How much does term life insurance cost?
Insurance companies use a lot of different factors to determine your premium, which is how much your coverage costs.
These are some of the main ones:
- Your age: Generally, the younger you are, the lower your term life insurance rate will be.
- Your health: If you’re in good health, you’ll likely qualify for lower premiums.
- Coverage amount: The higher the death benefit you choose, the more your premium costs.
- Term length: Longer terms typically come with higher premiums.
Consider limited-coverage (in some cases up to $500,000) term life insurance policies if you’re looking for budget-friendly options or have minimal financial obligations. These offer basic protection at a more affordable price, usually with a limited death benefit and a simpler application process.
Busting life insurance myths and common questions
Life insurance might not be the most exciting topic, but there’s a lot of misinformation out there that can make it seem even more confusing.
Here’s the truth behind these misconceptions and answers to common questions.
I’m young and don’t need coverage.
Even if you’re young and healthy, accidents happen, and life throws curveballs. If you don’t have dependents right now, think about your parents, siblings or close friends. Life insurance is for today as well as the future. Maybe you don't have a spouse or children or a mortgage right now, but you may in the future and having a policy already in place can help give you peace of mind when life changes do occur.
It costs too much.
You may assume life insurance is out of your budget. But the truth is, term life insurance rates can be surprisingly affordable, especially when you’re young and healthy. The average cost of $500,000 in coverage for a 20-year term policy for a healthy 30-year-old is less than $20 a month. And the rates are slightly lower the younger you are.
I’m single with no kids.
Life insurance can still be valuable even if you don’t have dependents right now. It can cover your final expenses, like funeral costs, so your family doesn’t have to worry about paying for it. You may also want to leave a death benefit to your parents to help them with their retirement.
I need a medical exam.
Not always! While some policies require more in-depth health questions and medical exams, many insurance carriers offer no-exam term life insurance. This means you can get covered quickly without worrying about needles or doctor visits.
Does term life insurance have cash value?
Permanent life insurance policies have a cash value component, which grows over time. Term life insurance is not permanent and doesn’t have cash value. It’s purely about providing a death benefit to your loved ones. This is one of the reasons it’s so affordable for young adults.
Can you borrow against term life insurance?
Term life insurance doesn’t have cash value, so you can’t borrow against it like you might with some types of permanent life insurance. Term coverage is designed to be simpler and more straightforward than permanent policies.
How do you use term life insurance for retirement?
Retirement may seem a long way away in your 20s, but it’s never too early to plan. Life insurance is primarily about protecting your loved ones during your prime working years. However, it can also play a role in estate planning. Here are a few ways term life insurance can help:
- Safety net for your partner: Imagine you and your partner are planning for a comfortable retirement together. If something happens to you, a term life insurance policy can give them a lump sum to help cover living expenses, pay off the mortgage, or even supplement their retirement income.
- Leave a legacy: You’re working hard to build a future for yourself. Term life insurance can help make sure that your loved ones inherit your assets, not your debts. It can also be a way to leave a meaningful legacy for your children or grandchildren, helping them achieve their dreams.
- Help business partners: Many Gen Zers are entrepreneurs or have side hustles. Term life insurance can protect your business partners or employees, ensuring the continuity of your ventures even if you’re no longer there.
So, even though retirement might seem very distant, term life insurance can help you prepare for your future and the future of those you love. It’s about securing not just their immediate financial needs but their long-term well-being, too.
