A $500,000 life insurance policy might sound like a lot, but for many families, it’s just what they need to protect their loved ones.
We’re here to offer guidance to help you figure out if a $500,000 life insurance policy is the right fit for your family!
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Do I Need A $500,000 Life Insurance Policy?
Do I Need A $500,000 Life Insurance Policy?For many families, $500,000 hits the sweet spot. It’s enough to cover major expenses—like paying off the house, funding kids’ college, or giving your spouse a financial cushion—without overcommitting to higher premiums.
It also aligns with a common guideline of having life insurance coverage of 7-10 times your annual income.
This ensures that your loved ones can maintain their standard of living by replacing the income you would have provided. So if you earn $50,00 a year, this is often in the right ballpark!
Surprisingly, according to a Life Insurance Gap survey by New York Life, many families feel they should be covered for even more than the “rule of thumb” amount.
Typical family case study:
$50,000 Income/ Non-working spouse/ Children/ Mortgage
So, how much life insurance does this family need?
- Your first calculation should be based on the death benefit required to generate sufficient income to support their surviving spouse and children.
- Then, determine the additional amount needed to repay any outstanding mortgage balance.
They must buy a policy with a death benefit to replace their income and pay off the mortgage balance.
A $500,000 term life policy covers both needs:
- $50,000 Income (x 7 years) = $350,000 Life Insurance
- $150,000 Mortgage Balance = $150,000 Mortgage Life Insurance
- $500,000 Total Life Insurance Required
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Buyer Tip:
At younger ages, most people are pleasantly surprised by the slight difference in premiums between a $250,000 and a $500,000 term life insurance policy.
$500,000 Term Life Insurance
$500,000 Term Life InsuranceTerm life insurance is our top pick for those needing substantial coverage at an affordable cost.
A $500,000 term insurance policy offers fixed premiums for terms ranging from 10 to 40 years, allowing you to tailor coverage to your evolving needs.
If you die during your selected term window, your loved ones get the full payout. If you’re still around at the end of the term, the coverage ends.
This is why it is essential to take some time to think about aligning the term length of your policy with your specific protection needs.
Let’s take a look at different term life insurance plans and why they are typically purchased as one progresses through life’s stages.
A 500k term life insurance policy is necessary for young adults stepping into family responsibilities or at the peak of their careers.
A good choice would be either a 20 or 30-year term when children are young or financial obligations are at their highest.
As people grow older and their financial liabilities decrease, the need for extensive coverage lessens while premiums rise accordingly.
A 10-year or 15-year policy fits perfectly for couples in their fifties who wish to protect their income until retirement or pay off a mortgage balance.
As mortgage payments dwindle and savings mount, achieving self-insurance by the time your policy concludes becomes increasingly realistic.
For seniors, term life insurance is best suited for short-term financial responsibilities rather than leaving a legacy for their children.
Below, you will find the cost of $500,000 term life insurance for both 10 and 20 years for non-smoking males.
$500,000 Term Life Insurance Rates
| 10 Year | $500,000 |
| 45 | $23 |
| 50 | $37 |
| 55 | $62 |
| 60 | $102 |
| 65 | $180 |
| 70 | $295 |
| 20 Year | $500,000 |
| 45 | $46 |
| 50 | $70 |
| 55 | $115 |
| 60 | $197 |
| 65 | $372 |
| 70 | $676 |
Permanent Life Insurance
Permanent Life InsuranceIf you require a $500,000 policy that lasts for your entire lifetime, opting for universal or whole life insurance is usually a better choice than term coverage.
Universal life insurance offers guaranteed premiums, death benefits, and a cash value that grows tax-deferred but varies over time.
The way that cash value grows can vary, depending on how the policy is set up. Some policies are designed just for coverage, with little or no savings built in, while others focus on building up cash value.
For example, a cost-conscious buyer might choose a guaranteed universal life policy. GUL policies keep costs low and provide lifelong coverage, but don’t build much savings.
On the other hand, indexed universal life offers a unique savings opportunity by allowing policyholders to allocate their cash value to equity index accounts such as the Dow Jones Industrial Average, S&P 500, and NASDAQ.
Whole life insurance ensures permanent coverage, featuring lifetime guarantees on premiums, cash value, death benefits, and the possibility of earning dividends.
Should you buy a $500,000 whole-life policy, or is universal life better?
Because of its guaranteed cash values and dividends, a $ 500,000 whole life insurance policy will often cost significantly more than a universal life policy.
However, as the White Coat Investor highlights, whole life insurance can benefit conservative buyers who want both cash value growth and permanent coverage.
While, universal life is often favored by those who have already accumulated savings and only need affordable lifetime protection.
Universal and whole life insurance are commonly used to transfer money to heirs without tax implications.
If you live to a typical life expectancy, your policy’s tax-free payout offers an excellent long-term, conservative investment.
However, if you live significantly longer than average, the accumulating costs may diminish the overall return on your investment.
$500,000 Life Insurance Policy Cost
$500,000 Life Insurance Policy CostIf you’re interested in the cost of a $500,000 life insurance policy, you’ve come to the right place!
Affordable Life USA streamlines the process, making it easy to find reputable life insurance companies that offer competitive rates.
You can compare low-cost life insurance plans from various providers in just a few minutes, eliminating the need to make countless phone calls to different agents.
Remember, the amount of life insurance you should purchase depends on your family’s requirements and budget. If your needs are more modest, a $250,000 policy may be sufficient.
Take charge of your family’s future today with our handy life insurance calculator! It’s super easy to use and helps you compare different life insurance options.
Just fill in a few details, and you’ll discover the perfect coverage to protect what matters most to you!
Buying a $500,000 Life Insurance Policy
Buying a $500,000 Life Insurance PolicyIf you want to secure a $500,000 term life insurance policy without spending a fortune, we are happy to help!
Our agents will get started by getting a few key details: how much coverage you want, whether you prefer term or permanent insurance, and a brief overview of your health history.
Once we have this information, we can help you compare options and find the best policy for your needs.
The application usually starts with a phone interview or a short medical exam, depending on the type of policy and the amount of coverage you need.
$500k Life Insurance No Medical Exam
Numerous studies have shown that eliminating the need for a medical exam can significantly increase the likelihood that individuals will purchase insurance coverage.
Nearly 66% of those interested in buying no-exam life insurance are drawn to the speed and ease that it offers, according to this LIMRA study.
Several insurers have responded by offering coverage without requiring an examination. Instead, you must undergo a brief phone interview where you will answer some health-related questions.
We can help you obtain a policy from a few great companies, including Pacific Life, Banner Life, and Lincoln Financial.
Banner Life caps its no-medical-exam life insurance to those under 50 seeking coverage up to $500,000 in death benefits.On the other hand, companies like Pacific Life and Lincoln Financial offer one million dollars in life insurance without an exam if you need higher coverage.
$500,000 Life Insurance with an Exam
If you are open to taking a brief medical exam, you can access some of the most affordable rates, especially if you are in good health without significant medical issues.
The exam itself is straightforward and usually takes around 30 minutes. It typically involves a nurse or technician visiting your home or office to check your height, weight, and blood pressure and collect blood and urine samples.
Many insurance companies will require an exam if you’re over 60 or need a death benefit above $1,000,000.
Best Life Insurance Companies
Best Life Insurance CompaniesSince many companies sell life insurance, it isn’t easy to know which carriers can offer you a low-cost $500,000 life insurance policy.
Affordable Life USA is a nationally licensed agency that monitors a network of many of America’s top life insurance companies.
Here is a list of our companies that offer the highest ratings from the Better Business Bureau, AM Best, and J.D. Power.
| COMPANY | BBB | AM Best | JD Power |
| AIG | A+ | A | 718 |
| AXA Equitable | A+ | A+ | 752 |
| Banner Life | A+ | A+ | N/A |
| Brighthouse | A+ | A+ | N/A |
| Guardian Life | A+ | A++ | 760 |
| John Hancock | A+ | A+ | 739 |
| Lincoln Financial | A+ | A+ | 744 |
| Mass Mutual | A+ | A++ | 780 |
| Metlife | B- | A+ | 780 |
| Mutual of Omaha | A+ | A+ | 766 |
| Nationwide | A+ | A+ | 806 |
| Pacific Life | A+ | A+ | N/A |
| Principal Financial | A+ | A+ | 774 |
| Protective | A+ | A+ | 742 |
| Prudential | A | A+ | 770 |
| SBLI | A+ | A+ | N/A |
| Transamerica | A+ | A+ | 720 |
What’s the cost of a $500,000 life insurance policy?
We realize that comparing life insurance prices and choosing the ideal policy can often be time-consuming.
Affordable Life USA makes it easy to compare term and permanent life insurance quotes with our life insurance premium calculator.
- Select Duration
- Select Amount
- Press Get Quote
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Affordable Life USA offers comprehensive life insurance solutions to families and business owners throughout the United States.
Our founder, Eric Van Haaften, developed his passion for quantitative analysis while earning his business degree from Ferris State University, which laid a strong foundation for his analytical approach to financial planning.
