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What is the Cost of Life Insurance

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The cost of life insurance varies depending on the type of insurance you purchase and the amount of coverage you need. Other factors, such as your age, health status and lifestyle, can also affect the cost of life insurance.

What Does Life Insurance Cost?

According to CNN Money, an average estimated cost for a healthy 40-year-old male to buy a 20-year term life insurance policy with a $500,000 death benefit is around $350 per year. A 20-year term life insurance policy will pay the $500,000 death benefit if the man dies any time before he turns 60 years old. Life insurance for women of the same age may be less, since women are statistically more likely to outlive men.

The average cost to purchase a whole life insurance policy with a cash value component for the same health 40-year-old man is around $3,000 per year. This additional cost accounts both for the fact that whole life insurance pays a death benefit no matter when you die, not just if you die during the term. In addition, whole life insurance policies have a cash value or an investment component. The premiums are more than it actually costs to insure you, and that additional monthly payment acts as an investment that will pay income at retirement.

Life Insurance Cost and Age

The younger you are when you buy life insurance, the lower the cost. This is because as you age, you become statistically more likely to die during the term (for term life insurance) or before you have paid in a large amount of premiums (for the whole life policy).

CNN Money reports that if a healthy 60-year-old man purchases $500,000 in life insurance coverage, he will pay around $3,000 a year for term insurance. This, obviously, is a significant difference from a policy purchased just 20 years before.

Once you reach the age of 65, premiums for a term life insurance policy may be too high to be feasible, if you can find a policy at all. Therefore, if you want to ensure your family will be protected, you should try to buy your life insurance policy when you are young to keep your life insurance cost down.

How to Lower Life Insurance Cost

If you are already older, there are still some steps you can take to lower life insurance cost. For example, you should quit smoking if you are a smoker, and/or lose weight if you are overweight. Eliminate other unhealthy habits or dangerous activities from your life as well to lower the cost of life insurance.

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