Life insurance rates see biggest decrease in over 12 months, despite accelerating inflation
In stark contrast with rising inflation, life insurance rates were 2% cheaper in July 2022 than they were a year ago, according to the Policygenius Life Insurance Price Index.
Life insurance prices have been steadily decreasing since April, but compared with previous months, they decreased even faster in June. On average, life insurance rates decreased by nearly 0.4% in June compared to May. Female non-smoking 55-year-olds saw the biggest savings — their life insurance rates were more than 2% cheaper in June versus May.
However, the cost decreases in June are even more dramatic when compared to last year’s rates: Life insurance rates were a full 2% cheaper on average in June 2022 than they were in June 2021. In fact, more than half of all age groups tracked by the Policygenius Life Insurance Price Index saw life insurance rates decrease by more than 2% over the last year. Female non-smoking 25-year-olds saw the biggest savings of all — a reduction in the cost of life insurance between 4% and 5% year-over-year.
Life insurance rates have continued to drop while the rest of the economy keeps moving in the opposite direction. Consumer prices have continued rising at an annual rate of 8.6% according to the most recent data from the U.S. Bureau of Labor Statistics, and inflation is showing little signs of slowing down despite the Federal Reserve raising the benchmark interest rate last month by three-quarters of a percentage point — the biggest hike since 1994.
The drop in life insurance rates amid the current economic climate is not surprising, since “life insurance costs don’t necessarily follow inflation,” said Policygenius CEO and co-founder Jennifer Fitzgerald. “In a rising interest rate environment, insurance companies will have greater appetite for longer-duration products such as life insurance,” Fitzgerald said.
The pandemic might also have had an impact on the reduction of life insurance rates. COVID forced insurers to iterate faster and use technology to process applications and collect information on users. These operational improvements have allowed insurance companies to become more efficient and pass that savings onto the consumer in order to pick up market share.
While the cost of many goods and services — including food, gas, medical care, and travel — keeps rising, the cost of life insurance continues to go down, creating an opportunity for people shopping for life insurance to lock in very competitive rates, especially if they’re young and in good health.
U.S. monthly averages as of July 1, 2022
Term life insurance for non-smokers
The chart below shows average monthly premium prices for a 20-year term life insurance policy for non-smokers in a Preferred health classification; quotes are based on the Policygenius Life Insurance Price Index Methodology.
Age / Sex | $250K coverage amount | $500K coverage amount | $1M coverage amount |
|---|---|---|---|
25 year old female | $14.13 | $21.06 | $33.48 |
25 year old male | $17.09 | $26.94 | $44.72 |
35 year old female | $16.40 | $25.50 | $42.70 |
35 year old male | $18.61 | $30.26 | $51.81 |
45 year old female | $28.40 | $47.85 | $86.75 |
45 year old male | $35.22 | $60.71 | $112.88 |
55 year old female | $60.18 | $108.98 | $208.30 |
55 year old male | $83.45 | $151.18 | $284.13 |
U.S. monthly averages as of July 1, 2022
Term life insurance for smokers
The chart below shows average monthly premium prices for a 20-year term life insurance policy for smokers in a Preferred health classification; quotes are based on the Policygenius Life Insurance Price Index Methodology.
Age / Sex | $250K coverage amount | $500K coverage amount | $1M coverage amount |
|---|---|---|---|
25 year old female | $34.01 | $57.17 | $105.24 |
25 year old male | $42.02 | $72.30 | $133.92 |
35 year old female | $43.66 | $76.85 | $140.68 |
35 year old male | $52.54 | $92.24 | $174.91 |
45 year old female | $88.72 | $162.36 | $311.13 |
45 year old male | $119.63 | $222.26 | $427.99 |
55 year old female | $195.47 | $361.64 | $702.05 |
55 year old male | $280.46 | $518.83 | $1,016.10 |
Methodology: The prices displayed above are based on internal actuarial rate tables for 10 life insurance carriers that offer policies through the Policygenius marketplace (AIG, Banner Life, Brighthouse, Lincoln Financial, Mutual of Omaha, Pacific Life, Protective, Prudential, SBLI and TransAmerica). The prices represent the average monthly life insurance premium for each sample customer profile (age, gender) and policy type (term, coverage amount) as of July 1, 2022. Monthly averages are based on 10 products available through Policygenius for the indicated profile; rates for those products may vary by state, and not all 10 products are available in all states. Individual rates may vary, depending on age, gender, state, health profile, and other eligibility criteria. The index is updated each month.
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