How Much Is a $500,000 Life Insurance Policy? (September 2024)


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The average cost of life insurance for a $500,000 term policy is $29 per month. This coverage offers more than just funeral expense relief — it can also cover mortgage payments, educational costs and daily living expenses for years.

Although many insurers offer this policy, costs and benefits can vary. MoneyGeek broke down the different kinds of life insurance available in the market and the factors that affect their cost.

Key Takeaways

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A $500,000 life insurance policy costs an average of $29 monthly for a 10-year term and $44 for a 20-year term.

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Various factors affect the cost of $500,000 life insurance policies, including age, gender, term length, coverage details and insurance provider.

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Your coverage amount should be enough to pay your unpaid debts, burial costs and dependent's expenses — about 10 to 12 times your annual salary.

Why Trust MoneyGeek? We analyzed 1,488 life insurance quotes to determine the average cost of a $500,000 life insurance policy for a variety of buyer profiles.

Rates and company information for life insurance providers are recent as of 2023.

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

Life insurance companies determine the cost of life insurance based on the insured's age, gender, health profile, lifestyle and other factors. Policy details, including term length and coverage amount, also affect life insurance costs.

For instance, the average monthly cost of a $500,000 life insurance policy with a 10-year term for a 40-year-old in excellent health is $29. The average monthly cost of life insurance for a 20-year term for the same individual is approximately $44.

Understanding factors insurance companies consider when evaluating life insurance rates can help you find the most suitable policy for your financial circumstances and coverage needs.

Factors Affecting Life Insurance Rates

Life insurance policy prices vary significantly from person to person due to certain determining factors, each of which shapes the life insurance price you're offered. Here’s a breakdown of the main elements that influence your life insurance rates:

  • Age: Typically, the younger you are, the lower your monthly life insurance cost. This is because younger individuals are considered less risky to insure than older ones.
  • Health: The applicant’s health is a key determinant in life insurance estimates. Healthier individuals get more favorable rates due to their lower risk profile.
  • Lifestyle: Risky lifestyles, such as engaging in extreme sports or having a hazardous job, can elevate your life insurance cost per month. Insurers assess these risks and adjust the price of life insurance accordingly.
  • Term Length: The duration of the policy affects the cost of $500,000 life insurance. Longer terms tend to have higher overall costs since they provide extended coverage.
  • Type of Insurance: The cost of permanent life insurance is usually higher than term life because it covers the insured for their entire life and often builds cash value.
  • Smoking Status: Smokers will likely face higher average life insurance prices due to the significant health risks associated with tobacco use. This can significantly affect the monthly cost of life insurance.
WHAT FACTORS DON'T AFFECT LIFE INSURANCE RATES?

While certain details significantly impact the monthly cost of life insurance, it's equally important to recognize what shouldn't influence your rates:

  • Ethnicity, Race and Sexual Orientation: Life insurance companies do not consider ethnicity, race or sexual orientation when determining rates, ensuring fairness and equality in policy pricing.
  • Number of Beneficiaries Named: The number of life insurance beneficiaries you choose does not affect the life insurance premiums.
  • Credit Score: Depending on your state, your credit score may not impact the cost of $500K life insurance or any other policy amounts.
  • Marital Status: Whether you are married, single or divorced does not influence the rate for life insurance you are offered.
  • Existing Life Insurance Policies: Holding other life insurance policies will not directly affect the rates of a new policy you are applying for.

Understanding the factors that do not typically affect life insurance rates can help guide your expectations and decisions when comparing life insurance policy amounts and payment options.

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

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

On average, a 10-year, $500K term life insurance policy costs $20 per month for a 30-year-old. Similar life insurance coverage for a 50-year-old would cost $65 per month.

In addition, a longer-term length also makes life insurance more expensive. A 30-year-old person buying a 10-year term life insurance policy would pay $20 per month on average, but the average cost of a 20-year term life insurance is $28 per month.

Use the table to compare the cost of life insurance by age and see how monthly premiums differ across age groups from 30 to 70.

$500K Average Cost by Age
Data filtered by:Results filtered by:
Gender:
Gender:M
Term Length:
Term Length:10-Year Term
30$20
40$29
50$65
60$141
70$410
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LIFE INSURANCE FOR SENIORS

For seniors, average life insurance rates can significantly rise as the applicant ages. This increment is primarily due to the higher risk associated with insuring older individuals, who are statistically closer to the life expectancy age and more likely to have health issues.

For example, the average life insurance premium for a 10-year term policy for a 60-year-old may be around $141 per month. In contrast, a 70-year-old purchasing the same $500K life insurance policy could see rates as high as $410 per month. This stark increase highlights how life insurance premiums vary by age and underscores the importance of securing a policy earlier in life, if possible.

Understanding these cost dynamics is vital for seniors evaluating their life insurance options, particularly those considering life insurance monthly payment plans.

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. Companies typically offer term lengths ranging from 10 to 30 years.

Your policy's term length will affect your life insurance rates. Shorter terms, like a 10-year life insurance plan, will have lower rates. Choosing a longer term, like a 20-year term, will result in higher premiums. The insurer agrees to a longer coverage duration. The likelihood of a claim also increases.

In the life insurance chart below, we've broken down the average monthly cost of a $500,000 life insurance policy for various term lengths.

$500K Average Cost by Term Length
Data filtered by:Results filtered by:
Gender:
Gender:M
10-Year Term$29
20-Year Term$44
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WHAT IS PERMANENT LIFE INSURANCE?

People buy permanent life insurance to provide lifetime financial protection for their loved ones and supplement their retirement assets. Whole life, universal life and guaranteed issue are the most common types of permanent life insurance:

  • Whole life insurance offers death benefit coverage and savings for the policyholder’s entire life.
  • Universal life insurance grants death benefit coverage but is riskier. With this type of insurance, you can customize your coverage amount, monthly premiums and how your savings will be invested based on your preference or financial situation.
  • Guaranteed-issue is a type of permanent life insurance that doesn’t require a medical exam designed for people with severe health conditions.

Permanent life insurance policies don’t expire, but they can cost up to 20 times more than term life insurance policies on average. This is because such policies are guaranteed to pay your beneficiaries, provided premiums are up to date.

Average Cost of a $500,000 Term Life Insurance Policy for Smokers and Health Conditions

Insurance companies consider health an essential underwriting factor when pricing their policies. Generally, a person with poor health is riskier to insure because they have a higher chance of dying early.

Because smoking may lead to health problems and early death, 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 $44 monthly for a healthy, nonsmoking adult. The average cost of the same policy for a smoker is $102, while a person with poor health may have to pay $53 monthly.

Below is a table highlighting the average monthly costs of a $500,000 term life insurance plan for smokers.

$500K Average Cost for Smokers
Data filtered by:Results filtered by:
Gender:
Gender:M
10-Year Term$68
20-Year Term$102

The table below shows the average monthly cost of life insurance with a $500,000 coverage amount for people with a health condition.

$500K Average Cost With a Health Condition
Data filtered by:Results filtered by:
Gender:
Gender:M
10-Year Term$36
20-Year Term$53
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HOW LIFE INSURANCE POLICIES WORK

Your life insurance policy's coverage amount is the amount paid out to your beneficiary or beneficiaries if you die. You have several options when it comes to how your death benefit is disbursed. 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 your dependents won't face financial hardship if you pass away.

Average Cost of a $500,000 Life Insurance Policy With No Medical Exam

Obtaining $500K life insurance with no medical exam offers a convenient option for those seeking quick coverage without the hassle of a health assessment. However, the rates for such policies can vary significantly between companies. For a 10-year policy length, the average cost for male policyholders typically ranges from $51 to $78 per month, while for female policyholders, it spans from $41 to $55 per month.

The average monthly life insurance cost increases when factoring in a longer term, such as a 20-year policy. For males, the cost ranges from $76 to $105, and for females, it ranges from $59 to $81.

The table below shows the average life insurance prices from companies offering no medical exam policies.

$500K Average Cost With No Medical Exam
Data filtered by:Results filtered by:
Gender:
Gender:M
Age:
Age:31-40
Term Length:
Term Length:10
AAA$5110
Mutual of Omaha$5210
Fidelity$6510
Haven$7810
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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, depending on your profile.

How to Save Money on Life Insurance

Life insurance can be an important financial safety net, but it does not have to break the bank. Certain strategies can significantly reduce your monthly life insurance cost and help you secure affordable protection.

  1. 1
    Buy Early

    Life insurance costs vary by age. Purchasing a policy when you're younger can lock in lower rates, as insurers see less risk in insuring younger, healthier individuals. Starting young can lead to substantial savings over the life of the policy.

  2. 2
    Opt for Term Life Insurance

    If cost is a major concern, choosing a term life policy can be much more affordable than a permanent one. The average term life insurance cost is significantly lower than permanent life insurance policy costs because it does not accumulate cash value and only provides coverage for a specified period.

  3. 3
    Maintain a Healthy Lifestyle

    Regular exercise, a healthy diet and avoiding risky behaviors like smoking can improve your health classifications with insurers, thus reducing the average price of life insurance you pay each month.

  4. 4
    Shop Around

    Do not settle for the first quote you receive. Comparing prices for life insurance from various providers can help you find the best rate for the coverage you need. Use online tools and consult with independent agents to get a broad range of life insurance quotes.

  5. 5
    Adjust Your Coverage

    Evaluate your actual life insurance needs periodically. You might be paying for more coverage than necessary. Reducing the death benefit or adjusting the terms of your policy can lower your monthly premium while still providing adequate protection.

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LIFE INSURANCE TERMS YOU SHOULD KNOW

Understanding key life insurance terms can help you navigate your options and ensure you select the right coverage for your needs. Here are some important terms to know:

  • Beneficiary: The person or entity designated to receive the death benefit from a life insurance policy upon the insured's death.
  • Premium: The payment required to keep the life insurance policy active. This is typically quoted as a monthly cost.
  • Death Benefit: The amount paid to the beneficiary when the insured person passes away, which is pivotal in family financial planning.
  • Underwriting: The process by which an insurer evaluates the risk of insuring a potential policyholder.
  • Rider: An addition to a standard insurance policy that provides additional benefits at an extra cost, often necessary to tailor a policy to specific needs.

Cheapest $500,000 Life Insurance Policy Companies

Transamerica offers the cheapest 10-year, $500K term policies. Its average monthly premiums are $15 for female adults and $17 for male adults. Allstate provides the second most affordable policies, averaging $17 for females and $18 for males.

You can obtain a $500,000 life insurance policy from various insurance providers online and through traditional channels. You can also consult financial advisors or use online comparison tools to find the best life insurance rate and coverage options.

The table below compares average monthly premiums from different companies. These rates are for a 10-year term life insurance policy with $500,000 in coverage.

Cheapest $500K Term Life Insurance Companies & Rates
Data filtered by:Results filtered by:
Gender:
Gender:M
Transamerica$17
Allstate$18
GEICO$19
Protective$20
Nationwide$22
AAA$25
Mutual of Omaha$26
State Farm$31
Fidelity$32
Prudential$32
Haven$38
Bestow$48
Progressive$52
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BUYING LIFE INSURANCE ONLINE

An online life insurance policy can be a good option for people looking for no-hassle life insurance quotes. These policies allow you to compare and purchase coverage quickly, streamlining the buying process. However, not all types of policies are available online.

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

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

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

Although $500,000 is the most popular coverage amount, you can always buy more or less coverage depending on your needs and circumstances. Use MoneyGeek's free calculator below to estimate how much life insurance coverage is adequate for your situation.

How Much Life Insurance Do You Need?

Answer three simple questions to get your recommended coverage amount.

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FAQ: $500,000 Life Insurance Costs

We answered some frequently asked questions about $500,000 life insurance plans and life insurance pricing to help you decide if these policies are right for you.

How does a $500,000 life insurance policy work?

Is a $500,000 term life insurance policy enough for me?

Do companies offer $500,000 life insurance policies with no medical exam?

How much is a $500,000 life insurance policy?

How much is a $500,000 life insurance policy for a 60-year-old man?

How much life insurance do I need?

How much is life insurance for a 65-year-old man?

Do men or women pay more for life insurance?

What is the cheapest life insurance?

Is life insurance expensive?

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About Mark Fitzpatrick


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Mark Fitzpatrick is a Licensed Property and Casualty Insurance Producer and MoneyGeek's Head of Insurance. He has analyzed the insurance market for over five years, conducting original research and creating personalized content for every kind of buyer. He has been quoted in several insurance-related publications, including CNBC, NBC News and Mashable.

Fitzpatrick earned a master’s degree in economics and international relations from Johns Hopkins University and a bachelor’s degree from Boston College. He is passionate about using his knowledge of economics and insurance to bring transparency around financial topics and help others feel confident in their money moves.