52%Americans who own life insurance
$27/moAverage 20-year, $500,000 term, healthy 40-year-old man
~3 in 4People who overestimate the cost
649Average customer satisfaction (J.D. Power 2026)
Key takeaway: Life insurance replaces your income and pays off debts if you die while others depend on you. For most families, term life is the most affordable option: a healthy 40-year-old man pays on average about $27 a month for $500,000 of 20-year cover. Buying younger and healthier locks in lower rates for the whole term.
How we put this guide together: Rates come from NerdWallet’s October 2026 analysis and MoneyGeek’s September 2026 quotes from 21 insurers. Ownership data comes from the LIMRA and Life Happens 2026 Insurance Barometer; satisfaction from J.D. Power’s 2026 study; financial-strength ratings from AM Best announcements. Figures were checked in October 2026; your own price depends on your age, health and the insurer. See our advertiser disclosure.

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Who needs life insurance

You likely need life insurance if someone would struggle financially without you: a spouse or partner, children, aging parents you support, or a co-signer on a loan. Stay-at-home parents need it too, because replacing childcare and household work costs money. Single people with no dependents and no shared debts may need little or none beyond final expenses.

The 2026 Insurance Barometer found only 52% of Americans own life insurance, and about 92 million adults say they need more. Cost is a common reason people delay, yet about three in four people overestimate it; adults under 31 guessed five to six times too high.

The main types of life insurance

TypeHow long it lastsCash value?Best for
Term lifeA set period, usually 10–30 yearsNoIncome replacement while children are young or a mortgage is outstanding
Whole lifeLifetime, with fixed premiumsYes, grows at a guaranteed rateLifelong needs, estate planning, special-needs dependents
Universal lifeLifetime, with flexible premiumsYes, interest-sensitivePeople wanting permanent cover with more flexibility
Guaranteed issue / final expenseLifetime, small amountsSmallOlder adults who can’t qualify elsewhere
Group (workplace) lifeWhile you work thereNoA free or cheap base layer, not usually enough on its own

Our guide to term vs. whole life insurance explains the trade-offs in detail.

What it costs

NerdWallet’s October 2026 averages for a $500,000, 20-year term policy at preferred health rates:

AgeMen (yearly)Women (yearly)
30$213$182
40$321$278
50$810$636
60$2,335$1,640

A whole life policy with the same $500,000 death benefit costs about $3,180 a year for a 40-year-old man, roughly ten times the term price. Smokers pay about four to five times as much. See our 2026 life insurance cost guide.

How much cover you need

A quick rule of thumb is ten times your annual income, but a needs-based estimate is better: add up income you want to replace, your mortgage and other debts, future education costs and final expenses, then subtract savings and existing cover. Our coverage calculator guide walks through it.

How to choose an insurer

  • Financial strength: life policies can last decades, so choose insurers rated A or better by AM Best.
  • Customer satisfaction: Nationwide (701), State Farm (692) and Mutual of Omaha (680) led J.D. Power’s 2026 study.
  • Underwriting fit: some insurers are more lenient with specific health conditions or smoking history, which can change your price class.

We compare major insurers in our guide to the best life insurance companies.

All Life insurance guides

Frequently asked questions

What is the cheapest type of life insurance?

Term life. A healthy 30-year-old can buy $500,000 of 20-year cover for about $15 to $18 a month on average.

Is life insurance taxable?

Death benefits paid to a beneficiary are generally not taxable income, according to the IRS. Interest paid on the benefit is taxable.

How much life insurance should I get?

A common starting point is 10 times your income. A needs-based calculation that includes debts, education costs and existing savings is more accurate.

Do I need a medical exam?

Not always. Many insurers offer no-exam policies, especially for younger, healthy applicants, though larger amounts or health issues may still require one.

Is life insurance through work enough?

Usually not. Workplace cover is often one to two times salary and typically ends when you leave the job.

Sources

Insurance prices, discounts and rules change often and vary by state. Figures were checked in October 2026; confirm details with the insurer or your state insurance department.