How Much Is A $500,000 Life Insurance Policy? – Forbes Advisor

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A $500,000 life insurance policy may provide enough coverage to take care of your family and expenses like mortgage and kid’s college costs if you die unexpectedly.

The cost of life insurance is often overestimated, so don’t assume that you can’t afford a $500,000 life insurance policy without first getting life insurance quotes. You may even find the cost of a $1 million life insurance policy to be much less than what you expected.

How Much Does a $500,000 Term Life Insurance Policy Cost?

We analyzed term life insurance quotes for policies with $500,000 in coverage and found:

  • The average cost for a 10-year, $500,000 term life policy is $200 a year.
  • The average cost is around $275 a year for a 20-year term—if you buy life insurance in your 30s while in good health, including being a non-smoker.

Your own life insurance quotes will differ depending on your age, health and other factors affecting life insurance quotes. However, our analysis of average costs for $500,000 in life insurance gives you a basic idea of ​​how much you can anticipate paying.

Related:

$500,000 Term Life Insurance Average Costs by Age and Gender

Average annual costs for a 10-year, $500,000 term life insurance policy

Average annual costs for 15-year, $500,000 term life insurance policy

Average annual costs for 20-year, $500,000 term life insurance policy

Average annual costs for 30-year, $500,000 term life insurance policy

Buying Younger Means Lower Life Insurance Costs

Age is one important factor in the cost of life insurance. Life insurance quotes will go up each year as you get older. Also, you risk developing a health condition that will cause higher quotes if you’re waiting to buy life insurance.

To get the best life insurance quotes, buy coverage as soon as the need arises.

Our analysis of $500,000 term life insurance costs finds substantial savings if you buy coverage while in your 30s. Waiting until your 50s or 60s to purchase a 20-year term life policy results in paying much more than if you buy coverage at a younger age:

  • If you hold out until age 40 to buy a 20-term $500,000 life insurance policy instead of buying at age 30, quotes go up 36% for males and 33% for females.
  • If you wait until age 50, the costs increase 212% for males and 176% for females compared to a 30-year-old.
  • Holding out until age 60 (instead of buying at age 30), the cost increases by 740% for males and 610% for females. For males, the annual rate is over $2,500 at age 60 (compared to $300 at age 30), and for females, nearly $1,800 compared to only around $250 at age 30.

How Gender Affects the Cost of $500,000 Life Insurance

Life insurance quotes show that gender is also a big deal to life insurance companies. Males typically don’t live as long as females, so men pay more for their policies.

Our analysis shows that males at every age will get higher quotes for $500,000 life insurance policies compared to females. The difference in costs fluctuates as they age.

For example, looking at a $500,000, 20-year term life insurance policy, here is how gender affects rates:

  • At age 30, males pay 19% more than females, nearly $50 more annually.
  • At age 40, males pay 21% more, which calculates to $72 more annually than females.
  • At age 50, males pay 34% more than females, an extra $240 annually.
  • At age 60, males pay 41% more, which comes in at $732 more annually than females.

$500,000 Life Insurance Costs by Term Length

Buying a term life insurance policy with a longer level term period means you’ll pay more, but you lock in a longer rate. The level term period is the number of years you’ll lock in a steady annual rate, such as 10, 20 or 30 years.

When the level term period ends you can typically renew the policy every year, but you’ll likely face much higher rates with each renewal, and the cost may become unaffordable.

Buying the right term life insurance length up-front will save you money in the long run by locking in your costs for the level term period.

Here we compare costs for various lengths of policies for a $500,000 life insurance for a 30-year-old male and female.

Average annual costs by term length for a $500,000 life insurance policy

Our analysis found that:

  • Moving from a 10-year term to a 15-year term raises rates 11% for males and 20% for females.
  • Upgrading from a 10-year term to a 20-year term raises rates 39% for males and 40% for males.
  • Both genders can double the length of the term life policy (from 10 to 20 years) and not even pay 50% more for the policy.
  • To triple the time from 10 years to 30 years, males pay 105% more and females pay 87% more.

$500,000 Life Insurance Costs by Coverage Amount

We analyzed costs for $500,000 term life policies compared to other coverage amounts.

Getting quotes for various life insurance payout amounts can help you decide if a $500,000 life insurance policy will fit your budget.

Average annual costs by coverage amount for 20-year term life insurance

We discovered that:

  • Moving up to a $750,000 policy from $500,000 costs 32% more for males and 14% for females.
  • Increasing your coverage amount from $500,000 to $1 million doesn’t double your life insurance costs. It costs only 60% more for males and 38% for females to double the coverage.
  • Moving way up from $500,000 to a $2 million policy gives you four times the death benefit but doesn’t quadruple the life insurance costs. Males pay 192% more and females 148% more.

Tips on Buying $500,000 Life Insurance

When you’re looking at $500,000 life insurance costs, first make sure that $500,000 meets your life insurance needs.

Determine what debts and other obligations your family would have if they no longer had you around. Your review of finances should include credit card balances, car loans, your home’s mortgage and other financial obligations. Decide if you want to provide additional life insurance money to cover lost income, college tuition and funeral expenses.

Once you know how much life insurance you need, think about how long the policy should last.

Term life insurance is good for covering obligations that have a definitive end, such as the years until you retire. If you want coverage no matter how long you live, consider whole life insurance or universal life insurance. A financial advisor or life insurance agent can also help you pinpoint the best coverage amount and policy type.

Don’t be surprised if a life insurance medical exam is required for the application process. Life insurance companies often require an exam so that they can get a detailed picture of your health. No-exam life insurance policies are becoming more widely available, but if you aren’t in excellent health, you may not qualify.

Finally, check the financial strength ratings of the life insurance companies you are considering. Ratings agencies such as AM Best and Standard and Poor’s analyze financial company and create financial strength ratings that indicate an insurer’s ability to pay its claims. Because life insurance may not pay out until the decades after you buy it, a company’s financial strength is especially important.

Methodology

We analyzed term life insurance rates for healthy non-smokers of average height and weight. We averaged the four cheapest quotes we found online. Your own rates will be different depending on your age, health, driving record and other factors.

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