What this calculator does
Two life insurance quotes are hard to compare directly when they cover different amounts: a $40 monthly premium for $250,000 of coverage is not obviously better or worse than a $60 monthly premium for $500,000, until both are put on the same footing. Premium per $1,000 of coverage does exactly that.
This figure standardises price, not value. It says nothing about the underlying terms of a policy, such as whether it is level or increasing term, what exclusions apply, or the financial strength of the insurer, all of which matter as much as price when actually choosing a policy.
The formula
Divide the annual premium by the coverage amount, then multiply by 1,000 to express the rate per $1,000 of coverage rather than per single dollar.
| Term | Meaning |
|---|---|
| Rate per $1,000 | The annual premium expressed per $1,000 of coverage: (annual premium ÷ coverage amount) × 1,000. |
| Annual premium | The total premium paid per year for the policy. |
| Coverage amount | The face value of the policy, the amount it would pay out. |
The inputs explained
| Field | What to enter |
|---|---|
| Annual premium ($) | The annual premium for the policy; multiply a monthly premium by 12 if that is how it is quoted. |
| Coverage amount ($) | The face value of the policy, the total amount it would pay out. |
When to use it
Comparing quotes from different insurers
Two insurers quoting different premiums for different coverage amounts become directly comparable once both are converted to a rate per $1,000, isolating price from coverage size.
Checking how rate changes with age or health rating
Comparing the rate per $1,000 at renewal, or after a change in health rating, against the original rate shows how much the underlying pricing has actually shifted, separate from any change in coverage amount.
Deciding between more coverage or a cheaper policy
Knowing the rate per $1,000 makes it straightforward to estimate what a larger or smaller coverage amount from the same insurer would cost, without needing a fresh quote for every amount considered.
Worked examples
Every figure in the tables below is produced by this page’s own calculator at build time, so the numbers and the tool always agree. Select any row to load that scenario.
How the rate per $1,000 changes with annual premium at a fixed coverage amount
A fixed $500,000 of coverage, across a range of annual premiums.
| Annual premium | Premium per $1,000 of coverage |
|---|---|
| $300 | $0.60 |
| $450 | $0.90 |
| $600 | $1.20 |
| $800 | $1.60 |
| $1,000 | $2.00 |
| $1,400 | $2.80 |
How the rate per $1,000 changes with coverage amount at a fixed annual premium
A fixed $600 annual premium, across a range of coverage amounts.
| Coverage amount | Premium per $1,000 of coverage |
|---|---|
| $200,000 | $3.00 |
| $300,000 | $2.00 |
| $500,000 | $1.20 |
| $750,000 | $0.80 |
| $1,000,000 | $0.60 |
| $1,500,000 | $0.40 |
Questions
What is a typical rate per $1,000 of coverage?
It varies enormously by age, health, smoking status, policy type and term length, so there is no figure worth quoting as a benchmark. It is most useful as a way to compare two or more specific quotes against each other.
Does a lower rate per $1,000 always mean a better policy?
Not necessarily. It only compares price. Policy terms, exclusions, whether the premium is guaranteed level or can increase, and the insurer’s claims-paying reputation all matter alongside price, which is why a licensed insurance professional is worth involving before choosing on price alone.
Should I compare term and permanent life insurance this way?
The rate per $1,000 can be calculated for either, but term and permanent policies serve different purposes and permanent policies typically build cash value, so a direct rate comparison between the two types can be misleading without accounting for that difference.
Why does my rate per $1,000 rise every renewal on an annually renewable policy?
Annually renewable term policies typically reprice each year based on attained age, so the rate per $1,000 climbs as the insured person gets older, even with no change in health.
To size a rough coverage target before comparing rates, see the DIME method calculator or the Human Life Value calculator.