the age of 60.

The rationale is simple. If every man in your immediate family had prostate cancer, there is likely a genetic predisposition for a male descendant to be diagnosed with it. If you don’t know your family’s health history, state that. Just remember that lying on an insurance application is a fraud and subject to penalties and fines.

Occupation and Life Insurance Costs

Occupation can play a role in determining your premium, but usually only if you’re working in a field particularly hazardous or extremely stressful. Some of the most hazardous jobs that could affect your premium include aircraft pilot, roofer, truck driver, and construction worker.

Those serving in the military, police, and fire department often have special underwriting standards. If you are an everyday hero, talk to your union or personnel office about the best insurance companies to work with you.

Travel and Life Insurance Costs

The life insurance application asks whether or not you plan to visit or just returned from foreign countries, typically within a 6-month period. The likelihood of contracting certain harmful, potentially life-threatening diseases increases with travel to developing countries. You may be required to wait 6 months after your trip to get the best pricing possible for life insurance if you have immediate travel plans.

For those who travel often, the life insurance company may require additional medical records and vaccination documents to rate the policy. Talk to your insurance agent if you travel frequently.

Lifestyle and Life Insurance Costs

If you like living life on the edge, your life insurance company will do one of three things: rate the policy, exclude the activity, or deem you ineligible. For example, riding motorcycles or mountain climbing usually increases your premium, as does a bad driving history, especially a DUI within the past 5 years, or a criminal record.

A criminal history can increase your premium by around $2.50 per $1,000 of coverage, which means an additional $250 per year on a policy with $100,000 in coverage. Life insurance companies don’t accept applications from anyone in jail, awaiting trial, or is currently on probation.”

What a Voluntary Life Insurance Table Rating Is

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The table rating is the points system each insurance provider uses to determine the ultimate effect any health condition will have on your insurance costs. Life insurance carriers are looking at all factors, including a table rating and your health conditions, in determining your cost. These factors go into what is called a table rating.

Different conditions get grouped together based on how significantly the insurance company feels it affects your overall health and wellness. Every life insurance applicant is given a table rating based on the overall mix of health conditions they have. The application considers simple things, such as height and weight, to major illnesses, such as cancer, and chronic conditions such as diabetes or hepatitis.

The chart below gives an idea of how table rating affects your life insurance rates by increasing your costs with every health issue. The higher the table rating class, the more expensive life insurance gets.

Table Ratings Affect Voluntary Life Insurance Costs

Every life insurance carrier uses the table ratings to adjust costs based on one or more health conditions. While the table is widely accepted, every carrier makes adjustments based on their own underwriting parameters.

Policy Factors Affecting Voluntary Life Insurance Costs

In addition to the personal risk factors that impact the cost of life insurance, policy characteristics, such as the size, term, and type of life insurance policy you purchase, play a large role in the cost of your premium.

Death Benefit Amount and Voluntary Life Insurance Costs

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As you might expect, the larger the death benefit on your policy, the higher your premium will be. However, the rate of increase declines with higher face values. In other words, double coverage doesn’t mean your rate doubles. It’s not a dollar-for-dollar correlation.

For example, the monthly premium for a $250,000 policy for a 30-year-old healthy female is approximately $19. However, the premium for the same individual on a $1 million policy is approximately $37 per month. Although the death benefit of the policy is four times larger at $1 million, the premium cost only increases approximately two times.

Term Length and Life Insurance Costs

Much of the cost specific to term life also depends upon the length of the term. The longer a policy is set to remain in force, the more expensive the premium will be. The duration of the term moves the insured into ages where there is a higher chance of dying, and that correlates to the age component of mortality.

For example, the cost for a $500,000 term policy for a healthy 40-year-old male could be $38 per month for a 10-year term policy, but it will be approximately $116 per year for the same amount of coverage under a 30-year term policy.

Administrative Fees and the Cost of Insurance

All life insurance has a component called the cost of insurance (COI). COI is the administrative costs of underwriting and administering your life insurance. Permanent life insurance has an additional investment component called cash value. Your insurer invests a portion of your premium, often in mutual fund variable accounts. These accounts require extra fees.

The life insurance costs paid by the COI bucket include:

  • Mortality and expense charges: Costs required to pay life insurance death benefits
  • Sales and administrative fees: Commissions, policy maintenance, and standard business expenses
  • Riders: Additional coverage options that customize a policy including things like guaranteed insurability, waiver of premium, and accelerated death benefits
  • Investment management fees: Costs associated with managing the investment portion variable life insurance

How Coverage Type Impacts Voluntary Life Insurance Costs

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There are two overall types of life insurance, temporary and permanent. Term insurance limits coverage to a specified number of years, called the term, while permanent insurance remains in force for the remainder of the insured’s life as long as premiums are paid. Permanent life insurance typically costs more than term policies.

Term and permanent insurance are further broken down into the following policies structures:

  • Term life insurance: Level term, decreasing term, return of premium, and annual renewable
  • Permanent life insurance: Whole life insurance, variable life insurance, and universal life insurance

Term Life Insurance Costs

Such costs are directly tied to the term’s length and your insurer’s expenses for maintaining your policy, or COI, based on table ratings. However, not every term insurance policy is structured the same way. Each structure is designed to serve a very specific life insurance purpose.

The four types of term life insurance structures are:

Level term: Commonly structured for anywhere from 5 to 30 years with the premium and the death benefit remaining constant throughout the life of the policy. These would often be considered the baseline pricing policy type.

Decreasing term: Structured for long-term debts such as mortgages or business loans, the policy’s death benefit is reduced annually as the debt is paid off. These are normally 15- or 30-year terms and are less expensive than level term.

Return of premium (ROP): Follows normal term insurance policies of 10 to 30 years with the premium paid during the course of the policy returned to the policy owner at the end of the term if no death benefit was paid, making it a more expensive policy.

Annual renewable: Single-year term policies with guaranteed renewability where premiums increase based on the insured’s age at the time of renewal but do not require another medical exam.

Permanent Life Insurance Costs

Because permanent life insurance pays a death benefit and a savings component called the cash value account, it’s often more expensive than term. The different permanent life insurance structures are designed to help satisfy investment objectives and suitability as well as make permanent life insurance more affordable to younger individuals.

The three types of permanent life insurance are:

Whole life insurance: Maintains a level death benefit plus a guaranteed minimum interest rate on the cash value and level premiums for the duration of the policy period.

Variable life insurance: Places cash value funds into a mix of mutual fund subaccounts to meet the long-term investment objectives of policyholders in hopes of using cash value to pay premiums or increase death benefits.

Universal life insurance: Makes permanent life insurance affordable for younger insured’s by allowing for annual renewals with rates increasing every year ideally with the cash value absorbing the difference in premium costs.

Private Life Insurance vs Employer Benefits

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There is a big difference between private life insurance and employer-provided group benefits. While employer policies are extremely inexpensive to get a policy that pays anywhere from three to 10 times your annual salary in group life insurance benefits, the policies are not portable and usually don’t cover death from illness. This means if you leave the company or die from something like cancer or a heart attack, your beneficiaries do not get benefits.

It is wise to max out your employer’s group term life insurance benefits because it is so affordable, but you may want to get additional life insurance that meets your family’s long-term needs.

Voluntary Life Insurance Costs for Small Business Owners

Small business owners don’t pay more for life insurance than non business owners because the insurers mainly base premiums on the insured’s life expectancy. However, business owners may need both personal life insurance and key man insurance. For key man insurance, the business owns the policy and receives the payout if the insured dies during its term. This is so the business can use the funds to replace the person or continue operations.

For example, it’s common for a buy/sell agreement between co-owners of a small business to include key man insurance requirements for each partner. Key man life insurance can also be an important part of ensuring your business continues to operate if you pass unexpectedly and is even required for some Small Business Administration (SBA) loans.

“The SBA provides guaranteed business loans. They work with approved financial institutions like banks to lend money to businesses and the SBA guarantees these loans. With an SBA loan, you typically must obtain life insurance coverage, often term life with a coverage amount reflecting the size of the loan. This protects the bank if death occurs during the term of the loan through the use of a collateral assignment, a legal document that says the bank will get paid the remainder of the loan first. The term of the insurance should match the term of the loan.”

Mike Raines, Agent, Raines Insurance Group

However, beyond specific business life insurance policies…

It’s also important to maintain adequate life insurance for the benefit of your family, for all of the same reasons anyone may want a policy. Every business owner should consider what his family needs personally and what the business requires to continue without him.

“It’s important to understand that key person insurance is not a substitute for personal life insurance. While key person insurance can help cover the costs of locating and securing external governance, replacing lost revenues, or executing the terms of a buy-sell agreement, it will not be covering your family’s needs. For that, a small business owner will still need personal life insurance.”

Jennifer Fitzgerald, CEO, Policygenius

Voluntary Life Insurance Costs Tips

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Keeping life insurance costs down allows you to do various things, such as either buy more life insurance to cover your changing needs or invest the difference in other areas of your financial life. This is why understanding your biggest insurance priorities is imperative.

Here are three tips to consider when shopping for life insurance costs.

1. Check Affordability of Term and Permanent

Emily Johnson, Head of Product, Fabric Technologies

“Most people are shocked by what they can afford when it comes to life insurance. Sometimes, the shock is the result of great health ratings generating cheap rates. However, other times, it is because the person looking to buy is older or less healthy and faces unaffordable coverage. Find out where you stand so you can choose a policy that covers your priorities.

“You can now buy competitive term insurance policies without going through an agent through several companies with an online presence. Just check to make sure that the company you use is backed by an insurer with a solid rating from A.M. Best.”

2. Use Employer Benefits as a Start

Byron Ellis, Certified Financial Planner, United Capital Financial Life Management

“Employer group life often allows you to purchase 3 to 5 years of your salary in life insurance for pennies on the dollar. This is a great way to get some basic life insurance in place inexpensively while with the employer. Understand that most group plans only cover accidents and not illnesses, so you do want to look at private policies for long-term protection.

“Most group plans are priced in age bands. Typically, every 5 years or so, the cost goes up. This makes it look appealing when you first sign up, but the policy could end up costing you more over 10 or more years. For example, if you are 30 years old, you will most likely keep your coverage for 20 years or longer. You may find that a 20-year policy [purchased on your own] will end up being cheaper than your group coverage.”

3. Get a Free Medical Exam

Margaret M. Koosa, CEO, The Alchemists, Your Wealth Concierge

“In many cases, a quote is nothing more than an estimate based on your application that is finalized with a medical exam. Getting the medical exam before you shop rates in a ton of places is smart because you will get a copy of the results, and this can make it easier to compare rates among other carriers.

“Most underwriters require a medical exam of some sort, which may include height, weight, blood and urine samples, and other tests, depending on the age of the proposed insured. They will also review one’s personal medical history and request records from any physicians they have consulted. In addition, the health, longevity of one’s parents and siblings and, if applicable, cause of death may be considered.”

Voluntary Life Insurance Costs Frequently Asked Questions (FAQs)

Below are some of the most frequently asked questions about life insurance costs.

How do I find the best rates for life insurance?

Determine the amount of insurance you desire to cover your needs and then consider various term and permanent policies or a combination of the two. Get a baseline of costs and finalize which of the types of insurance best meet your needs and compare those among multiple carriers. Some carriers have better pricing for term compared to permanent.

Do group life insurance policies have lower rates than other policies?

Most group life insurance policies purchased through employee benefits are often priced much lower than private plans. These policies often allow employees to pick several years as a multiple to their salary for accidental death. While these are affordable starting policies, they are normally only accidental death and don’t cover death from illness.

Is a medical exam required to get life insurance?

Not every life insurance policy requires a medical exam. Group plans, children’s whole life insurance, and many final expense plans don’t require physical medical exams. There are also many term policies with death benefits not exceeding $250,000 that don’t require medical exams for those in good health and age 35 and younger.

Bottom Line

Across the board with every type of life insurance and every carrier, one thing is consistent: healthier and younger individuals have lower life insurance costs. Additionally, women are less expensive than their male counterparts to insure. Understanding how everything from your medical history to profession affects cost is important when shopping for life insurance that remains affordable.

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