While several variables help determine the cost of your life insurance policy, perhaps none has a bigger effect than age.
This post examines the factors that influence life insurance cost by age and why this is the case.
Life insurance rates refer to the cost of a life insurance policy. Life insurance rates are mainly determined by two factors:
The personal circumstances that determine your life insurance rates include:
Additionally, the amount of cover you require, i.e., the amount you want your beneficiary to receive, the higher your life insurance costs.
Secondly, your life insurance rates depend on the premiums you pay, either level or stepped premiums. Level premiums stay the same as you get older but are usually pricier in the beginning, although the insurer can decide. Alternatively, stepped premiums increase with age but usually start a lot cheaper than level premiums.
See also: How much does life insurance cost?
There are two general categories of life insurance: term life insurance and whole life insurance.
A term life insurance is a policy that lasts for a set amount of time, i.e. a term. Term life insurance policies generally last for 5 or 10 years and are an ideal form of cover for protecting you until you attain a particular financial goal. This could include:
Yes, age does indeed affect the cost of your life insurance policy. In fact, your age is one of the leading influences on your life insurance rates.
Quite simply, the reason your age affects life insurance costs is that the older you become, the more likely you are to pass away. There are several reasons for this:
Insurance companies charge more for life insurance as you get older because the risk of insuring you increases. So, on the anniversary of your policy, your insurance provider will recalculate your insurance rates and adjust your premiums accordingly.
For expert, impartial advice on life insurance cost by age or any other aspect of income protection or financial planning, contact us to book your consultation.
Please note that all the while the information provided above is factual in nature, it’s also intended to apply generally, and to a broad audience. Subsequently, the information hasn’t taken your personal circumstances or goals into consideration.
Life insurance is a form of cover you can take out to provide for a chosen beneficiary if you pass away. You need life insurance if you have people you want to take care of financially when you’re no longer around. Generally speaking, the more dependents you have – and the higher the cost of taking care of them, the more you need life insurance. Additionally, life insurance becomes an even better idea if you don’t have any savings for your beneficiaries to draw on, if you were to pass away suddenly.
You should get life insurance when you want to financially support your loved ones after you die. For others, this may be a lot sooner if they have relatives they care for.
The younger you are when you buy life insurance, generally, the cheaper the premiums will be. However, there is no real point in purchasing life insurance if there is no one depending on you financially.