I can remember when the easy answer for “how much life insurance do I need” was three or 5 times your income. Not anymore unless you’re buying it to cover a debt like a mortgage or vacation home.
Of course, if you’re single with no dependents a $250,000 life insurance policy is probably sufficient since your death is unlikely to affect anyone financially.
But when you’re married and have a couple of kids, a $250,000 death benefit probably won’t cut it. In fact, if you want to make sure your kids can go to college, $250,000 is probably not even close.
Moreover, if you’re the primary breadwinner with a spouse and one or more children, you need to consider all financial issues that your family with have to deal with if you were to die unexpectedly. The good news is, if you’re a healthy non-smoker, buying a boatload of life insurance is actually very affordable.
How affordable is $250,000 in Term Life Insurance?
Term life insurance is the most affordable way to purchase a lot of coverage without breaking the bank. In this article we will take a look at all things Term:
- Different types of term life insurance
- Optional riders that are available
- The conversion privilege
- Highly-rated companies with the lowest rates
First, let’s set a baseline. Here are actual rates for a healthy male and female non-smoker for a $250,000 10-year term policy:
| Age of Applicant | Male Non-Smoker | Female Non-Smoker |
| 25 | $9.72 | $8.53 |
| 30 | $9.77 | $8.71 |
| 35 | $9.98 | $8.98 |
| 40 | $11.89 | $10.86 |
| 45 | $16.81 | $15.15 |
| 50 | $24.17 | $20.78 |
As you can see from this rate chart, a 40-year old male can buy a quarter-million-dollar life insurance policy for less than one large cheap pizza a month. We used a 10-year term policy because that’s what you’ll see quoted on TV.
Types of Term Life Insurance policies to Choose From
Term life insurance is inexpensive compared to other types of life insurance because it’s temporary and doesn’t build cash value.
Depending on your age, most companies offer several policy terms to choose from like 10 years, 15 years, 20 years (most popular), 25 years, and 30 years. The term you choose should depend on the number of years you want to mitigate your financial risks.
For example, if you want mortgage protection life insurance and have a 30-year mortgage, it makes sense to purchase a 30-year term policy rather than a 20-year term policy. In reality, however, you can renew your term policy but your rates will go up each year as you get older.
There are three primary aspects that will affect your rate no matter which type of term insurance you purchase:
- Your age when you purchase the policy
- Your health when you purchase the policy
- The face amount (death benefit) of the policy you purchase
Based on this, it makes better financial sense to purchase life insurance when you are younger and healthier instead of waiting. Your life insurance rates will never be as cheap as they are today.
Reasons for Buying a $250,000 Term Life Insurance
You’ve probably heard different descriptions of life insurance like mortgage protection insurance, income replacement insurance, final expense insurance, and return of premium insurance. These are all marketing terms that describe the purpose of the insurance policy and not the type of insurance you’re purchasing.
There are three primary aspects that will affect your rate no matter which type of term insurance you purchase:For example, if you buy a 30-year term life insurance policy to make sure your mortgage is paid off if you die during the policy term, you will not find the name “mortgage protection insurance” anywhere in the policy because mortgage protection is the purpose for the policy and not the type of policy you purchased.
Optional Riders that enhance your $250,000 term life insurance policy
Most life insurance companies offer a handful of optional riders that you can add to your $250,000 life insurance policy to broaden your coverage and add living benefits. Some of these riders can make a huge difference when life events come up that could be financially devastating.
Accelerated Death Benefit
This is one of the most important riders to consider and in fact, many insurance companies include this benefit in the core coverage of the policy. The accelerated death benefit provides for the insurer to advance the insured a large percentage of the death benefit if he or she is diagnosed with a chronic or critical illness. The advance you receive is intended to help with expensive medical costs and other life-ending expenses while you are still alive.
Accidental Death Benefit
This rider provides for the insurance company to pay an additional amount that you select over and above the policy face amount if your death is the result of a covered accident. The cost for this additional insurance is very inexpensive and should always be considered.
Children’s Term Rider
The children’s term rider allows the applicant to add and insure all dependent children on the policy including any children born or adopted after the policy is issued. With most carriers, the children’s coverage will expire at age 18 or when they get married.
Waiver of Premium
When you select this rider, your insurance company will waive your insurance premiums if you become totally disabled and are unable to work.
Return of Premium
The return of premium rider provides for the insurance company to return all premiums paid to the company if the insured outlives the policy term. Since the premium being returned has already been taxed, the insured will receive this lump sum payment tax-free. One of the best companies for Return of Premium term is Assurity Life.
Conversion Rider
The conversion rider is another benefit that many companies include in the policy’s core coverage. The conversion rider allows the policyholder to convert their term policy to a permanent policy and receive the same rate class as the term policy and not have to prove insurability or undergo a medical exam. Many companies will also include a premium credit towards the new policy.
Does a $250,000 policy cost a lot more than a $50,000 or $100,000 Policy?
In most cases, if you are 40-years old or younger, the difference between $250,000 and a smaller policy is negligible but remember, policy rates are based on your age, health, face amount, and the policy term you select.
Here is a comparison for a 20-year term policy for a healthy male non-smoker:
Here is a comparison for a 20-year term policy for a healthy male non-smoker| Age of Applicant | $50,000 Policy | $100,000 Policy | $250,000 Policy |
| 25 | $7.96 | $8.50 | $11.80 |
| 30 | $7.96 | $8.50 | $11.94 |
| 35 | $8.57 | $8.72 | $13.54 |
| 40 | $10.35 | $10.64 | $18.02 |
| 45 | $13.27 | $15.69 | $26.85 |
| 50 | $18.57 | $21.77 | $39.33 |
As you can see from the chart above, the rates for a $250,000 life insurance policy are not much higher than the rates for a $50,000 term life or $100,000 term life policy, especially if you’re 40 or younger.
Conclusion to the $250k life insurance policy
The bottom line is that the amount of life insurance you buy should be predicated on the risk you want to mitigate. If you are covering just debt then a smaller face amount will suffice but if you are looking to replace your incomer for you surviving loved ones, you will likely need between $500k and $1 million to cover all the bases.
Now you are probably wondering what company you should buy your policy from. Well use the quoter on this page to start with a list of the top term life companies that compete in the $250,000 policy space. I can go ahead and tell you that the following are great companies to work with when you are buying a $250,000 term life insurance policy:
- Protective Life
- Assurity Life
- North American
- Lincoln
- AIG American General
- Transamerica
Don’t just take our word for it – use our life insurance quoter to start comparing rates.
Frequently asked Questions
If I want a $250k policy will I need a medical exam
Not always. There are some highly-rated insurance companies that offer $250,000 of no exam life insurance. One company in particular, Savings Bank Life, offers no medical exam life insurance with face amounts up to $500,000. SBLI Insurance Company offers these no exam life insurance at very affordable rates.
Is $250,000 in coverage a lot more than $100,000?
The rate difference between $100,000 and $250,000 in coverage is minimal when you are 40 or younger. Even when you compare $50,000 with $205,000 there is only a few dollars difference in the monthly rates.
What's the best way to decide how much insurance to buy?
If you are trying to determine how much life insurance you need to replace your income, you can use an online life insurance calculator that will help you determine an accurate face amount.
