How Much Is Life Insurance Per Month and Is It Worth the Investment?
One of the most frightening thoughts that can cross anyone’s mind is what will happen to your family in the event of your untimely death.
Having children or other dependents significantly raises this fear. Life insurance is a contractual agreement between you and an insurer where you pay premiums for a fixed period of time in exchange for a monetary benefit.
If you pass away, the policy pays out a pre-determined amount to your beneficiaries so they can continue living their lives without financial strain from your passing. In return for those benefits, the insurer charges you premiums at regular intervals.
The premium cost depends on many factors, including age and health status of the policyholder, type and amount of coverage, and so forth.
How Much Is Life Insurance Per Month?
The amount of life insurance per month is calculated by taking into account your current age, health status, existing coverage, and financial obligations.
The insurance company factors in these characteristics to determine the appropriate cost of your insurance premium. Let’s say you’re 25 years old and purchase a $5,000 death benefit policy.
If you maintain that policy until you retire at 65 years old, you will have paid roughly $2,100 in total premiums. The amount of your premium is likely to fluctuate as you age.
Insurance companies use your age and health status to determine your risk of dying prematurely. They will then set a premium amount based on the risk involved.
Generally, older individuals pay more for their insurance policies because they are more likely to die within the duration of the policy.
Is Life Insurance Worth the Investment?
The primary purpose of life insurance is to provide financial support to your loved ones in the event of your death.
If you pass away without a policy in place, then your family may have to take out a loan or seek financial assistance from family members or charities.
This will put a lot of financial strain on your family, at a time when they are already grieving and feeling overwhelmed.
With a life insurance policy in place, your beneficiaries will receive a pre-determined amount of money. The amount provided will help them pay off any financial obligations, such as loans and mortgages, that you owe.
If your family members have small children, they will have access to financial assistance to care for them while they grow into responsible adults.
Types of Life Insurance
There are several types of life insurance, including group and variable. The most common types are:
- Term life insurance: Term insurance provides coverage for a specified amount of time. Most policies are set at 10 or 15 years. Terminating the policy before the end of the term will result in you losing access to the coverage.
- Whole life insurance: While term life insurance provides a set amount of coverage at a set rate, whole life insurance provides coverage until you die. You pay a fixed amount each month that goes toward both the cost of your insurance policy and the death benefit that will be paid to your beneficiaries.
- Universal life insurance: Universal life insurance combines aspects of term life and whole life policies. You select an amount of coverage for your death benefit at the beginning of the policy and a monthly premium. As you age, the monthly premium increases due to the risk of you dying before the policy ends.
Things to Consider Before Purchasing Life Insurance
Before purchasing a life insurance policy, you’ll want to think about:
- Age of the policyholder: The younger you are when you start a policy, the less you will pay in premiums.
- The health of the policyholder: A healthier individual will have a lower monthly premium than someone with a pre-existing medical condition.
- Existing coverage: Even if you want to purchase an insurance policy, you need to make sure that the amount of coverage you have is sufficient. You will likely want to purchase additional coverage if you have high financial obligations and want to ensure that your family receives the money they need after your death.
Insurance can provide your family with the financial assistance they need to pay off your debts, care for your children, and maintain the lifestyle you worked hard to provide them.
The amount of coverage you should obtain will depend on your age, health, existing coverage, and other factors. As a rule, the younger you are, the lower your premiums will be.
Regardless of age, however, you should make sure your family is financially protected.
Category: Life Insurance
