Introduction
Life insurance is a form of financial protection that can help you and your dependents in case of your death. Life insurance can be used as part of an estate-planning strategy or to replace income lost due to the death of a wage earner. Life insurance policies are generally renewable, which means that premiums must be paid regularly and at the same rate over the entire term of coverage (usually 20 years or more).
What is a normal life insurance amount?
Life insurance is a contract between you and an insurance company. When you pay a premium to the company, they promise to pay out on the death of the insured person. Normal life insurance amounts vary widely depending on your situation, but here are some general guidelines:
- If you’re young and single without dependents, it’s probably best to get $25-50k of coverage. This will provide enough money for any debts or expenses that may arise before someone else can take care of them after your passing.
- If you’re older with dependents (spouse/kids), it’s recommended that you buy at least $100k worth of coverage—and ideally more than that! This amount should cover all funeral costs plus provide for any other financial needs your family might have in the wake of losing their main earner/breadwinner.
How much coverage do I need?
How much life insurance coverage do you need?
While the amount of coverage you need depends on your specific situation, one rule of thumb is to purchase enough to cover all of your funeral expenses plus the additional debts that may be left behind. For example, if your family would have to take out a loan in order to bury or cremate you, then it’s safe to say they will still want that loan paid off when they pay off their credit cards. That means it’s important for them not only separate what they owe from whoever’s paying off their debts but also pay off those other bills before they finish paying off yours.
To get an idea of how much coverage is right for you, use this simple calculator: http://www-cs-students.stanford.edu/~amitp/coding/life_insurance_calc%20template2-01232019%20AMITP%20BINARY1of1.html
How much does life insurance policy cost?
The cost of life insurance depends on a number of factors, including your age and health. If you have pre-existing medical conditions or are older than 40, the cost of a policy will be higher. You can expect to pay between $50 and $100 per month for coverage starting at $250,000 in face value (the amount that would be paid out if you died).
To get an idea about what your policy will cost:
- Calculate your monthly income needs. This figure should include expenses such as housing costs, utilities and other living expenses; food; childcare; transportation costs; clothing; savings contributions; debt repayment—including mortgage payments—and any other commitments such as spousal support obligations or alimony payments. Subtract this amount from your gross salary to determine how much money is left over after paying these expenses each month (called discretionary income).
- Find out how much life insurance you need based on this calculation by visiting our Life Insurance Calculator page (opens external link)
A normal or basic life insurance cost would be about $500,000 for a 30-year old.
For a 30-year old male, your life insurance policy cost would be about $500,000. For a 30-year old female, it would be about $400,000. If you are older than 30, the amount will go up accordingly. The amount generally increases by 10% per year over time (up to age 80).
Conclusion
While there’s not an exact amount that can be called a normal life insurance amount, it is important to know that the average cost of a policy is around $2,000 per year. This will depend on your age and health status though. If you have any questions about how much coverage you need or what type of plan would be best suited for your situation then we recommend talking with someone at your local bank or credit union who can help guide you through this process!