life insurance cost by age

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.

How do life insurance rates by age in AU work?

Life insurance rates refer to the cost of a life insurance policy. Life insurance rates are mainly determined by two factors:

  •       Your personal circumstances
  •       The type of premiums you opt for

The personal circumstances that determine your life insurance rates include:

  •   Age: quite simply, the older you get, the chance of you passing away increases. As a result, the risk of insuring you increases, which influences the cost of your life insurance rates.
  •   Gender: your gender can affect your insurance premiums through different stages of life.
  •   Occupation: some jobs are riskier than others, affecting their cost of the life insurance by age
  •   Health: this includes your current health and any past medical conditions. Generally, this also encompasses your immediate family health history
  •   Lifestyle: the main concern from insurance providers is if you’re a smoker.

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?

Term life insurance vs whole life insurance

 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:

  •       Paying off your mortgage
  •       Getting your children through university
  •       Waiting for your children to leave
  •       Successfully establishing a secondary income
  •       Reaching retirement age

Does age affect life insurance cost?

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. 

Why does age affect the cost of life insurance?

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:

  •       The older you get, the greater the risk of developing a serious illness
  •       The longer unhealthy or destructive habits, e.g., smoking, excessive drinking have to catch up with you

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 cost

Bonus, life insurance calculator

...Tell us a bit about yourself
How old are you?
...Your Assets
What is the total of your disposable assets ( E.g. Superannuation balance, Savings, Investments, etc. )
...Your Liabilities
How much of your debt do you want to cover in the event of your premature death?
...Lastly, let us know your expected income for you family after you pass away
How much income do you want to replace for your family per year in the event of your premature death?
How many years do you want to provide you family with an income?
How much income do you wish to leave behind for education expenses for your children each year?
How many years do you want provide the education expense?

Life insurance cost by age FAQs

Why do you need life insurance?

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.  

At what age should you buy life insurance?

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.

Is it better to buy life insurance as soon as possible?

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. 

If you have no financial dependents, you need to look at taking out Total and Permanent Disability (TPD Insurance), Income Protection and Trauma insurance to protect yourself. 

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