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  • Writer's picturejimmy ting

How much does a $250,000 term life insurance policy cost?

When you think of life insurance coverage amounts of $500,000, $1 million or even $3 million, a $250,000 term life insurance policy might not seem like a substantial amount. But let us be clear, $250,000 is still a lot of money and would have a huge, positive impact on a family if their loved one died. For just one example, it’s roughly the cost of a brand new Italian sports car. So who needs that much coverage? And how much does a $250k term life insurance policy actually cost, anyway?

We’ve broken it all down below, including the questions you’ll need to ask to determine if a quarter-million-dollar policy (or even a $200,000 policy) is right for you.

Who needs life insurance?

Let’s start here — after all, term life insurance isn’t right for everybody. (And yes, we realize this isn’t a statement most life insurance agencies selling term life insurance typically make.) In short, term life insurance is a way of providing financial protection for your loved ones in case something happens to you within a set number of years (aka, the term).

If you die before the policy term ends, your designated beneficiaries will receive the full value of your policy from the life insurance company — in this case, $250,000 — which can be used to cover both short- and long-term expenses. These might include financial obligations like the cost of burial, paying off the remainder of your mortgage, even future tuition bills. This $250,000 life insurance payout is typically tax-free, and can be thought of as a financial safety net for when and if you’re not around. And if you don’t die before your policy term ends, good news: You’re still here.

For the most part, if you have other people who depend on you to pay for things, you probably should have life insurance. Most commonly, this would mean having children who rely on you for food, shelter, Legos, and so forth. This might include a spouse or partner with whom you share the cost of living, from rent or a mortgage to groceries. This could also include an aging parent, a relative with special needs, even a pet. (It’s not like your dog ever volunteers to pay for Purina.) Life insurance is a way of helping ensure that your family can to take care of financial obligations, even after you’re no longer there to pay for them.

In short, you should consider getting life insurance if (but not only if):

  • You’re a new parent (or planning to become one).

  • You and a partner or spouse share expenses or other financial commitments.

  • Other people rely on you for their living expenses.

  • You’re concerned with leaving behind a legacy.

So who needs a $250,000 term life insurance policy?

In general, the rule of thumb is that you should multiply your annual salary by five or ten to determine how much life insurance you need. Reverse that math, and you’ll see that a $250,000 policy is right for someone who makes between $25,000 and $50,000 per year. (If you’re in that range, you might also consider a $200,000 policy, which is right for someone who makes between $20,000 and $40,000 per year.) There are reasons why that figure might vary — if, for example, you’re the family breadwinner, you might need to multiply your base salary by even more, in which case you might need more insurance coverage than $250,000 can provide. But in general, that rule of thumb is a rule of thumb for a reason.

Paradoxically, that means a $200,000 or $250,000 policy might be right for someone just starting out, who is currently at the lower end of the salary spectrum. Or it might make sense for someone closer to retirement age, who is looking for a policy to bridge the gap between an expired policy and, say, retirement, or the kids going off to college.

Based on the salary-based rule of thumb outlined above, and the reality that, for most people, it doesn’t make sense to carry term life insurance policy once their house is paid off and/or their kids have graduated from college, there are roughly two groups of people who might want a $250,000 term life insurance policy:

  • People who make between $25,000 and $50,000 per year

  • People who only need a few years of coverage

This might include parents of middle school-aged children, or someone nearing the end of their mortgage payments. Ultimately, the ideal length of the term depends on a number of factors, including your age and overall health. And as you can see from below, this level of coverage only costs a little more than it takes to fill up your car with gas.

What does a $250,000 life insurance policy cost?

In general, a $250,000 policy is one of your more affordable life insurance options. (The reality is, you can have too much life insurance — yet another thing you never expected to hear from a life insurance agency.) The life insurance rate will depend on the length of your term, your age and your health at the time you apply, and a range of other factors. If the life insurance rate for a $500,000 policy exceeds your monthly budget, and you wisely don’t want to go without coverage, a $250,000 policy or even $200,000 policy might be a good fit. (And you can always purchase additional coverage as your budget changes.)

Finding the right coverage for you

The reality is, there are a lot of variables that go into determining how many years and dollars of coverage you should get. The lists above are by no means exhaustive, and there are lots of reasons why you might need life insurance, even beyond what we've mentioned already.

For more information about Life Insurance call JCT Insurance Agency at (626)354-2000 or email

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