Getting a $500,000 life insurance policy

Do you earn at least $50,000 a year? This amount of coverage could be right for you.

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So, you’ve decided to purchase life insurance. The next question: How much coverage should you buy?

Your policy should sync up with your income as well as your financial obligations now and in the future. If after doing the math, you discover that your living expenses and debt add up to $500,000, it’s worth considering that amount for coverage.

What’s more, if you’re earning around $50,000 a year, this policy can protect your income if something happens to you — and at a surprisingly affordable price.

Why we like:

Term life insurance with no policy fees and the freedom to cancel anytime. Simple application process that can get you approved for coverage instantly.

  • Apply online and get a decision instantly
  • Cancel your coverage at any time
  • No annual fees

Why we like: LadderLife™ Life Insurance

Term life insurance with no policy fees and the freedom to cancel anytime. Simple application process that can get you approved for coverage instantly.

  • No brokers trying to upsell you
  • Your rate is locked in until your term expires
  • 30 day money-back guarantee

How much does a $500,000 life insurance policy cost?

Life insurance is tailored to the individual, and the rate you’re given is based on your gender, age, health, lifestyle, job and hobbies, plus the length of your policy.

Generally speaking, a $500,000 policy won’t break the bank, especially if you’re healthy and a nonsmoker. But smoking can double or triple your premiums, even if you’re in good physical health.

To figure out the average cost for a 20-year term policy with $500,000 of coverage, we compared rates from 10 major carriers. For a 30-year-old nonsmoking man in perfect health, the average cost of $500,000 worth of coverage is $28.58 a month. If he smokes, the rate could jump to $83.13 a month.

For the same policy, a 30-year-old nonsmoking woman could pay $23.06 a month. The average rate for smokers climbs to $67.45 a month.

With term life insurance, your premiums stay the same for the life of the policy — so aim to lock down a rate as soon as you need coverage.

*Based on sample rates from Policygenius, August 2019

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Can I get a $500,000 life insurance policy?

When determining your eligibility, insurance companies look at your age and salary.

As with all types of life insurance, the younger you are, the better your position. With a young applicant, the life insurance company assumes your salary and financial responsibilities will increase as you age. In other words, they know you’ll be able to pay and that your risk of dying during the term of the policy is lower.

Insurance carriers also consider your income. Most insurers will approve you for a policy that’s 10 to 20 times your salary. So if you earn $50,000 a year or more, you’ll likely qualify for a $500,000 policy.

If you’re a student, stay-at-home parent or unemployed, you may have a harder time securing half a million dollars in coverage — but it’s not impossible. The same goes for self-employed workers.

Can I get $500,000 coverage without a medical exam?

It’s likely. No-exam policies are risky business for insurers, because they can’t get a complete understanding of your health and medical history without a full exam. As such, they set higher premiums for no-exam policies, which fall under two categories: simplified issue and guaranteed issue life insurance.

Most insurers cap their coverage at $250,000, but a handful are willing to go up to $500,000.

For instance, Sagicor Life provides up to half a million dollars of term life insurance coverage for people between the ages of 18 and 65 without an exam. The application is digital, and the underwriters may check your DMV history and pharmacy and records with the Medical Information Bureau. The process can take up to a week, but those in good health might see approval in minutes.

No-exam policies have a speedy turnaround, making them ideal for people who need coverage quickly, like those who want to secure a business loan or fulfill a court order.

Is a $500,000 life insurance policy right for me?

The general rule of thumb is to buy a policy that would replace your income — and therefore cover your family’s cost of living — for 5 to 10 years. If you’re earning around $50,000 a year, you might be a good candidate for a $500,000 policy.

Along with income, take your financial obligations into account. To find that figure, think about everything you pay for now and what you’d be expected to pay for in the future. This might include a mortgage, student or car loans, credit card debt, college costs and business expenses.

When your financial responsibilities hit the $500,000 mark, you’re in the right market for half a million dollars of coverage.

When you’re doing the math, consider:

  • Income replacement. How much money would your family need to maintain their standard of living? If you’re the breadwinner, you should carry enough coverage to replace your salary for a few years, so your dependents won’t be saddled with financial burden. If your spouse is a stay-at-home parent or works part time, it’s a good idea to add extra coverage.
  • Children. The younger they are, the more coverage you’ll want to get, especially if you’re paying for child care. Most people go for a policy that covers their children until their 20s, when they’re working and earning money themselves.
  • College expenses. Speaking of kids, if yours are planning to go to college, consider the future costs. Depending on how many children you have and the schools they’re applying to, it might be worth getting a $500,000 policy.
  • Existing debt. Unfortunately, your debt doesn’t die with you. Your policy ideally should take care of your mortgage, car loan, student loans, credit cards and any other debt.
  • End-of-life expenses. Many policyholders put aside some money to cover expensive funeral, burial and related costs.
  • Long-term care. Are you looking after a sick parent or one who’s in a nursing home? Factor in those costs when calculating your life insurance needs.
  • Estate planning and management. As you work your way up the career ladder, you’ll most likely acquire assets and wealth. If your estate is worth $500,000, a life insurance policy can protect it and provide liquidity.
  • Savings. What does your savings account or 401(k) look like? Those numbers may lessen or increase your need for life insurance.
  • Business ownership. If you own or are a partner in a business, a policy can offer the company financial security as well as cash flow if something happens to you. The value of your business generally determines how much coverage you need.
  • Legacy. After you’ve accounted for financial responsibilities, you might want to think about leaving a legacy. Adding cushion coverage to your policy may bring it up to the $500,000 mark.

When your circumstances change, re-evaluate your coverage. If you find that your financial obligations and assets are now over $500,000, it’s worth looking into laddering policies for extra protection.

But take care with buying too much life insurance. Your policy should meet your financial situation and needs, not exceed them. If most of the above points don’t apply to you, you may not need $500,000 of coverage.

Companies that offer $500,000 coverage

Name Product Issue Ages Minimum Coverage Maximum Coverage Medical Exam Required State Availability
LadderLife™ Life Insurance
20 - 60 years old
Not available in New York
Term life insurance with no policy fees and the freedom to cancel anytime. Simple application process that can get you approved for coverage instantly.
18 - 85 years old
Depends on provider and policy
All 50 states
Compare affordable quotes from 12+ A-rated life insurance companies side-by-side.
18 - 100 years old
This life insurance broker combines technology and the human touch to match you with a policy tailored to your needs.
20 - 85 years old
Depends on policy.
Products and product features may not be available in all states.
This well-established life insurance provider could offer you $250,000 worth of coverage for as low as $14 per month.
21 - 54 years old
Not available in New York
Affordable 2-, 10- and 20-year term life insurance policies. Instant quotes and no medical exams.
25 - 60 years old
Available in all states except NY, CA and MT
Get affordable term life insurance with accelerated underwriting or no-exam coverage up to $1,000,000. Available in all states except CA, NY and MT.

Compare up to 4 providers

Bottom line

Life insurance is incredibly personal, so it’s up to you to do the math. If your living expenses and debt come to half a million dollars, it’s worth looking at a $500,000 policy.

Think about your salary, too. For those who take home $50,000 a year, this policy can offer the protection you might need.

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