Life insurance is one of the most important insurance policies in the USA and about 58% of Americans have life insurance. Having life insurance not only ensures that all your final expenses are paid but also the beneficiaries receive financial help as well as enjoy other benefits. Moreover, the current COVID – 19 situations have forced people to buy life insurance for themselves and their family members. Therefore, getting a life insurance policy is an important decision.
The price of life insurance is a very important factor along with other factors like term lengths, coverage amounts, etc. Usually, the price of the insurance decides what type of insurance will be best for you. The average cost of life insurance in the USA is $27 a month. This information is based on data provided by Quotacy for a 40-year-old buying a 20-year, $500,000 term life policy. The cost of a life insurance policy mostly depends on age, location, health condition, policy types, etc.
What Is Life Insurance?
Life Insurance is a policy between an insurance company and a policyholder where the insurance company promises to pay out a sum of money when the policyholder dies or after a certain period. In life insurance you have to pay monthly payments and the life insurance company will provide a large amount of money to your beneficiaries upon your death. There are various amount life insurances available and you can buy life insurance based on your needs.
Types Of Life Insurance Policies
| Type of life insurance | Term | Permanent |
| Term life insurance | Yes | N/A |
| Whole life insurance | N/A | Yes |
| Universal life insurance | N/A | Yes |
| Variable life insurance | N/A | Yes |
| Simplified issue life insurance | Yes | Yes |
| Guaranteed issue life insurance | Yes | Yes |
| Group life insurance | Yes | Yes |
Average Life Insurance Cost In USA (State-wise Chart)
| State | Average Annual Life Insurance Premium | Average Monthly Premium |
| Alabama | $602 | $50 |
| Alaska | $655 | $55 |
| Arizona | $615 | $51 |
| Arkansas | $584 | $49 |
| California | $668 | $56 |
| Colorado | $654 | $54 |
| Connecticut | $724 | $60 |
| Delaware | $657 | $55 |
| District of Columbia | $636 | $53 |
| Florida | $627 | $52 |
| Georgia | $630 | $53 |
| Hawaii | $687 | $57 |
| Idaho | $597 | $50 |
| Illinois | $631 | $53 |
| Indiana | $593 | $49 |
| Iowa | $601 | $50 |
| Kansas | $601 | $50 |
| Kentucky | $599 | $50 |
| Louisiana | $597 | $50 |
| Maine | $641 | $53 |
| Maryland | $712 | $59 |
| Massachusetts | $718 | $60 |
| Michigan | $610 | $51 |
| Minnesota | $639 | $53 |
| Mississippi | $581 | $48 |
| Missouri | $590 | $49 |
| Montana | $601 | $50 |
| Nebraska | $603 | $50 |
| Nevada | $607 | $51 |
| New Hampshire | $708 | $59 |
| New Jersey | $732 | $61 |
| New Mexico | $588 | $49 |
| New York | $675 | $56 |
| North Carolina | $617 | $51 |
| North Dakota | $603 | $50 |
| Ohio | $599 | $50 |
| Oklahoma | $598 | $50 |
| Oregon | $627 | $52 |
| Pennsylvania | $658 | $55 |
| Rhode Island | $660 | $55 |
| South Carolina | $615 | $51 |
| South Dakota | $595 | $49 |
| Tennessee | $609 | $51 |
| Texas | $633 | $53 |
| Utah | $636 | $53 |
| Vermont | $655 | $55 |
| Virginia | $682 | $57 |
| Washington | $655 | $55 |
| West Virginia | $590 | $49 |
| Wisconsin | $607 | $51 |
| Wyoming | $601 | $50 |
Average Life Insurance Cost By Sex
In Life Insurance, sex plays a very important role. For the same life insurance policy male and females have to pay different insurance coverage every month. The below compression table is between two 35-year-old, nonsmoking California residents of different sexes for a $250,000 term life policy –
| Life Insurance Company | 35-Year-Old Female Quote | 35-Year-Old Male Quote |
| RiverSource | $22.09/month | $24.72/month |
| State Farm | $28.07/month | $30.02/month |
| Nationwide | $20.34/month | $23.63/month |
| Mutual of Omaha | $21.29/month | $24.51/month |
| Average cost | $22.95/month | $25.72/month |
Average Life Insurance Cost By Age
The age of the policyholder also plays an important role in the cost of life insurance. The more the age of the policyholder the more insurance premium you have to pay each month. Here is a detailed overview –
| Age | Average female quote | Average male quote |
| 25 | $18.59/month | $22.67/month |
| 30 | $19.79/month | $23.49/month |
| 35 | $22.95/month | $25.72/month |
| 40 | $29.63/month | $34.74/month |
| 45 | $41.75/month | $51.42/month |
| 50 | $60.68/month | $81.23/month |
So, if you check the above table then you will notice that there is a substantial difference in the monthly premium of the older ages. After age 40, the monthly premium goes up significantly. Therefore, the sooner you buy life insurance the less you have to pay each month.
Best Life Insurance Companies Ranked By Customer Satisfaction
There are more than 800 life insurance companies available in the USA. So, there are lots of options available when you opt to buy life insurance. However, when you are buying life insurance, customer experience matter because you’re trusting them to care for your loved ones if something happens to you. According to the J.D. Power 2020 Life Insurance Study, below are the top ten life insurance companies for customer satisfaction –
| Company | J.D. Power Rating |
| State Farm | 838 |
| Globe Life | 810 |
| Nationwide | 803 |
| Northwestern Mutual | 790 |
| Mutual of Omaha | 789 |
| New York Life | 784 |
| Pacific Life | 776 |
| MetLife | 773 |
| MassMutual | 769 |
Reasons For Buying Life Insurance In The USA
According to a recent survey by trade research organization LIMRA and the non-profit organization Life Happens, some of the common reasons for Americans to buy life insurances are –
1. 84% Burial/final expenses
2. 66% Wealth transfer
3. 62% Income replacement
4. 57% Supplement retirement income
5. 50% Pay off mortgage
Life Insurance Facts And Statistics
1. In 2021, 58% of Americans were covered by life insurance.
2. 50% of people overestimate the cost of term life insurance.
3. Millennials overestimate the cost by 213%.
4. The average premium for a male rise 258% between age 25 and age 50.
5. The insurance company won’t pay out for death by suicide.
6. If the life insurance policyholder died while committing a felony, then the insurance company won’t pay the insurance coverage.
7. Usually, a men’s average premium is about 12% more per month than a women’s.
8. The number of customers for internet sales has increased over the years, The number increased from 17 percent in 2011 to 31 percent in 2021.
Factors That Impact The Whole Life Insurance Pricing
There are few important factors available that have a great impact on the whole life insurance pricing. They are –
1. Age and gender
2. Height and weight
3. Past and current health conditions
4. The health history of your parents and siblings
5. Nicotine and marijuana use, including nicotine patches and gum
6. Substance abuse
7. Credit
8. Criminal history
9. Driving record
10. Dangerous hobbies and activities
FAQs About Average Life Insurance Cost In USA (State-wise Chart)
How To Compare Life Insurance Rates?
It is very important to compare the life insurance rates before buying an insurance policy. There are several things to consider but the three most important factors are –
1. Affordability of premiums
2. Amount of death benefit
3. Provider reputation
What Are The Advantages Of Term Life Insurance?
1. High Sum Assured at Affordable Premium
2. Easy to Understand
3. Multiple Death Benefit Payout Options
4. Additional Riders
5. Income Tax Benefits
6. Critical Illness Coverage
7. Accidental Death Benefit Coverage
8. Return of Premium Option
What State In The USA Buys The Most Life Insurance?
Among the 52 states in the USA, California has the highest number of life insurance purchases. On the other hand, Wyoming is the state with the least number of life insurance purchases.
Why Is A Term Plan Important?
Term insurance is a very simple life insurance policy and it is a very important one. A term life insurance provides security and financially protects you and your family members in emergencies. This type of life insurance provides a high cover at an affordable premium which is rare in other types of life insurance.
Who Usually Pays More For Life Insurance?
Usually, men pay more for life insurance than women. On average, a 35-year-old female pays $28.07/month as insurance premium while a 35-year-old male pays $30.02/month as insurance premium.
How Much Does Life Insurance Payout On Average?
According to Matt Myers, head of customer acquisition at Haven Life, on average, $618,000 is expected to pay out by Haven Life each year.
How Much Does 100k Life Insurance Cost?
Here is what a $100,000 term life insurance policy will cost a 25 years old male –
| Risk Class | 10-Year Term Monthly Premium | 20-Year Term Monthly Premium | 30-Year Term Monthly Premium |
| Preferred Plus | $8.24 | $9.36 | $12.24 |
| Preferred | $9.89 | $9.89 | $13.42 |
| Standard Plus | $11.58 | $13.46 | $15.47 |
| Standard | $12.17 | $13.54 | $18.86 |
| Preferred Tobacco | $17.17 | $19.04 | $26.18 |
| Standard Tobacco | $23.20 | $26.09 | $33.32 |
Who Is The Largest Life Insurance Company In The USA?
The largest life insurance company in the USA is Northwestern Mutual. This company offers Term life, Whole life, Universal life insurance, etc. They have more than 11% market share in 2021.
What Are The Profitable Property And Casualty (P&C) Insurances?
Some of the profitable (P&C) insurances are –
1. Mortgage guaranty
2. Inland marine
3. Fire insurance
4. Warranty insurance
5. Workers’ compensation
6. Farm-owners multiple perils
7. Homeowner multiple perils
8. Private passenger auto physical
9. Medical professional liability
10. Commercial multiple perils
How Big Is The US Life Insurance Market?
The USA has one of the largest insurance markets in the world. The market size of life insurance in the USA is $886.7bn.
Is Life Insurance Cheaper In Different States?
No, life insurance is not cheaper in different states. Life insurance companies don’t use the location to determine the premium rates.
How Many Life Insurance Policies Are Sold Each Year In The USA?
In the USA, approximately 27.8 million life insurance policies are sold each year.
References:
1. https://www.forbes.com/advisor/life-insurance/average-life-insurance-rates/
2. https://www.businessinsider.com/personal-finance/average-life-insurance-rates
Last Updated on February 7, 2022 by
Magalie D. is a Diploma holder in Public Administration & Management from McGill University of Canada. She shares management tips here in MGTBlog when she has nothing to do and gets some free time after working in a multinational company at Toronto.
