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

A $500,000 life insurance policy can help your family live a stable and financially-secure life when you are gone. The death benefit they’ll receive can cover funeral fees, unpaid debts and day-to-day expenses. It’s a good idea to shop around and find the best deals before buying a policy.

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Last Updated: 11/17/2022
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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.

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Key Takeaways

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The cost of a $500,000 life insurance varies depending on the applicant’s profile and coverage details.

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You can buy life insurance without medical exams. These policies can be cost more (like guaranteed and simplified issue) or have limited availability (instant life insurance).

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Your coverage amount should be enough to pay your unpaid debts, burial costs and your dependent’s expenses. Ideally, this is 10 to 12 times your annual salary.

How Much Is a $500,000 Life Insurance Policy?

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.

Winner: Cheapest $500,000 Life Insurance

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MoneyGeek Top Pick
Transamerica

MoneyGeek’s research reveals that the most affordable provider of $500,000 life insurance is Transamerica. They are one of the biggest life insurance companies in the U.S., and they provide term, whole and universal life insurance policies. On average, their 20-year policy costs $18.28 per month.

  • MoneyGeek Score: 80
  • J.D. Power Rating: 736.4
  • AM Best Rating: A
  • Average Policy Cost (20-Year Term, $500k Coverage): $18.28 per month

Runner-Up: Cheapest $500,000 Life Insurance

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MoneyGeek Top Pick
Nationwide

Nationwide is the second-most-affordable life insurance provider among the companies we surveyed. They are a leading insurance company and offer a range of financial products in the U.S. In addition to life insurance, they provide riders to personalize and improve a policy. The average cost of their $500,000 life insurance policy is $21.22 per month.

  • MoneyGeek Score: 88.6
  • J.D. Power Rating: 785.5
  • AM Best Rating: A+
  • Average Policy Cost (20-Year Term, $500k Coverage): $21.22 per month

Average Cost of a $500,000 Term Life Insurance Policy by Term Length

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.

Average Monthly Rates for $500,000 Coverage for Different Term Lengths

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  • Company
    10-Year Term
    15-Year Term
    20-Year Term
    30-Year Term
  • Transamerica
    $12.47
    $13.98
    $18.28
    $29.03
  • Nationwide
    $14.66
    $21.22
    $35.00
  • Mass Mutual
    $14.77
    $16.98
    $21.76
    $34.38
  • Mutual of Omaha
    $14.82
    $19.14
    $22.15
    $32.69
  • AAA
    $17.82
    $22.22
    $23.10
    $32.34
  • State Farm
    $22.62
    $25.24
    $38.07
  • Progressive
    $22.62
    $26.54
    $31.98
    $45.24
  • Prudential
    $27.74
    $31.49
    $34.82
    $42.73

Average Cost of a $500,000 Term Life Insurance Policy $500,000 by Age

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.

Average Monthly Rates for $500,000 Coverage for Different Ages

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  • Age
    10-Year Term Average Cost
    15-Year Term Average Cost
    20-Year Term Average Cost
    30-Year Term Average Cost
  • 30
    $18.44
    $21.72
    $24.82
    $36.18
  • 40
    $24.80
    $29.53
    $36.91
    $61.75
  • 50
    $55.28
    $74.77
    $92.27
    $160.53
  • 60
    $137.14
    $194.37
    $250.93
  • 70
    $397.84
    $600.19
    $1,174.55

Average Cost of $500,000 Term Life if You Smoke or Are in Poor Health

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.

$500,000 Monthly Rates for Smoking, Low-Health & High-BMI Individuals

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  • Criteria
    10-Year Term Average Cost
    15-Year Term Average Cost
    20-Year Term Average Cost
    30-Year Term Average Cost
  • Smoke
    $62.99
    $76.22
    $87.71
    $148.23
  • Poor Health
    $29.26
    $35.40
    $40.59
    $68.60
  • High BMI
    $26.88
    $32.53
    $36.82
    $62.22
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MONEYGEEK EXPERT TIP

The coverage amount of your life insurance policy is the amount of money paid out to your beneficiary or beneficiaries if you die. You have several options when it comes to the way your death benefit will be paid. These include lump-sum payments, installments and retained asset accounts.

Insurers offer various coverage amount options, and a $500,000 life insurance policy is just one of them. Your financial and family situation will determine the amount of coverage you need. If you’re the breadwinner in your family or carry a lot of debt, buying life insurance will help ensure that your dependents won’t face financial hardship if you pass away.

Average Cost of a $500,000 Permanent Life Insurance 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.

Annual Life Insurance Cost of Permanent Vs. Term Life Insurance ($500,000 Coverage)

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Term Life Insurance

30-Year-Old Male Policyholder

$317
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Permanent Life Insurance

30-Year-Old Male Policyholder

$6,127
Permanent life insurance premiums are on average:$5,810 more

This is 1833% more expensive.

$500,000 Life Insurance With No Medical Exam

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.

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INSTANT LIFE INSURANCE

Sometimes, insurance companies allow young and healthy applicants to forgo medical exams when applying for life insurance. They’ll only ask a few health and lifestyle-related questions. They may provide approval within minutes, but it doesn’t always happen.

Is a $500,000 Life Insurance Policy Right for You?

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.

Life Insurance FAQs

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

About the Author


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Mark Fitzpatrick is a senior content manager with MoneyGeek specializing in insurance. Mark has years of experience analyzing the insurance market and creating original research and content. He graduated from Boston College with a Bachelor of Arts and Johns Hopkins University with a Master of Arts.