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A $500,000 life insurance policy may provide enough coverage to take care of your family and expenses such as a mortgage or your child’s college expenses if you die unexpectedly.
The cost of life insurance is often overestimated, so don’t assume you can’t afford a $500,000 life insurance policy without getting a life insurance quote first. You may find that your $1 million life insurance policy costs much less than you expected.
How much does a $500,000 term life insurance policy cost?
After analyzing term life insurance quotes with $500,000 coverage, we found the following:
- The average cost of a 10-year, $500,000 term policy is $200 per year.
- The average cost is about $275 per year over a 20 year period. This is if she took out life insurance in her 30s in good health, including being a non-smoker.
Your own life insurance quote will depend on your age, health, and other factors that affect life insurance quotes. However, analyzing the average cost of a $500,000 life insurance policy gives you a basic idea of expected payouts.
Related:
Average Cost of $500,000 Term Life Insurance by Age and Gender
Average annual cost of a $500,000 term life policy for 10 years
Average annual cost of a $500,000 term life policy for 15 years
Average annual cost of a $500,000 term life insurance policy for 20 years
Average annual cost of a 30-year, $500,000 term life policy
Buying younger means lower life insurance costs
Age is one of the important factors in the cost of life insurance. Life insurance premiums increase with age. Also, if you are waiting to buy life insurance, you are at risk of developing health conditions that cause higher estimates.
To get the best life insurance quote, buy coverage as soon as the need arises.
An analysis of the cost of a $500,000 term life policy found that taking out insurance in your 30s can save you a lot of money. If he waits until his 50s or 60s to purchase a 20-year term policy, he will pay significantly more than if he purchased the policy at a younger age.
- If instead of buying at age 30, holding out until age 40 and taking out a 20-term, $500,000 life insurance policy, estimates increase by 36% for men and 33% for women.
- Waiting until age 50 increases costs by 212% for men and 176% for women compared to age 30.
- Holding out until age 60 (instead of buying at age 30) increases costs by 740% for men and 610% for women. For men, the annual rate is over $2,500 at age 60 ($300 at age 30) and closer to $1,800 for women, compared to just $250 at age 30.
The effect of gender on the cost of a $500,000 life insurance policy
Life insurance quotes show that gender is also a big issue for life insurers. Men usually pay more for insurance because they don’t live as long as women.
Our analysis shows that men of all ages have higher estimates for a $500,000 life insurance policy compared to women. The cost difference varies with age.
For example, looking at a $500,000 20-year term life insurance policy, here’s how gender affects the price.
- At age 30, men make 19% more than women, about $50 a year more.
- At age 40, men are 21% more expensive than women, or $72 more for the year.
- At age 50, men are paying 34% more than women, an additional $240 a year.
- At age 60, men earn 41% more than women, $732 a year more.
$500,000 life insurance cost by term
Purchasing term life insurance with a longer level term will result in more payouts but will be fixed at a longer rate. Level terms are locked at a fixed annual rate such as 10, 20 or 30 years is the number of years to
Once the leveling period is over, you can usually renew your policy annually, but you are likely to face very high fees with each renewal, which can make the cost unaffordable.
Buying term life insurance for the right duration upfront will save you money in the long run as it locks in your costs for a period of time.
Here we compare the premiums for different terms of a $500,000 life insurance policy for a 30-year-old man and a woman.
Average annual cost of a $500,000 life insurance policy by term
Our analysis found that:
- Moving from 10 to 15 years increases rates by 11% for men and 20% for women.
- Upgrading from 10 to 20 years increases rates by 39% for men and 40% for men.
- Both men and women can double the term of whole life insurance (10 to 20 years) without even increasing the premium by 50%.
- To triple the time from 10 to 30 years, men pay 105% more and women pay 87% more.
$500,000 Cost by Life Insurance Coverage
We analyzed the cost of a $500,000 term insurance policy compared to other policy amounts.
Getting estimates for various life insurance payments can help you decide if a $500,000 life insurance policy fits your budget.
Average Annual Cost of 20-Year Term Life Insurance by Amount
I found the following:
- Changing from a $500,000 to a $750,000 policy costs men 32% and women 14%.
- Increasing coverage from $500,000 to $1 million does not double the cost of life insurance. It costs only 60% more for men and 38% more for women to double the coverage.
- Increasing the $500,000 to $2 million policy quadruples the death benefit, but does not quadruple the cost of life insurance. Men pay 192% more and women pay 148% more.
Tips for buying $500,000 life insurance
If you are looking at the cost of a $500,000 life insurance policy, first make sure that $500,000 meets your life insurance needs.
Determine what debts and other obligations your family will have if you are gone. Your financial review should include credit card balances, car loans, mortgages, and other financial obligations. Decide whether to provide additional life insurance money to cover lost income, college tuition, and funeral expenses.
Once you know how much life insurance you need, it’s time to think about the length of the policy.
Term insurance is good for covering eventual obligations, such as the time until retirement. If you want protection no matter how long you live, consider whole life or universal life insurance. A financial advisor or life insurance agent can also help identify the best coverage and type of insurance.
Don’t be surprised if the application process requires a life insurance medical examination. Life insurance companies often request tests to better understand your health. No-test life insurance is becoming more widely available, but you may not be eligible if you are not in good health.
Finally, check the financial strength rating of the life insurance company you are considering. Rating agencies such as AM Best and Standard and Poor’s analyze a company’s finances and produce financial strength ratings that indicate an insurer’s ability to pay claims. A company’s financial strength is particularly important because life insurance may not pay until decades after it is purchased.
methodology
We analyzed term life insurance premium rates in healthy nonsmokers of average height and weight. I averaged his 4 cheapest quotes I found online. Your rate will depend on your age, health, driving history and other factors.
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