Average Cost of $500,000 Life Insurance in March 2023

Insurers commonly offer a $500,000 life insurance policy, but you can buy life insurance in various coverage amounts. Not all $500,000 insurance policies are alike, and some are cheaper than others or offer better coverage. MoneyGeek broke down the different kinds of life insurance available in the market and factors that affect their cost.

• How Much Is $500k Life Insurance?
• Cost by Term Length
• Cost by Age
• Cost if You Smoke or Are in Poor Health
• Cost of Permanent Coverage
• $500k Insurance With No Exam
• Is $500k Right for You?

Rates for life insurance are calculated based on the insured’s age, health profile, lifestyle, driving record and other factors. Policy details like term length and coverage amount also affect premiums.

A 40-year-old with excellent health buying $500,000 life insurance with a 10-year term will pay $18.44 per month on average. The same individual will pay approximately $24.82 per month for a 20-year term.

The term length of your life insurance is the number of years the insurance company will cover you. If you die within that period, the insurer will pay a death benefit to your beneficiary. The most common term length is 20 years, but 10, 15 and 30 years are also common.

MoneyGeek found that Transamerica offers the lowest premiums for $500,000 life insurance. Prudential has the most expensive options for the same amount of coverage.

We broke down the average cost of a $500,000 life insurance policy for various term lengths on the table below.

Age is the most critical factor that affects the cost of life insurance since insurance companies consider it the most significant risk determinant. People typically buy life insurance in their 40s, but it’s generally better to purchase a policy at a younger age to lock in a lower premium.

On average, a 20-year term life insurance policy costs $24.82 per month for a 30-year-old person, while a 50-year old buying the same policy would pay $92.27 per month.

In addition, a longer term length also makes life insurance more expensive. A 40-year-old person buying a 20-year term life insurance policy would pay $36.91 per month on average, but they’d have to pay $61.75 per month for a 30-year policy.

Health is an essential factor that insurance companies consider when pricing their policies. Generally, an unhealthy person is riskier to insure because they have a higher chance of dying early.

Because smoking may lead to health problems and early deaths, it's much riskier for insurers to provide life insurance for smokers. A person’s lifestyle and health profile also affect their life insurance rates.

On average, a 20-year term life insurance policy costs $87.71 per month for a smoker, while a person with a high body mass index (BMI) may have to pay $36.82 per month for the same policy.

Permanent life insurance policies don’t expire, but they can cost up to 20 times more than term life insurance policies on average. Whole life, universal life and guaranteed issue are the most common types of permanent life insurance.

Because such policies are guaranteed to pay beneficiaries provided premiums are up to date, they are more expensive than term life insurance.

People buy permanent life insurance to provide lifetime financial protection for their loved ones and supplement their retirement assets. Whole life insurance offers death benefit coverage and savings for the policyholder’s entire life.

Similarly, universal life insurance grants death benefit coverage, but it’s riskier. With this type of insurance, you can customize your coverage amount, monthly premiums, and the way your savings will be invested based on your preference or financial situation.

Meanwhile, a guaranteed issue policy is a type of permanent life insurance that doesn’t require a medical exam designed for people with severe health conditions.

Instant life insurance is a new and affordable kind of life insurance that doesn’t require medical examinations. Applying for a policy is convenient, as the process can be done online, and you’ll receive an immediate response from the insurer.

It’s also relatively cheap compared to similar no-exam policies — a $500,000 instant life insurance policy on average costs about the same as a traditional policy.

To apply, you visit the company’s website and fill out personal, contact, health and lifestyle information. The insurer will then collect your health and lifestyle data, including your prescription, driving, and medical records. An algorithm will calculate your risk of dying early, and within minutes, the company can either approve, decline or refer your application to an underwriter.

Unlike a guaranteed or a simplified-issue policy — both of which do not require medical exams — an instant life insurance policy doesn’t require a two-year waiting period. It’s also often a more affordable option.

If you’re looking to get life insurance with a $500,000 coverage limit, instant life insurance is one of the most feasible options. Remember that instant life insurance is only available to certain age groups and people who fit into specific health parameters.

Ethos, Jenny Life and Haven Life offer instant life insurance.

Your life insurance coverage amount should be 10 to 12 times your annual salary as a rule of thumb. This amount of coverage gives your dependents financial protection in case of your untimely death. Of course, the ideal amount for you will vary based on your financial and family situation.

If you’re buying a $500,000 life insurance policy, you should consider any unpaid debt, your burial cost and your family’s everyday expenses. It also makes sense to consider future costs, such as your children’s college tuition.

While $500,000 is the most popular coverage amount, you can always buy increased or decreased coverage depending on your needs and circumstance.

We answered some frequently asked questions about $500,000 life insurance to help you decide if it’s right for you.