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How much does a $250,000 life insurance policy cost? – Forbes Advisor

By on June 2, 2022 0

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A quarter of a million dollars may seem like a lot, but a $250,000 life insurance policy might not be enough life insurance for you. On the one hand, it’s cheaper than a $500,000 or $1 million policy, but will it be enough to cover all of your family’s needs if you die suddenly? These are things to consider when shopping for life insurance.

Our analysis of life insurance quotes can help you determine how much you can afford.

How much does a $250,000 life insurance policy cost?

We analyzed term life insurance quotes for $250,000 life insurance policies to determine the average cost. The average price of a $250,000 10-year term life insurance policy is about $130 per year for a 30-year-old. The average cost is $180 per year for a term of 20 years. These rates are for healthy non-smokers.

Related:

Annual costs of a $250,000 term life insurance policy over 15 years

Annual costs of a $250,000 term life insurance policy over 20 years

Annual costs of a $250,000 term life insurance policy over 30 years

It can be extremely difficult to find term life insurance for 30 years to 60 years or more.

Buying younger means cutting costs for a $250,000 life insurance policy

When purchasing life insurance, your age is an important underwriting factor. Quotes will increase each year you delay buying life insurance. It is cheaper to buy life insurance when you are younger and you can benefit from low rates.

Our analysis revealed solid savings if you buy life insurance in your 30s.

  • Waiting 30 to 40 years to purchase a 20-year term life insurance policy at $250,000 has quotes that increase by 31% for men and 36% for women.
  • Postponing the purchase of a policy from 30 to 50 years leads to an increase in quotes of 163% for men and 129% for women.
  • If you wait 30 to 60 years to get a policy, quotes go up 613% for men and 471% for women.
  • For men age 60, average quotes are nearly $1,400 per year, compared to an annual rate of $192 if the policy was purchased at age 30.

How gender affects the cost of $250,000 life insurance

Women normally live longer than their male counterparts, so they usually pay a little less for their life insurance.

For example, looking at 20-year term life insurance, here’s how gender affects quotes:

  • At age 30, men pay 14% more, or $24 more per year, than women.
  • At age 40, men pay 11% more, or $24 more per year, than women.
  • At age 50, men pay 31% more than women, or $120 more per year.
  • At age 60, men pay 43% more than women, which amounts to $408 per year.

Life insurance costs $250,000 per term

If you are purchasing term life insurance, you will generally want to match the length of your term to your longest financial obligation. For example, do you need life insurance to replace your income, pay your children’s school fees, or cover debts like loans or a mortgage?

Here we compare $250,000 life insurance costs for different policy lengths.

Our analysis of average life insurance costs of $250,000 revealed:

  • Moving from a 10-year term to a 15-year term increases the quotes by 18% for men and 9% for women.
  • Going from 10-year to 20-year term life insurance increases quotes by about 45% for men and 27% for women. This doubles your tenure, but you pay less than 50% more.
  • Going from a 10-year term to a 30-year term increases quotes by 109% for men and 82% for women. You triple the term of the policy but only pay about double the amount, so it’s not a bad deal if it still fits your budget.

Life insurance costs by policy amount

We have analyzed the rates of life insurance from $250,000 compared to $100,000 up to $1 million.

Our analysis revealed that:

  • Life insurance of $500,000 costs 56% more for men and 50% more for women than life insurance of $250,000. So for about 50% more, your beneficiaries would get double the payout.
  • Increasing coverage from $250,000 to $750,000 will cost 106% more for men and 71% more for women. This doubles the cost for men, and not as much for women, but triples your coverage amount.
  • Going from a $250,000 life insurance policy to a $1 million life insurance policy costs 150% more for men and 107% more for women.

Life Insurance Cost Comparison by Coverage Amount

Tips for Buying a $250,000 Life Insurance Policy

Determine if $250,000 in life insurance is enough

Buying a life insurance policy starts with determining how much life insurance you need.

Calculate how much you want to include for funeral expenses, income replacement and your children’s education. Include large debts in your coverage amount, such as a mortgage.

You may find that a $250,000 life insurance policy is far less than what your family would need. For example, if you earn $80,000 a year and want to provide replacement income for 20 years, that’s already $1.6 million.

Determine the length of coverage needed

Next, consider how long the life insurance policy should last. If you’re younger and have a 30-year mortgage to pay off, a longer term is probably better. If you’re older and have paid off your debts and your mortgage is only a few years old, a shorter term may work just fine.

If your life insurance needs extend beyond a specific period, consider permanent life insurance such as universal life insurance or whole life insurance.

Compare life insurance quotes

Check life insurance quotes from several companies. Life insurance quotes are always free. Here are the typical cost factors:

  • Past and current health
  • Height and width
  • Lifestyle information, such as smoking
  • Family medical history for immediate family (parents and siblings)
  • Medications, current and past
  • Dangerous hobbies, such as scuba diving or flying airplanes
  • Future travel plans outside of the United States
  • Coverage amount and policy type

You may need to pass a life insurance medical exam. This gives insurance companies more details to determine your life expectancy. No-exam life insurance is also available for coverage amounts such as $250,000.

Be honest, because a misrepresentation on a life insurance application could result in voiding the policy in the future.

Methodology

Term life insurance quotes are for healthy non-smokers of average height and weight. We averaged the four cheapest quotes we found online. Your rates will be different depending on your age, medical condition, family medical history, driving record and other factors.