What does term life insurance cost?
Purchasing term life insurance is a smart move if you don't want your dependents to experience financial hardship after your death. Of course, it's important that you, as the policyholder, know exactly what the cost of buying term life insurance is.
How much does term life insurance cost per month? What things affect the average cost of term life insurance? For answers to these and more questions, read on quickly.
Different types of term life insurance
In addition to obvious factors, the type of term life insurance also influences the type of life insurance below:
- An equal insurance policy has the highest benefit, but costs more.
- Linearly declining insurance pays out less each year, so the monthly cost also decreases each year.
- With annuitized insurance, the amount paid out decreases by a certain percentage each year, making the monthly cost somewhere between the two above.
What factors determine the cost of term life insurance?
The cost of term life insurance depends on certain factors. Below is an overview:
1. The benefit
When taking out death risk insurance, you as the policyholder must set a certain insured amount. This is entirely up to you, so you also have an influence on the final monthly cost of the insurance.
It's important to note that when you purchase death benefit insurance with a mortgage, in many cases the amount insured is exactly the same as the mortgage debt.
2. The period of validity of insurance.
In addition, the average cost of term life insurance per month will also be determined by the term you choose, which is usually 30 years. You are, of course, completely free to choose a shorter or longer period.
Note that a longer term usually carries a higher monthly premium, since the risk to the insurer in that case is also longer-lasting.
3. Your own age
Another important factor that determines the cost of term life insurance: the age of the policyholder. Younger people are a lot less likely to die than older people, so the premium at early ages is also a lot less.
This is one of the reasons why it is recommended that people purchase term life insurance as early as possible. Someone 18 years old pays significantly less monthly cost for term life insurance than a senior of 70.
Below is an overview of average death benefit insurance costs by age to make the difference clear:
- 21 years: average of €5.92 per month
- 41 years: average of €9.35 per month
- 61 years of age: average €36.21 per month
4. Your state of health
Finally, your own state of health has a very big impact on the cost of your life insurance per month. This is obvious: people who maintain a less healthy lifestyle are at greater risk of dying prematurely.
For example, smokers always pay a higher monthly premium than nonsmokers. However, the insurer will always look at other possible health problems-and risks, such as chronic conditions-to determine the final monthly premium.
The average cost of term life insurance
The above issues greatly affect the final monthly cost of a term life insurance policy. Therefore, it is important for policyholders to research what to expect from that monthly cost.
What exactly is the average cost of term life insurance? This question is difficult to answer because every personal situation is different. If we use a spectrum for monthly costs, they are usually between 5 and 35 euros per month.
It is important to note that age in particular is a determining factor. Therefore, the earlier you take out life insurance, the more likely you are to pay a lower monthly cost!
The cost of purchasing term life insurance
Besides the fact that you pay a monthly premium for term life insurance, of course, there are also costs associated with buying the insurance itself. These are also known as the whole life insurance closing costs. Here's some important info about these costs:
- You don't pay the term life insurance closing costs until you take out the policy.
- You can pay the closing costs in several ways: all at once or in several installments.
- The cost of purchasing term life insurance varies from insurer to insurer.
So when looking for a term life insurance policy that fits your budget, it is important to consider both the monthly premium and the initial cost of purchasing the term life insurance!