Who needs a $500,000 life insurance policy?

While we would never call you average, we thought you might want to know that, according to a Georgetown University study, the average American without a high school diploma earns nearly $1 million in their lifetime. As you would probably guess, those with additional education earn more. All of which is to say that, while a half-million dollars might sound like a lot — and it is — it’s a less imposing figure when considered over the course of your lifetime.

Which brings us to life insurance. When you’re buying life insurance, you need to be mindful of choosing a policy amount that covers more than end-of-life expenses (like burial and a funeral). You also need to consider decades of expenses when reviewing life insurance quotes, if you were to pass away suddenly. These expenses might include things like mortgage payments, childcare, health care costs, and of course, education needs.

But how much does $500,000 worth of insurance coverage cost? And is a $500,000 life insurance policy enough coverage? As we often say, life insurance is one of those things where more isn’t necessarily better. That’s why we’ve put together this guide with tips for determining how much coverage is right for you. And if it turns out a $500,000 life insurance policy makes sense, we’ll also let you know how you can buy a policy and what else you might need to consider for your financial protection. Let’s get to it, shall we?

In this article:

How much life insurance do I need?

Before getting into the price, it’s worth asking who actually needs a $500,000 policy to cover their financial obligations. A common rule of thumb is to have coverage that’s 5 to 10 times your annual salary. That would suggest that a $500,000 policy could be right for someone who earns between $50,000 and $100,000 a year. The reason for the broad range is that your exact policy needs depend on the age and quantity of your dependents, as well as other factors, like what debts you have and your partner’s income. You will be able to review these factors further with your insurance provider.

Nonetheless, for many people, the rule of thumb is a useful starting point. If you’re the type who likes your life insurance needs a bit more personalized to you (most people do), you can also use an online life insurance calculator. It’ll calculate your face amount and term length needs based on your family structure and financial situation.


What does a $500,000 life insurance policy cost?

Most things that are worth $500,000 cost $500,000, but that’s not the case with term life insurance. As for what does a $500,000 policy cost, there are two definitive answers to the question: The first is, “It depends, but it’s easy to find out.” And the second is: “a lot less than you probably think.”

The easiest way to get an idea of how much a $500,000 life insurance policy will cost is to use a free online quote tool. Using a quote tool you’ll see that a healthy 35-year-old woman can buy 20 years of $500,000 Haven Term life insurance coverage for around $18 per month.

The price you pay for life insurance is affected by several different factors, some of which you can’t control (like your age), and some of which you can. Three key factors that can influence the price of your term life insurance coverage are your age, your health, and the length of the term.

Age

The younger you are, the less you’ll pay for life insurance, which is a strong argument for getting it sooner, rather than later. The rate for a policy goes up as you get older because your age increases and logically, your health, well, decreases. For example, a man in excellent health, looking for a 20-year, $500,000 policy:

  • If he’s 35, he’ll pay around $21 a month
  • If he’s 45, he’ll pay about $42 a month

Health

The bottom line is… the better your health, the less you pay. Take the example of a 35-year-old woman looking for a 20-year, $500,000 policy:

  • With excellent health, she pays around $18 a month
  • With average health, she pays approximately $44 per month

Smoking will also negatively impact your life insurance rate. If that same woman smokes:

  • With good health, she pays around $61 a month
  • With average health, she pays close to $108 a month

Term length

The longer you want coverage for, the more your life insurance quote will be. A 35-year man in excellent health, looking for $500,000 of coverage will pay:

  • About $14 a month for a 10-year term
  • Approximately $16 a month for a 15-year term
  • Around $21 a month for a 20-year term (a popular term length for our mid-thirties to early-forties customers)
  • Just over $29 for a 25-year term
  • Approximately $35 a month for a 30-year term

So does this mean you should get a 10-year policy instead of a 20-year policy and save yourself some cash? Almost certainly not. The length of your term should be based on the amount of time your dependents will need life insurance coverage for their financial obligations. If you have young children and want to make sure they’re looked after financially if you die unexpectedly, that might mean you’ll need a longer term length than if you just have a few lingering debts that you expect to pay off in the next ten years.

Additionally, this is when the discussion of term versus whole life insurance comes into consideration. Permanent life insurance policies (like whole and universal life insurance) offer coverage that lasts a lifetime as well as a cash value component that can grow over time. However, these permanent life insurance policies can be cost prohibitive compared to term policies.

A 30-year-old woman in excellent health would pay about $25 per month for a 30-year, $500,000 Haven Term policy. A $500,000 whole life insurance policy for that same woman would be about $411 per month [Source: State Farm]. As you can see, the added financial protection can come at a high monthly premium cost. Below you’ll find our term life insurance rate chart.

Quotes for a $500,000 term life insurance policy

Age Gender Health Face amount Term length Premium
30 Male Excellent $500,000 30 $29.99
30 Female Excellent $500,000 30 $25.40
35 Male Excellent $500,000 20 $20.72
35 Female Excellent $500,000 20 $17.50
40 Male Excellent $500,000 15 $20.07
40 Female Excellent $500,000 15 $19.67

Source: Haven Life Insurance Agency (Haven Life) quotes for the Haven Term policy

How do I buy a $500,000 policy?

As with any insurance coverage, the process of getting a $500,000 term life insurance policy begins with getting a quote and then filling out an application, both of which you can do online with forward-thinking life insurance agencies like Haven Life.

Just know that you will likely pay less for a policy that is medically underwritten, which means that the life insurer is going to look at factors like your lifestyle, health, and medical history to determine eligibility and pricing. For many people, medically underwritten policies are more affordable because pricing is based on your health and other known factors so the life insurer is taking on less risk from the lack of unknowns. For this type of policy, you will usually need to take a medical exam to finalize coverage, but there are some situations where you may qualify for a no medical exam buying experience. Once an application is submitted, you will know whether or not a medical exam is needed. (Please keep in mind that payment of a policy’s benefits may depend on the truthfulness of answers provided in the application.)

If you need to take a medical exam to finalize your life insurance rate and coverage, it takes about 20 minutes and can be scheduled at a time and place of your choosing. Also, the insurer may offer your temporary life insurance coverage to financially protect you while you wait to complete your exam and get a final decision.

  • Both my husband and I got term life from Haven life. We recently had a baby girl and we wanted to make sure she’s protected financially if something were to happen to us. He got his first then i got mine after seeing how quick and simple the process was. We are both healthy adults in our late 20s so it was fairly simple and easy to get approved. The price is fair. Term life provides peace of mind for trajedy as we continue to build our wealth. We plan to be self insured when our term expires. I would recommend this company.

  • Everything to acquire the piece of mind that my family is taken care of because of something I did over a very short period of time was well worth it. From answering the pre-qualification questions online to attending the medical exam in town, I’ve gotten to work with a team of really nice professionals.

  • Was fairly easy to complete, but the online form disappeared in the middle so I had to start over. I called with a question regarding another issue with the form and that was resolved quickly.

  • Wow! I have life insurance and it only took 15 minutes! The process was simple, quick and painless. Now that’s my type of life insurance! #GoHavenLife…it’s (almost) like my birthday!

  • Haven Life company provides a great rate and a very easy to use process with a simple website to access. This is one of the best websites to use. I highly recommend this company.

Is my life insurance coverage dependable?

If you’ve spent even a little time shopping for a life insurance product, you know that you have a lot of options when choosing your life insurance company. One way to narrow down those options is by consulting ratings from third-party agencies. These agencies analyze an insurance company’s financial strength, and their ability to fulfill their contractual obligations to pay out a policy — and they do so independently, so you can trust their assessments. Typically, you can find a life insurance company’s ratings on its website; you can also check out life insurance reviews from customers.

Finding the right coverage for you.

Even though $500,000 sounds like a lot of money, you may well find that you need that much. We find that the average life insurance policy that a Haven Life customer purchases is around 20 years and $600,000. The price for a policy will vary according to your individual circumstances, but it’s easy to find out that number, and one of the great things about life insurance is that you don’t get what you pay for – you get more by way of peace of mind.

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About Louis Wilson

Louis Wilson is a freelance writer whose work has appeared in a wide array of publications, both online and in print. He often writes about travel, sports, popular culture, men’s fashion and grooming, and more. He lives in Austin, Texas, where he has developed an unbridled passion for breakfast tacos, with his wife and two children.

Read more by Louis Wilson

Our editorial policy

Haven Life is a customer-centric life insurance agency that’s backed and wholly owned by Massachusetts Mutual Life Insurance Company (MassMutual). We believe navigating decisions about life insurance, your personal finances and overall wellness can be refreshingly simple.

Our editorial policy

Haven Life is a customer centric life insurance agency that’s backed and wholly owned by Massachusetts Mutual Life Insurance Company (MassMutual). We believe navigating decisions about life insurance, your personal finances and overall wellness can be refreshingly simple.

Our content is created for educational purposes only. Haven Life does not endorse the companies, products, services or strategies discussed here, but we hope they can make your life a little less hard if they are a fit for your situation.

Haven Life is not authorized to give tax, legal or investment advice. This material is not intended to provide, and should not be relied on for tax, legal, or investment advice. Individuals are encouraged to seed advice from their own tax or legal counsel.

Our disclosures

Haven Term is a Term Life Insurance Policy (DTC and ICC17DTC in certain states, including NC) issued by Massachusetts Mutual Life Insurance Company (MassMutual), Springfield, MA 01111-0001 and offered exclusively through Haven Life Insurance Agency, LLC. In NY, Haven Term is DTC-NY 1017. In CA, Haven Term is DTC-CA 042017. Haven Term Simplified is a Simplified Issue Term Life Insurance Policy (ICC19PCM-SI 0819 in certain states, including NC) issued by the C.M. Life Insurance Company, Enfield, CT 06082. Policy and rider form numbers and features may vary by state and may not be available in all states. Our Agency license number in California is OK71922 and in Arkansas 100139527.

MassMutual is rated by A.M. Best Company as A++ (Superior; Top category of 15). The rating is as of Aril 1, 2020 and is subject to change. MassMutual has received different ratings from other rating agencies.

Haven Life Plus (Plus) is the marketing name for the Plus rider, which is included as part of the Haven Term policy and offers access to additional services and benefits at no cost or at a discount. The rider is not available in every state and is subject to change at any time. Neither Haven Life nor MassMutual are responsible for the provision of the benefits and services made accessible under the Plus Rider, which are provided by third party vendors (partners). For more information about Haven Life Plus, please visit: https://freshersOnline.com/plus.html

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  • The online experience was extremely simple and took all of the intimidation out of the application process. I appreciate how fast I was able to complete the account setup.

  • Great Life insurance company, your treated like a individual not just another number added to the bunch.

  • I love the process through Haven Life, as the application was easy to complete, and the medical exam was done at a facility near my home. Customers also have the option to have the medical examiner visit their home; however, I preferred to visit a nearby lab. Finally, I got a fair price for a 30-year term life insurance with Mass Mutual. I am delighted because the process was easy, and the underwriter did not make a huge issue like other insurance companies I have tried in the past, and the whole process took less than a week to complete. I am at peace know that should something happen to me; my family will be covered.

  • The website is easy to review. Coverage level I requested meant testing. That was a little clunky due to communication between their 3rd party, but haven life agents were timely with email communication. Overall the rate was a little higher than expected, but glad to have the insurance. Really liked using the slider to determine the final coverage. After policy issued, website shows a new perk so come so looking forward to seeing what that is about

  • This was a very pleasant experience. Their automated system was very well organized to obtain my medical records, driving record, and all of the other normal questions I would expected to answer. I’m 49 and in perfect health so I’m not surprised that I was approved. But I was very surprised that I was able to be be approved for life insurance in just minutes without a medical exam. I was even able to signed my docs right then. What I thought would take weeks took minutes.

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