How much is a $500,000 life insurance policy?

Why you can trust Insure.com

Quality Verified

At Insure.com, we are committed to providing the timely, accurate and expert information consumers need to make smart insurance decisions. All our content is written and reviewed by industry professionals and insurance experts. Our team carefully vets our rate data to ensure we only provide reliable and up-to-date insurance pricing. For a deeper dive into our process, see our complete methodology. We follow the highest editorial standards. Our content is based solely on objective research and data gathering. We maintain strict editorial independence to ensure unbiased coverage of the insurance industry.

A healthy 45-year-old woman pays $564 a year for $500,000 of 20-year term life insurance. A man the same age pays $723. That rate is locked for the full 20 years, so the premium you qualify for at 45 is the premium you pay through 65.

What you pay comes down to your age, your gender, your health and whether you smoke. A 45-year-old woman who doesn’t qualify for the top health class pays $960 a year for that same $500,000, and a man pays $1,243. A smoker pays about three and a half times the healthy rate.

Comparing quotes from three or four insurers is what makes the biggest difference at 45, since each one weighs your health history differently and the same applicant can land in different health classes at different companies. Locking in a rate this year rather than next also matters more than it did at 35 — the same policy costs $845 at 50 and $1,275 at 55.

How much does a $500,000 life insurance policy cost?  

A $500,000 life insurance policy costs a healthy 40-year-old woman $386 a year, while a healthy 40-year-old man of the same age pays $470 annually. Rates also climb steadily the longer you wait to buy – a healthy 25-year-old woman can lock in coverage for $242, but by age 65 that same coverage costs $4,166.

The table below shows how annual premiums change based on age at purchase, assuming a 20-year term life policy with a $500,000 death benefit for healthy non-smokers:

Which health class you qualify for and what it costs

Your current health and family health history can both be used in setting life insurance premiums. Insurers typically use four tiers or classifications:

• Preferred Plus: Applicants with excellent health and no concerning family history can be eligible for Preferred Plus status and the best rates an insurer has to offer. Typically, only non-smokers will qualify for this tier.
• Preferred: This classification is generally reserved for those with good health and no family history of early death. Depending on the insurer, even those with health issues may be eligible for Preferred rates if their conditions are well-controlled.  
• Regular Plus: Individuals rated in this tier may have some health concerns, such as high blood pressure or cholesterol, but they are being treated and well managed. 
• Regular: This is the standard tier, and insurers use it for those who may have some concerning family history, such as an early death of a parent, or health risks like obesity.

How much does your health class raise your $500,000 premium?

The premium gap between health tiers stays fairly consistent with age. A 25-year-old in the Regular tier pays roughly 92% more than someone in Preferred Plus, and that gap remains in a similar range even at age 65.

Here’s how much premiums cost for each health class for $500,000 in coverage with a term length of 20 years. 

How insurers decide which tier you qualify for

Each insurer has its own system for evaluating and classifying applicants. You don’t get to choose your tier, though your actions, like how well you manage your weight and health conditions, can play a role in how much you pay.

A few things that surprise applicants most:

• Family history counts, even if you’re healthy. A poor family history can keep even a very healthy applicant out of the top rate classes, cancer and heart disease in parents or siblings are common reasons for this.
• It’s not the condition, it’s whether it’s controlled. Having a medical condition doesn’t automatically hurt your rate. What matters more is whether it’s being actively treated and monitored, versus left unmanaged.
• You can influence your tier, but you can’t pick it. Insurers assign your tier based on their own underwriting criteria, but factors within your control, like weight and how well you manage existing conditions, still shape where you land.

“Many people are surprised by the fact that a poor family history, even if the insured person themselves is very healthy, can prevent them from getting the very top rate classes,” says Jarad Stolz, vice president of insurance sales and associate chief underwriter at Diversified Insurance Brokers. “Cancer and heart disease in parents and siblings are common reasons for this.”

“One of the biggest myths about life insurance is that having certain medical conditions affects your rates,” says Joshua Lavine, CEO of Capitol Benefits, an independent insurance advisory firm in Maryland. “The reality is having medical conditions that are being treated and monitored by doctors are often not an issue. It’s the conditions that are not being treated or controlled that are the issue.”

Why do rates increase so much with age?  

Life insurance rates increase with age because insurers price policies based on mortality risk — the older you are, the higher the chance the insurer will pay out a claim during the policy term. A 65-year-old man buying a new $500,000 policy pays about 20 times more than a 25-year-old man for the same coverage, because a 25-year-old is far more likely to reach age 45 than a 65-year-old is to reach age 85.

Here’s how age affects your life insurance premium:

• Mortality risk doubles roughly every decade after age 30, which is why premiums climb steeply with age
• Rates accelerate sharply after age 55, when annual premium increases shift from gradual to dramatic
• Health conditions become more common with age, further increasing risk-based pricing
• Locking in a rate young means your premium stays the same throughout your term, even as you age into higher-risk brackets

Why do men pay more for coverage than women?

Men pay more for life insurance than women because they have shorter average life expectancies, which means insurers face a higher likelihood of paying out a claim during the policy term. The gender gap stays moderate through your 30s and 40s but widens dramatically after age 50, when men’s mortality risk climbs faster than women’s.

At age 25, men pay $57 more per year than women, which is a manageable gap. By age 65, that gap widens to $1,750 per year, or roughly $35,000 more over a 20-year policy. This is one of the strongest reasons for men to lock in life insurance early, when the gender premium difference is at its smallest.

The chart below shows how the gender gap grows with age for a $500,000, 20-year term policy at Preferred rates:

How much more does $750,000 or $1 million in life insurance cost?

Going from $500,000 to $750,000 costs a healthy 45-year-old woman 43% more a year, and going to $1 million costs 82% more. For a man it’s 45% and 85%. Both increases are smaller than the jump in coverage they buy.

That’s why one larger policy beats stacking two. A woman who buys $500,000 at 45 and adds another $500,000 at 50 pays $564 plus $845 — $1,409 a year, against $1,025 for the full $1 million bought at 45. Same coverage, $384 more every year, and the second policy is priced at whatever her health looks like at 50.

What $750,000 costs

A 45-year-old woman pays $809 a year, $245 more than she’d pay for $500,000. A man pays $1,046, or $323 more. Both get 50% more coverage for roughly 43% to 45% more premium.

The premiums below show average annual premiums for a healthy nonsmoker on a 20-year term policy.

What $1 million costs

A 45-year-old woman pays $1,025 a year, $461 more than she’d pay for $500,000. A man pays $1,337, or $614 more. Both double their coverage for 82% to 85% more premium, and buying younger makes that trade better — a 25-year-old woman pays 61% more to double, a 55-year-old pays 92% more.

How to get a lower premium on a $500,000 policy 

You can lower your $500,000 life insurance premium by applying young, quitting tobacco, managing chronic health conditions, and comparing quotes from multiple insurers. While you can’t control your age or family history, these four steps can move you into a better rate class and save you hundreds — or thousands — per year over the life of your policy.

1. Apply early. The easiest way to get cheap life insurance is to buy a policy when you’re young, ideally in your 20s or 30s. Waiting until your late 40s or 50s could cost you hundreds — or even thousands — more per year.
2. Quit tobacco. Smokers and tobacco users pay significantly higher rates than non-smokers. You can qualify for non-smoker rates once you’ve been tobacco-free for one to five years, depending on the insurer.
3. Manage your health. Obesity, high blood pressure, and high cholesterol can all push you into a higher rate class. Maintaining a healthy BMI and treating chronic conditions can help move you into a better tier.
4. Compare quotes. Every life insurance company has its own underwriting standards. One insurer might place someone with a family history of cancer in the Regular Plus tier while another gives the same person Preferred rates. Comparing quotes from multiple carriers is the only way to find your true lowest rate.

“The best way to save on premiums is to apply early while healthy and shop the market so you get rates from multiple carriers, since underwriting guidelines vary from carrier to carrier,” Stolz says.

Maryalene LaPonsie

Staff Writer

 

 . .

Maryalene LaPonsie is a staff writer for Insure.com. She has 25 years of professional writing experience. She specializes in personal finance — insurance, investing and retirement.

Related Articles

How to read your life insurance policy By Alisha Ambre

Mortgage protection insurance: Who needs it and why By Alisha Ambre

How do life insurance companies test for drugs and nicotine? By Alisha Ambre

Is a $2 million life insurance policy worth it? Costs by age and term By Maryalene LaPonsie

The 10 largest life insurance companies By Alisha Ambre

Life insurance for people with Down syndrome: What families can actually get By Alisha Ambre