Life insurance companies usually base their prices on your age and health status. Other factors determining the prices are your job, weight, and even your family health history. However, life insurance rates are not affected by your location.
When it comes to getting the most competitive rates, certain factors can influence the cost. Due to the varying factors, understanding the cost of your insurance coverage is critical.
So, in this article, we will cover the average life insurance cost per month in the United States and the factors that influence this cost.
What Is The Average Life Insurance Cost In the US?
In the United States, the average cost of life insurance is $27 per month. However, the cost of life insurance may vary significantly depending on the applicant, the insurer, and the policy type.
Life insurance premiums are calculated mainly on life expectancy. That is, the younger and healthier you are, the lower the cost of your insurance premiums will be.
Insurers often categorize applicants into super preferred, preferred, and standard categories. This risk classification helps insurers determine their insurance rate.
Types of Insurance Policies
To determine the life insurance cost precisely, we will see it for every category and type. To start, there are two types of life insurance policies:
● Permanent Life Insurance
● Term Life Insurance
There are significant differences in each type's growth and payout and the expenditures connected with each. So, we will see each one separately.
Permanent life insurance
Permanent life insurance is generally used for insurance policies that do not expire. Permanent life insurance combines a death benefit with a savings portion. The three primary types of permanent life insurance include whole life, universal life and variable life insurance.
1. Whole life insurance
It is important to note that whole life insurance is a long-term policy that will continue to pay out even if you die at any point in the future. This sort of coverage is assured to pay out at some point in the future, and the premiums will always remain constant.
It is frequently used to pass on inheritances; however, it may be prohibitively expensive. The average cost of whole life insurance is $52 per month.
2. Universal life insurance
It is more versatile than whole life insurance as it gives you the flexibility to adjust the benefit amount and monthly payment to meet your changing requirements over time.
Furthermore, it is guaranteed to payout and has a monetary value, much like whole life insurance. The average monthly cost of this insurance type is $55 per month.
3. Variable life insurance
Variable life insurance, like universal and whole life insurance, has the added benefit of providing cash value. However, since this sort of permanent life insurance is invested in the stock market, it is a little riskier. The average monthly cost of this is $40 every month.
Term life insurance
Term life insurance is a less expensive option and is typically recommended for young parents who only want to ensure that their family's financial obligations are met in the event of their death.
It provides enough coverage for a specified period, typically between 10 and 30 years. The average cost for this insurance is $53.
It is worth noting here that the insurance becomes void when the specified number of years has elapsed.
Factors that Insurers Consider While Determining Rate
Each insurer has its own review procedure, and each considers criteria in a different way than the others. That is why it is good to compare rates from several different insurance companies.
The following are the primary factors that insurers consider when determining your rate:
Age
In general, younger individuals pay less for life insurance than older ones. It is because, as you get older, your life expectancy decreases, increasing the possibility that your insurer may be required to pay out on your policy.
Hence, purchasing life insurance as soon as possible is recommended. The longer you wait, the more your premiums will climb merely based on your age.
Gender
In part since women live longer lives than men of the same age and health, women will nearly always pay less than males of the same age and health.
Smoking Status
Your cigarette use status also determines the insurance cost per month. Life insurance for smokers is often more costly than for non-smokers. It is because smokers are at greater risk of having health problems such as lung illness.
Your overall health and well-being
It covers any pre-existing diseases and your blood pressure and cholesterol levels, among other factors. In addition, insurers will take your height and weight into consideration.
Medical history
If you have a family history of significant health concerns like heart disease, cancer, or diabetes, your insurance company may inquire about it.
Driving records
If you have a criminal record, including DUIs, DWIs, and other serious traffic violations, your insurer may classify you as a high-risk life insurance applicant and charge you a higher cost.
Occupation and Hobbies
Those that are dangerous or high-risk, such as a police officer working on the bomb squad or a racing car driver, might expect to be paid more than less hazardous jobs. Additionally, you may be subject to a higher insurance rate if you engage in high-risk hobbies such as skydiving.
Factors Not Affecting your Insurance Rate
Neither of the following criteria has an impact on the rate you are offered:
Ethnicity or Race
While insurers consider your age and gender, they are not permitted to discriminate on the basis of these aspects of diversity.
Marital status
Your marital status is essential. Many motor insurance firms charge different prices for married applicants, while life insurance companies do not.
Number of policies
The number of life insurance policies you currently hold doesn't affect your insurance rate. Just keep in mind that you'll have to provide a compelling argument for acquiring significant amounts of coverage across many plans.
Beneficiaries
There is no limit to the number of beneficiaries you may designate. Whether you have one life insurance beneficiary or five beneficiaries; your rate will remain the same.
Take Away
Insurance may be a wise financial decision to help you hedge your risks and offer security for your loved ones in the event of your death while the policy is still in effect.
Due to the fact that life insurance policies are a significant investment and commitment, it is critical to conduct research before making a decision. Doing this will ensure that the company you choose has a strong track record and you don’t lose your money.