Term life insurance is surprisingly affordable, especially if you're young and healthy. Learn how much term life insurance costs and how to get a policy to project your loved ones.

What if you found out that life insurance actually costs a lot less than many of the other services you routinely pay for? It does, and that’s why you should take a closer look at it. This is especially true if you’re in your 20s or early 30s because that’s when life insurance premiums are the lowest.

Why you need life insurance even if you think you don’t

Virtually everyone needs some kind of life insurance. That’s true even if you don’t have anyone who is directly dependent upon your income. At a minimum, you should have at least enough insurance to provide for your final expenses, including burial.

But you should also have enough to pay for potential uncovered medical expenses as well as open debts and immediate obligations. Even if you don’t have a spouse or children, you don’t want your parents or siblings to be worried about these expenses after you’re gone. (It’s worth noting that unless they cosigned a loan with you, your parents or siblings wouldn’t be legally liable for your debts after you die, but sometimes debt collectors will try to coerce relatives into paying, anyway).

One of the factors that make life insurance so important is that there is no do-over in the event that you don’t have coverage. Once you die, it will be too late to provide for your loved ones in any meaningful way. With other types of insurance, such as health insurance and homeowner’s insurance, there’s usually some kind of workaround if you don’t have coverage. Not so with life insurance.

Life insurance is your final financial statement to your loved ones following your death.

Determining how much life insurance you need

This is probably more subjective than scientific. Obviously, you’ll need more life insurance if you have dependents, and less if you don’t.

Some life insurance experts will come up with a multiple of your income as a convention. For example, they may say that a person who has young, dependent children should have sufficient life insurance coverage to replace their income 10 times. If you earn $50,000 per year, that means that you will need a $500,000 policy.

That’s probably a good starting point, but you should make adjustments along the way. For example, if you have a mortgage on your house, you might want to add enough additional coverage to pay off your mortgage. If you have no debts at all, or if your spouse has a significant income, you may be able to lower the policy amount accordingly.

As a single person with no dependents, a flat amount of $50,000 or $100,000 may be plenty.

Read more about how much life insurance you need here.

Some life insurance is better than none at all

Even if you can’t afford the level of insurance coverage that is optimal, you should still get whatever policy amount you can afford. If $500,000 is too much for your budget, go with $200,000, or even $100,000.

Such an amount may not provide for your dependents until they reach adulthood, but it can cover final expenses, as well as provide funds for the readjustment to life without you.

Term life insurance is the best value

A major reason why so many people believe that life insurance is expensive is because they are often given quotes for whole life insurance policies. I’ve found that whole life is much more expensive than term— can be up to 10 times more expensive. That cost could be a problem in most households.

The main reason why it’s so much more expensive than term is because of the cash value option. Whole life insurance also has a cash-value component that you can withdraw money later in life.

Term life insurance is generally much less expensive because it has a set term, just like its name implies. It’s in effect as long as you pay the premium over a certain amount of time. Once the term is up, the coverage ends. If you want to hear about this subject first hand from an insurer, here’s what our partner Allstate has to say about it.

If you’re looking to get a term life insurance quote, head over to Bestow. They only offer term life insurance, they have an easy online application, and their support isn’t commission-based – meaning you won’t constantly be upsold on products you don’t want.

Related: Start your free life insurance quote now

Real-world life insurance quotes

The life insurance quotes provided below are for actual policies. They’re provided by my friend Neal Frankle at Term Life Insurance Saver.

Let’s look at some quotes. All individuals will be assumed to be in good health, residents of California, and non-smokers. (Note that rates for life insurance for tobacco users can be more than three times the rates for non-smokers — another reason to quit!) All quotes are for a 10-year level term life insurance policy. We’ll also assume that the need for insurance coverage increases with age, due to higher financial obligations, and the presence of dependents.

First scenario

25-year-old male, non-smoker, $100,000

  • $7 to $17 a month or
  • $83 to $186 a year

Second scenario

25-year-old female, non-smoker, $100,000

  • $8 to $15 a month or
  • $91 to $165 a year

Third scenario

30-year-old male, non-smoker, $250,000

  • $10 to $22 a month or
  • $112 to $240 a year

Fourth scenario

30-year-old female, non-smoker, $250,000

  • $9 to $18 a month or
  • $102 to $195 a year

Fifth scenario

35-year-old male, non-smoker, $500,000

  • $21 to $36 a month or
  • $240 to $400 a year

Sixth scenario

35-year-old female, non-smoker, $500,000

  • $18 to $28 a month or
  • $205 to $305 a year

Even if your budget is a bit tight right now, you should be able to find a life insurance policy that you can afford, either monthly or yearly.

Avoid “no medical exam” policies

Some people are understandably reluctant to undergo a medical exam for life insurance purposes. They don’t like doctors! Instead, they may opt for a “no medical exam” policy that does not require such a procedure.

The problem with this strategy is that no-medical-exam policies are dramatically more expensive than regular term policies. And not only are the premiums much higher, but they usually cap the amount of coverage that you can get. So you may find yourself paying a higher premium for a $50,000 no-medical-exam policy than for a straight term policy for $500,000.

No-medical-exam policies are generally best if you have serious health conditions, and are unlikely to be approved for regular coverage. In that regard, they work well. But from a financial standpoint, they will be a costly and limiting when compared to regular term coverage.

So now that you know why you need life insurance and how inexpensive it really is, what’s holding you back from getting a policy?

Price your own policy

Any insurance agent will be happy to give you personalized life insurance quotes. (Just be firm about only wanting term life insurance, as many insurance agencies get higher commissions on less-desirable whole life policies.)

We also recommend Policygenius for realistic, no-obligation life insurance quotes online. Unlike other insurance sites, you can actually get pricing online and won’t be hounded with phone calls after putting in your info.

Summary

Term life insurance is the least costly, most efficient insurance for young people. With prices barely reaching double digits per month, term life insurance is essential in protecting your loved ones when the unexpected happens.

Read more

Related Tools

About the author

Total Articles: 175
Kevin Mercadante is a freelance personal finance blogger and the owner of his own personal finance blog, OutOfYourRut.com. A recent transplant to New England, he has backgrounds in both accounting and the mortgage industry.

Article comments

We invite readers to respond with questions or comments. Comments may be held for moderation and will be published according to our comment policy. Comments are the opinions of their authors; they do not represent the views or opinions of Money Under 30. Comments have not been reviewed or approved by any advertiser, nor are they reviewed, approved, or endorsed by our partners. It is not our partner’s responsibility to ensure all posts or questions are answered.