Get ahead of the life insurance game by applying when the rates are still low.
Your 30s are a decade of discovery: You might be climbing the career ladder, getting married, starting a family and buying a home. You may also be thinking of starting your own business. Before you launch into your 30s, it’s a good idea to explore life insurance.
While you’re young, life insurance is incredibly affordable — and as a healthy 30-year-old, you may still have access to most providers’ preferred rates. Forward thinking pays off: You’ll not only lock in a low premium, but you may be able to opt for higher coverage for just a few extra dollars a month.
Life insurance goes hand-in-hand with financial planning. Even if you don’t have any major financial obligations now, you can start putting some money aside to protect you or your family when issues arise.
Life insurance companies for 30-year-olds
Which is the cheapest life insurance provider for 30-year-olds?
Let’s use a 20-year term life policy with $250,000 of coverage as an example. According to our research, the cheapest life insurance provider for a 30-year-old nonsmoking man might be Protective Life at $13.12 a month. The rates for a smoker are a little higher — William Penn and Banner Life tend to be the most inexpensive options, charging $39.77 a month.
For a 30-year-old nonsmoking woman, William Penn and Banner Life are among the cheapest providers at $11.74 a month, according to our research. They also offer low rates for smokers, with coverage at $32.03 a month.
Monthly costs of a 20-year, $500,000 term life policy for a 30-year-old in great health
|Banner Life (LGA)||$20.12||$17.11|
|William Penn (LGA in New York)||$20.12||$17.11|
|AIG Life Ins (American General)||$20.24||$17.21|
|Mutual of Omaha||$21.22||$18.16|
|Principal Life Insurance||$21.44||$18.59|
|John Hancock USA||$25.07||$22.62|
|Lincoln Financial Group||$28.44||$23.45|
What is my risk of dying in the next five years?
As a typical, healthy 30-year-old, it’s safe to assume you’ll live a long life. Based on our US life expectancy data, the risk of dying within the next five years stands at 0.79% for men and 0.38% for women.
To put this into context, a man who reaches the age of 65 can expect to live until 84.3, while a woman can expect to reach 86.6. These numbers are averages — about a quarter of 65-year-olds will live past age 90.
Though life insurers put a huge emphasis on age when they’re underwriting policies, at 30, you’re still in the sweet spot. It’s much less risky for a provider to cover you now than it is in 5, 10 or 15 years.
Odds of dying for a 30-year-old
|Within the next…||Male||Female|
Life expectancy rates are merely calculations based on averages of mortality among specific population, gender and age groups. They do not predict the specific life expectancy of any one person - including you. If you're concerned about your overall health and risks, talk to your doctor or health professional.
What is the typical cost of life insurance for 30-year-olds?
There’s nothing more personal than life insurance, and the rates vary depending on your age, health, lifestyle, occupation and family history. That being said, there are many benefits that come with signing up early, such as qualifying for low, preferred rates.
Our research suggests that the average cost of a $500,000, 20-year term policy for a nonsmoking man in perfect health is around $22.93 a month. Over 20 years, this adds up to $5,503.54, with an expected value of $23,620.14.
For that same amount of coverage for a nonsmoking woman, the average cost tends to be around $19.56 a month. This totals $4,694.06 over the life of the policy, with an expected value of $14,433.96.
What is expected value and how is it determined?
The expected value (EV) of a life insurance policy is the anticipated value based on the odds that you’ll die and your death benefit is paid out. You can find the expected value by multiplying the probability of you dying by the payout of the policy. If the expected value is higher than the total cost of the policy over the term length, then it may be considered a good investment. However, if the expected value is less than the total amount you’ll pay into the policy throughout the term, then you may want to look at other providers or alternatives to life insurance.
Let’s look at an example. Say you’re a 50-year-old nonsmoker who’s thinking about taking out a 20-year term life policy for $500,000 at $79.88 a month. As a man, you have a 20.97% chance of dying within the next 20 years, so you multiply that by $500,000 to get an expected value of $104,859.38. Since the total cost of your policy over 20 years adds up to $19,171.89 — less than the expected value — then your life insurance policy may be considered a good investment for the future.
What is the best life insurance policy for 30-year-olds?
The short answer: It depends on your situation.
To simply protect your family and give yourself peace of mind, consider term life insurance. It’s the cheapest type of insurance on the market and a common choice for 30-year-olds. Term insurance provides coverage for a fixed period, usually 10, 20 or 30 years. If you die during that time, your beneficiary gets your policy’s death benefit, which they can then use to cover the costs of your funeral, pay off your debts and maintain their lifestyle.
Typically, life insurance carriers offer low premiums to 30-year-olds. The reasoning behind this isn’t subtle: You’re young, so the odds of you outliving your policy are high. That means your life insurance provider probably won’t have to pay out your policy. In other words, you’re not a risk to their bottom line, but a term life policy will take care of your loved ones if you die unexpectedly.
For many 30-year-olds, it’s the most affordable option. Plus, the premium doesn’t change, so you know exactly how much you’ll be paying every month.
If life insurance is a major part of your financial plan, you might want to explore a permanent policy, like whole life. This type of policy typically costs two to four times more than term life, but most 30-year-olds can still access low, preferred rates. It also accumulates cash value, making it more of an investment option. Once you build up sufficient cash value, you can take out loans against your own policy — with interest — to cover a wedding, down payment and so on. The policy doesn’t expire as long as you make your payments, and when you die, your beneficiary receivez a death benefit along with an added cash value benefit.
While there usually isn’t a huge price difference between term and permanent life insurance at this age, the policy you choose comes down to your unique needs, budget and financial plan.
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How do I calculate my life insurance needs?
To figure out how much life insurance to buy, carefully consider your financial needs now and in the near future. Think about the following:
- Student loans. Are you still paying off those pesky student loans? If you die, any outstanding debt will be transferred to your cosigners, such as your parents, or your partner or kids. Your life insurance policy could help cover that debt.
- Existing debt. Student loans aside, assess any other debts, such as car loans or mortgages. Your debt doesn’t die with you, so the same principle applies here: You may want to leave enough to pay it off.
- Marriage. Many people get hitched in their 30s. If you’re married or thinking of getting married, it’s a good idea to have a life insurance policy in place. Should you die, it protects your spouse and provides them with much-needed income.
- Beneficiary’s lifestyle. Is your beneficiary — such as your spouse — able to work? If they do, you may need less coverage than you would for a stay-at-home parent, for example.
- Spouse’s health and life expectancy. This is a little morbid, but it’s important — especially if you’re married to someone much younger or older than yourself. When you’re calculating your life insurance needs, consider the age and health of your spouse and adjust your coverage according to that. The younger and healthier they are, the longer they will need a source of income.
- Children. According to the CDC, women in their early 30s are now the group with the highest birth rate in the US. This is a shift from previous years, when the average woman was having her first child in her 20s. It’s no secret that having a child is a huge financial responsibility, and a life insurance policy can help to cover the costs of raising that child if one parent dies. When you’re crunching the numbers, look at how many children you have — or are planning to have — and add coverage according to that.
- College expenses. At the same time, you can start thinking about your kids’ college plans, and factor that cost in.
- Business ownership. Maybe you have a business, or are hoping to start one in the future. Either way, a life insurance policy can offer the company — and its employees — cash flow and a sense of financial stability if something happens to you.
- End-of-life expenses. The most basic life insurance policy takes care of your funeral and burial costs, so your family isn’t saddled with that financial burden.
- Life insurance through work. While group insurance — the type offered through an employer — is great, it usually only offers a base level of protection, which can lull you into a false sense of security. Consider supplementing your policy by paying extra money to cover the financial needs we’ve listed above.
It’s a good idea to review your coverage as your circumstances change. Say you upgrade your home, have a child or get a hefty raise — you’ll want to be sure your life insurance policy accounts for that.
If you found yourself nodding “yes” to a few of the points above, it’s worth looking at higher coverage. At age 30, the difference between $250,000 and $500,000 or $1 million in coverage is typically $10 or less.
Let’s look at a 30-year-old nonsmoking man. Based on our research, one of the cheapest life insurance providers is Protective Life, which tends to charge $13.12 a month for a $250,000, 20-year term policy. For a $500,000 policy, that same insurer might offer a rate of $20.21 — a price difference of $7.09 for double the coverage. And if he wants to go even further and buy life insurance for $1 million, it increases to around $33.97 a month.
For many 30-year-olds, there’s a question mark over the future. They’re working their way up the career ladder, and marriage, houses, children and businesses may be a reality or on their mind. All of those things are huge financial responsibilities, and the sooner you start planning for them, the better off you — and your bank account — will be in the future.
When you’re young and healthy, you can usually score life insurance at a cheap rate. For most types of policies, that rate doesn’t change, meaning you can be covered for a low cost throughout much of your working life.
You may not know what the future holds, but life insurance can help you to prepare for it financially. However, it’s still an expense, so be sure to compare policies with our guide to life insurance.