Understanding the Average Cost of Whole Life Insurance
If you’re thinking about buying whole life insurance, one of the first questions you’ll probably have is how much it costs on average. Whole life insurance charges higher premiums than term insurance in order to provide lifetime coverage.
However, average whole life insurance prices vary greatly depending on the death benefit, custom add-ons, and other personal factors. This guide examines whole life insurance cost averages, what influences pricing, and how to get the best rate.
Whole Life Insurance Pricing
Whole life policies, as opposed to term life insurance, provide permanent coverage for the duration of your life as long as you pay the premiums. Life premiums are significantly higher in exchange for guaranteed coverage because the policy does not expire after a predetermined time period.
Whole life insurance also builds cash value, which can be borrowed against if necessary. This adds additional value to the death benefit that your beneficiaries would receive. Given the lifetime coverage and cash savings, whole life insurance has higher monthly or annual premiums to support these bonuses.
Your individual rates are partly determined by the insurer’s costs for providing permanent coverage. The insurance company calculates your premiums based on your age and life expectancy. Although whole life premiums are fixed once the policy begins, insurers must charge more early on for longer-living policyholders.
What Affects the Cost of Whole Life Insurance?
The main factors influencing whole life insurance rates are:
Your age when the policy begins: To compensate for shorter life expectancies, older applicants pay higher premiums.
Death benefit amount: The larger the payout your beneficiaries receive, the more you’ll pay.
Premium frequency: Monthly payments incur small service fees that increase costs over annual premiums.
Policy customizations: Adding bells and whistles, such as a premium waiver for disability, increases expenses.
Insurance Company: Based on historical data, each provider calculates various pricing factors.
These variables make it difficult to determine the average whole life insurance rate that everyone pays. However, reviewing price ranges can help you get a sense of how much permanent protection will cost.
How much does whole life insurance cost on average?
According to Haven Life, the average whole life insurance policy costs about $160 per month, or $1,920 per year. Average death benefit limits are also around $150,000 based on the amounts policyholders choose. However, preferred health applicants may pay closer to $100 per month for coverage ranging from $100,000 to $250,000.
Expect monthly payments of around $181 or $2,172 per year for a whole life policy with an average coverage of $150,000 at the age of 30. By the age of 50, premiums average $317 per month, or $3,804 per year. Pricing rises with age as life expectancy declines.
Using averaged monthly costs, here’s a table of common whole life rates by age and death benefit amount.
Death Benefit Amount
Age: $50,000, $100,000, $250,000, and 30 years: $72 to $117. $256 for 40 years.$102 $192 $437 over 50 years = $158, $317 over 60 years = $703.$266 $532 $1,181
Common annual pricing averages for whole life policies include:
Death Benefit Amount
Age $50,000 $100,000 $250,000
30 years: $864, $1,404, $3,072; 40 years: $1,224, $2,304. $5,244 50 years: $1,896 $3,804 $8,436
60 years: $3,192, $6,384, $14,172.
What do insurers charge extra for with whole life insurance?
Whole life insurance expenses are comprised of more than just the base death benefit and premiums. Insurers also offer numerous optional add-ons for further customization at an additional cost:
Disability waiver provision: If you become disabled, premium payments are waived for approximately $300 per year, or an additional 10% of base rates.
Accidental death benefit: Provides an additional payout of approximately $150 per year for death caused by an accident.
Child term rider: Adds term life insurance for children under the age of 25 for approximately $200 per year for a $10,000 benefit.
Spousal rider: Provides term life coverage for a husband or wife for approximately $100 per month for a $50,000 benefit.
Guaranteed insurability option: Allows you to increase the death benefit up to predetermined limits without medical underwriting for an additional 10% of the premium or more.
The cost of these riders varies depending on the level of coverage chosen. When custom add-ons are selected, insurers typically charge an additional 10% to 15% of the base policy rate. An independent agent can explain the costs for riders that are relevant to your situation.
How to Get the Best Whole Life Insurance Rates?
While the average monthly cost of a whole life policy is around $160, you may be able to find lower or higher rates based on personal factors. Here are smart steps to minimize your total life costs:
Purchase earlier when younger to lock in lower age-based rates, such as saving over 60% on premiums by applying at 30 rather than 60.
Get quotes from at least ten top mutual life insurers to compare pricing differences and find the best option.
Improve your health by losing weight, quitting smoking, and managing medical issues such as high cholesterol to potentially qualify for preferred rates of up to 50% off standard pricing.
If you only need basic burial coverage, choose a lower death benefit, such as $50,000, to lower your premiums.
Set aside extra funds over time to pay premiums annually or semi-annually instead of monthly payments to avoid service fees that add 12% to 17% per year.
To keep access rates low, decline optional riders that you can probably do without.
Running quotes with details such as age and smoking status ensures that each insurer provides accurate personalized premium costs when weighing coverage against budget needs.
Should I expect my rates to rise over time?
One significant advantage of whole life insurance is that the premiums remain consistent over time. This means that the monthly or annual pricing that was established when your policy began will remain unchanged in the future. Your rates will not rise simply because you age or develop medical conditions later in life.
As long as you pay your premiums on time, they will remain fixed no matter how long you have the policy. In contrast to term insurance, which has rising renewal rates, this ensures stable pricing for life. As a result, you can budget accurately for annual whole life premium costs that remain constant.
In addition to fixed pricing, some insurers offer guaranteed cash value growth. This way, your cash accumulation linked to the policy grows at a fixed interest rate, allowing for earnings over time. While not all whole life products guarantee cash value growth, premium stability provides long-term financial security that is not available with other types of insurance based on age or health.
Conclusion
Finding affordable whole life insurance that fits your budget requires carefully comparing insurer rates based on your age and desired coverage amount. While average whole life premiums cost about $160 per month or $1,920 per year, taking advantage of qualified health discounts and purchasing early in adulthood saves the most money.
Reducing unnecessary add-ons and riders also reduces costs for policies that already provide guaranteed lifetime protection and competitive pricing.
Speaking with a reputable independent insurance agent simplifies the process of selecting and customizing the best whole life product.
However, knowing average costs before quoting provides useful context for determining a good whole life insurance value when you’re ready to make this important long-term investment.
