Term Life Insurance Blog

Term Life Insurance: It's Getting Cheaper and Cheaper

It shouldn't be a surprise that term life insurance is getting cheaper because people are generally living longer. Also, the popularity of getting insurance coverage from online outlets reduced the cost of insurers, which also drives the cost down. Is it time for me to double-size my million-dollar policy?

A key financial product -- term life insurance -- continues to get cheaper and easier to buy.

Prices for coverage have plummeted, partly because people are living longer. A healthy 40-year-old man who doesn't smoke can now get a $500,000 term-life policy for as little as $350 a year for 20 years -- down from $375 two years ago and $674 a decade ago, according to AccuQuote, an online insurance broker. In the early 1990s, the same policy cost more than $1,000 a year.

Another important change: Over time there's been a fundamental change in the nature of term policies. Years back, the standard product was annual renewable term, on which the premium rises inexorably each year. Today, the bread-and-butter offering is level-premium term, with charges that are fixed for, say, 10, 20 or 30 years.

The shift is significant. If you've held an annual-renewable policy for many years, you may be able to move to a level-premium policy with an annual charge that is less than the current cost of your rising-premium plan.

Similarly, if you bought level-premium term life insurance years ago, you may be able to switch to a new policy with a lower annual cost -- and possibly also extend the time period for which the rate is guaranteed.