Term life insurance is generally one of the lowest cost types of life insurance you can buy.
In this article we’ll look at the average cost of term life insurance and the different types of policies available. We’ll also look at what factors affect the cost of a term life policy.
What Does Term Life Insurance Cost?
Term life insurance costs significantly less than whole life insurance. For this type of insurance, you are only required to pay your premiums for a certain “term” and not throughout your whole life.
The average cost of premium is around $26-$50 per month. However, that depends highly on the insurance company, and on the type of term life insurance policy you want.
There are different types of term life insurance depending on your needs.
Different Types of Term Life Insurance
Level Term Policy
This type of term life insurance provides coverage for a specified period of time. It ranges between 10-30 years. The death benefit and the premium rates for this insurance are fixed. The premium for this policy is higher than the yearly renewable term life insurance.
Yearly Renewable Term Policy
The YRT policy has no specified term. The best part about this policy is that you can renew it each year without providing evidence of insurability. However, the premium you pay will change every year. It goes higher as you age.
Decreasing Term Policy
Lastly, we have the decreasing term policy where the death benefit declines each year. This is according to a predetermined schedule. The monthly premium is fixed for the duration of the policy. This type of term life insurance policy is often used with a mortgage to match the coverage with the declining principal of the home loan.
Factors that Affect Term Life Insurance Cost
Here are the main factors that affect term life insurance cost:
- The type of policy you want to get, the coverage, and the term length
- Overall state of health
- Your lifestyle
- Family health history
- Gender
- The state you live in, different states have different price ranges for life insurance premiums