Life insurance is all about risk from an issuer’s perspective: the higher your mortality probability, the more it costs to obtain coverage. As a result, your age, height-to-weight ratio, whether or not you smoke, and your history of family illness help determine your monthly premium.

To that point, to determine the average cost of life insurance in the United States, we analyzed quotes for $500,000 life insurance policies from Prudential, MassMutual, and Transamerica.

And while inflation increased the cost of many goods and services in 2021, only 30-year life insurance premiums have increased relative to our previous study.

Average Life Insurance Cost of April 2024: Charts, Graph, Analysis

Average Life Insurance Cost by Age and Terms

As mentioned, monthly life insurance premiums have declined across nearly all terms and age groups.

For example, relative to our previous study, the average monthly cost of 10 and 15-year life insurance policies for Americans aged 35 (-15.3% and -15.6%) and 40 (-15.7% and -15.0%) have enjoyed the most significant percentage declines since we last conducted the research.

Conversely, the average monthly cost of 30-year life insurance policies has increased across all age groups. For example, at the high end, 55-year old Americans pay 25.1% more on average for their monthly premiums to purchase 30-years of coverage. At the low end, 40-year old Americans spend 1.1% more on average for the same peace of mind.

In addition, it’s important to remember that life insurance is more expensive the longer you wait to obtain coverage. For example, the table below depicts the dollar increases in the monthly cost of life insurance policies relative to identical policies obtained by individuals that are five years younger.

As you can see, a 35-year-old American pays 57 cents more per month on average than a 30-year old for ten years of coverage and $5.94 more per month for 30 years of coverage. Likewise, a 55-year-old American pays $22.28 more per month on average than a 50-year old for ten years of coverage and $134.94 more per month for 30 years of coverage. For context, the results may not precisely match the consolidated figures above due to rounding.

However, it’s financially beneficial to obtain life insurance when you’re young rather than waiting until later in life.

Average Life Insurance Cost by Gender

When breaking down the numbers by gender, you can see that life insurance is more expensive for men than women. And why is that?

Well, for starters, men have a lower life expectancy. According to the U.S. National Center for Health Statistics, men have a life expectancy of 76.1 years, while women have 81.1 years. And due to the higher likelihood of death, higher premiums compensate insurers for the increased risk.

In addition, men are overrepresented in dangerous occupations: police officers, firefighters, construction workers, or miners, mortality risk is higher than comparable white-collar positions. And while women have increased their footprint in these fields over the last several years, men still make up the majority.

To that point, the monthly cost of life insurance for men demonstrates a similar trend as the consolidated figures. For example, nearly all men’s groupings have declined since our last study, while the cost of 30-year policies has increased.

Similarly, women’s monthly outlays for life insurance have decreased in all groupings except 30-year policies. However, it’s interesting to note that 60-year-old women save an average of $119.97 per month on their 25-year life insurance policies relative to men. Likewise, 30-year-old women save an average of $3.80 per month on their 10-year life insurance policies comparable to men.

Average Life Insurance Cost for Smokers

When it comes to life insurance, smoking is a costly habit. For example, a 30-year-old male smoker pays $43.80 more per month on average for a 10-year policy than a non-smoker. And for a 30-year policy, a 30-year-old male smoker pays $112.13 more per month on average.

What’s more, the cost spread also increases with age.

A 45-year-old male smoker pays $206.29 more per month on average than a non-smoker for a 10-year life insurance policy, while a 60-year-old male smoker pays $354.52 more per month on average for identical coverage. But, again, the results may not exactly match due to rounding.

Moreover, like the gender data above, women smokers also pay less for life insurance than their male counterparts.

For example, a 30-year-old female smoker pays $15.49 less per month on average for a 10-year life insurance policy than a male smoker. And a 60-year old female smoker pays $105.95 less per month on average for a 10-year life insurance policy than a male smoker.

When making an apples-to-apples comparison, a 30-year-old female smoker pays $32.10 more per month on average for a 10-year life insurance policy than a non-smoker. And for a 30-year policy, a 30-year-old female smoker pays $78.60 more per month on average for a 10-year life insurance policy than a non-smoker.

Likewise, age also plays a role.

A 60-year-old female smoker pays $285.27 more per month on average for a 10-year life insurance policy than a non-smoker, while a 45-year-old female smoker pays $234.61 more per month on average for a 30-year policy than a non-smoker.

Average Life Insurance Cost by State

Unlike other financial products, your state of residence doesn’t influence the cost of your life insurance policy. For example, when analyzing quotes from our three insurers, changing from California to Delaware or Ohio to Connecticut didn’t affect quoted premiums.

As such, your age, health status, and smoking habits are the most critical variables.

Life Insurance Applications by Age

The latest data from MIB Group’s Life Index shows that applications for life insurance policies returned to growth in November 2021. For example, after declining year-over-year (YoY) in October, life insurance applications increased across all age cohorts in November.

To that point, applications by Americans aged 71+ (12.0%) demonstrated the highest YoY percentage increase in November, while applications by Americans aged 61-70 (0.8%) demonstrated the lowest YoY percentage increase.

However, Americans aged 31-50 (5.5%) have shown the most potent appetite for life insurance policies in 2021, while Americans aged 30 or younger (2.8%) have exhibited the weakest demand.

Life Insurance Demand by Generation

The latest findings from LIMRA and Life Happens’ 2021 Insurance Barometer Study show that younger Americans are underinsured relative to older generations.

However, the study revealed that the coronavirus pandemic had influenced younger Americans’ perceptions of life insurance. For example, only 49% of Millennials own life insurance. However, 48% of the uninsured group plans to purchase life insurance over the next 12 months.

Moreover, 50% of Millennials surveyed by LIMRA and Life Happens said that the death of the primary household earner would result in financial hardship. Likewise, 43% of Millennials said they felt anxious about loved ones covering the funeral expenses if they were to pass away.

On the flip side, only 33% of Generation X respondents and 15% of baby boomers plan to purchase life insurance over the next 12 months.

Life Insurance Demand by Income

The 2021 Insurance Barometer Study revealed that middle-income Americans ($50,000 to $99,999 in annual income) were also influenced by COVID-19. For example, 10% of middle-income Americans purchased life insurance policies in 2020. And 20% of adopters claimed the pandemic swayed their decision.

Moreover, 70% of American households that earn $50,000 to $99,999 in annual income believe life insurance is necessary. Moreover, 34% still plan to obtain coverage before the New Year.

Middle-income Americans’ main reasons for owning life insurance policies are:

• To cover funeral expenses
• To make up for lost household income
• To leave children or loved ones an inheritance
• To help service mortgage debt
• To help finance retirement

Life Insurance Demand by Race

Providing interesting insights into Hispanic Americans’ ownership of life insurance policies, the 2021 Insurance Barometer Study found that while 78% of Hispanic Americans consider life insurance a necessity (versus 70% of the general population), only 51% have coverage. Moreover, this figure is down from the 54% of Hispanic Americans that had coverage in 2020.

Furthermore, 47% of Hispanic Americans said that they require more life insurance coverage, which outpaces the responses from any other race. In addition, the ethnic group is more likely to rely on a professional when purchasing life insurance (37% versus 33% of the general population). It is also more likely than any other race to opt for simplified underwriting. For context, the structure allows applicants to forgo a medical exam.

In addition, Hispanic Americans, more so than other Americans, view life insurance as a way to offset lost household income (47% versus 35% of the general population), offset their mortgage debt (43% versus 31% of the general population) and help them navigate retirement (35% versus 29% of the general population).

As a result, 45% of uninsured Hispanic Americans plan to purchase life insurance coverage over the next 12 months.

Life Insurance Market Growth

While 2020 was relatively mixed, LIMRA expects 2021 to be a banner year for life insurance companies.

For example, the consulting firm revealed that total individual premium increased by 15% in Q1 2021, and purchased policies increased by an all-time high of 11%. As a result, LIMRA projects that the U.S. life insurance market will expand by 7% to 11% YoY in 2021 when the final figures are released.

Households and Nonprofit Organizations’ Life Insurance Assets

When life insurance companies estimate the value of future claims, they often discount the future obligation by its expected rate of return. And with the latest data from the Fed showing that U.S. households and nonprofit organizations have the present value of $1.897 trillion in future claims, the metric hit a record high in the third quarter of 2021.

Moreover, these liabilities owed by life insurance companies have increased by 52% since Q1 2010 and by 10% since Q4 2019. However, with financial markets performing quite well over the last ~12 years, life insurance companies should have earned solid returns on their invested capital.

How We Conducted The Study

To provide the most accurate depiction of the average cost of life insurance in the United States, we analyzed quotes from three of the largest issuers: Prudential, MassMutual, and Transamerica.

First, we calculated the average cost of all applicants. The tables above tally monthly premiums for a $500,000 life insurance policy for residents of California. Policyholders are assumed to be in excellent health and have a clean driving record. Next, we organized our findings by age and term to detail how premiums change based on age and duration. Next, we broke down the average cost of life insurance by gender. For men, we assumed a height-to-weight dynamic of 5’10, 175 pounds. For women, we assumed 5’4, 110 pounds.

Last, we calculated the average cost of life insurance for smokers. Again, we used the same inputs while assuming the recreational use of tobacco.

Conclusion

With the coronavirus pandemic increasing Americans’ willingness to consider life insurance, COVID-19 has shifted consumer sentiment. And with the death toll from the outbreak opening the eyes of uninsured Americans, individuals are more mindful of how their loss of life could financially impact their loved ones. As a result, demand for life insurance remains resilient, and the momentum should continue until the pandemic subsides.

Policy Estimate Sources

Prudential

MassMutual

Transamerica