How to Tell If You’re Paying Too Much for Life Insurance

If you have life insurance and you have not looked at it in a while, there is a real chance you are overpaying. Not because you made a bad choice, but because policies often get bought during a busy life moment, then left on autopilot for years.

The fastest way to get clarity is to compare your premium to today’s pricing, confirm your policy type still fits your goal, and make any changes carefully so you do not create a coverage gap.

Step 1: Reality check your premium against 2025 pricing

Start by asking one blunt question: if you applied today, would your monthly premium look anything like what you pay now? Guardian’s 2025 pricing examples show that a healthy 30-year-old buying a $500,000 20-year term policy averages about $30 per month for men and about $23 per month for women, with costs rising as age increases. (Source: Guardian Life)

If your premium is way higher than what you would expect for your age, health, coverage amount, and term length, that is your first sign. A lot of people never benchmark because they assume life insurance is automatically expensive. In the 2025 Insurance Barometer Study, healthy adults ages 18 to 30 overestimated the median cost of a $250,000 20-year level term policy by about 10 to 12 times. (Source: LIMRA and Life Happens) Once you see real 2025 pricing, it becomes easier to spot when your premium is out of line.

Step 2: Confirm your policy type still matches your goal

Next, look at what you bought, because the policy type can explain the price. Many people are paying “too much” simply because they are paying for a design that no longer matches what they are trying to protect.

For example, if your goal is straightforward protection for a set window of time, level term is built to be predictable. The NAIC explains that level term insurance provides a fixed death benefit and premium throughout the term, commonly 10, 20, or 30 years, and those amounts do not change even if the insured’s health changes. (Source: NAIC) If your needs are time-bound but your policy is structured differently, you might be paying for features you do not value. Once you confirm the policy type fits your goal, you can judge the premium more fairly.

Step 3: Check whether “convenience pricing” is quietly inflating your rate

Even with the right policy type, you might still be overpaying because of how you purchased coverage. If you chose a no-medical-exam option for speed, the trade-off can be price. Policygenius notes a common drawback of no-exam life insurance is higher premiums compared with fully underwritten policies. (Source: Policygenius)

This matters because plenty of people buy fast coverage during a stressful season, then never revisit it when life stabilizes. If your health improved, your nicotine use changed, or your finances look different now, your old premium may be based on an older snapshot of you. That does not mean you should automatically replace your policy, but it does mean you should compare what you have with what is available now under a full underwriting review.

Step 4: If you make changes, do it safely and avoid a coverage gap

If you decide your premium is too high, the biggest rule is simple: do not cancel your current policy until the new coverage is active and approved. Underwriting can take time, and results can surprise you. Keeping your existing policy in force protects your household during the transition.

It also helps to understand timing. MarketWatch explains that the contestability period is generally a two-year timeframe when an insurer can investigate the application and deny a claim if there was material misrepresentation or fraud, with claims during that window more likely to be reviewed closely. (Source: MarketWatch)

Investopedia similarly notes that life insurance policies generally have a two-year contestability period for the insurer to assess the policy for fraud or errors. (Source: Investopedia) That is why accuracy on any new application matters, and why replacing coverage should be handled carefully.

If you want a second set of eyes on your premium and coverage, book an appointment with Finance 360. We’ll connect you to a licensed life insurance specialist who can review your policy and walk you through your options.

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