A Guide to Life Insurance Rates by Age
Of all the factors to consider when choosing life insurance coverage, cost is one of the most important. Understanding the ways that life insurance rates change as you age can help you choose the best time to buy a policy.
How age impacts life insurance rates
When determining life insurance rates, or how much you pay for your policy, the main factor that insurance companies use is life expectancy. Life expectancy is an estimate of how long a person is expected to live based on statistics. Basically, the younger you are, the longer you are expected to live, which may result in lower insurance rates.
Age isn’t the only factor used by life insurance companies, but if it were, it would work like this:
- Younger people who are expected to live longer are seen as a lower risk to the company, and in turn, are typically charged less.
- Older people who are closer to their life expectancy are considered higher risk. Companies make up for this increased risk by charging higher premiums.
- On average, women live longer than men. Because of this, a 58-year-old man may have higher life insurance rates than a woman of the same age.
Keep in mind that life expectancies change over time and can change based on other factors. Companies use complex formulas to determine your rates based on all of the factors combined.
Other factors used to determine a person’s life expectancy include:
- Health history
- If you’ve had multiple serious illnesses or procedures, your life insurance rates will often be higher than someone without a history of medical conditions.
- Preexisting conditions
- Conditions like diabetes, high blood pressure, high cholesterol, or heart disease can cause your rates to be higher.
- Family history
- If you have a family history of cancer, heart attacks or other health conditions, you could be considered a higher risk to insure.
- Smokers or those who once were may pay higher life insurance premiums. This is because the life expectancy for smokers is about 10 years shorter.1
The premium, or cost of a policy, is determined when you buy your policy. Premiums can be paid yearly, quarterly or monthly. Generally, premiums are higher the shorter your life expectancy. If you are younger, but one of the above factors apply to you, you may pay more than someone else your age.
This, paired with the fact that your needs change as you age, makes it important to consider your stage of life when searching for life insurance. In many cases, the rising costs may be worth some peace of mind and other benefits that a life insurance policy can bring.
Life Insurance at Every Age: Children
Life insurance premiums are usually at their lowest for children. It’s purchased by a parent or grandparent in the name of their child or grandchild and gives the gift of lifelong insurance protection. Life insurance for children can be purchased from the day your loved one turns 14 days old until they turn 17. It can be used for any life insurance need during a child’s entire life. Children can typically claim the cash value the policy has built after their 18thor 21stbirthday, depending on the insurance plan.
Life Insurance at Every Age: 50-65
Other than your age, the duration of the life insurance you are considering is one of the main factors that determines the cost. At age 50, you may still qualify for terms longer than 20 years. But, the longer the term, the pricier your premium could be as you age. Keep reading about life insurance for seniors over 50.
Life Insurance at Every Age: 65-70
Updating your life insurance at age 65+ can be important, as you may need to change your coverage to meet your individual needs. Healthy individuals up to age 70 can usually get a term-life insurance policy for up to 20 years. If you are thinking about purchasing a term-life policy, consider your health and family history. Because the term is 20 years, a healthy individual may face the risk of outliving this policy’s coverage. Keep reading about life insurance for seniors over 65.
Life Insurance at Every Age: 70+
After turning 70, it may become more difficult to get a life insurance policy. For term-life insurance, the length of policies often becomes more limited. In fact, some providers won’t even offer term-life insurance to someone who is 70 or older. If you can get a term-life insurance policy, keep in mind that premiums are often more expensive the older you are. Based on your family history and current health state, you may be comfortable with purchasing a 5-15 year term policy. If you are looking for death benefit or payments after your death, a whole life insurance policy might be a better strategy.
Now that you have a better understanding of how life insurance rates change as you age, you can feel more confident in your coverage decisions. Remember that premiums are also impacted based on the amount of life insurance you purchase. Like most things, the more you purchase, the greater the total cost.
Talk to an agent/producer to find the most appropriate life insurance for your stage of life. It is important to keep in mind that there is no exact science for figuring out what you might pay for a life insurance policy without requesting a quote.
1CDC. Web page: Tobacco-Related Mortality Retrieved April 17, 2018, from https://www.cdc.gov/tobacco/data_statistics/fact_sheets/health_effects/tobacco_related_mortality/index.htm.