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Life insurance quotes can vary quite a lot between individuals. One of the more significant factors in determining the average cost of life insurance is an applicant’s age. Generally, the older a person is, the higher the cost of their life insurance will be. This is because life insurance policies are designed to pay a death benefit when the insured passes away; the more likely it is that the named insured will pass away during the policy period, the higher rates will be. Age is one of the strongest determiners of future life expectancy, so it is also one of the most impactful variables in determining life insurance rates.

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Many other variables are also used to calculate these rates. The health of an applicant, their family medical history and risky lifestyles and hobbies can factor into rate determination when underwriters review an applicant. Still, few, if any, of these factors are as impactful as age when it comes to rates. However, because life insurance rates vary so widely between individuals, average rates are not a particularly useful tool. An average rate could give you a false sense of what you might pay for coverage, since age, health, hobbies and medical history vary widely between people. Because of this, Bankrate’s insurance editorial team chose not to feature average rates on this page; instead, we explain how age affects life insurance rates and what you can do to keep your rate lower.

Life insurance rates by age

When you are shopping for life insurance, it is important to consider your age and understand how that will affect your premium. Depending on your age, you might decide to choose one type of life insurance over another in order to get a more affordable rate. Here is a brief overview of life insurance rates by age.

Young adult life insurance

Young adults are often in good health and may only need a small amount of coverage, which can translate to lower rates. Many individuals will find that a term life insurance policy offers adequate coverage for their needs and budget. For example, a 35-year-old couple with a 5-year-old child might consider purchasing term life insurance policies with $500,000 in coverage over a 30-year term. This could help provide a financial cushion for the surviving spouse if one passes away. The death benefit could be used to help pay the mortgage, replace the lost spouse’s income and cover the child’s educational expenses. In most cases, life insurance policies for young adults are based on what fits your budget and covers immediate outstanding financial concerns, such as funeral expenses or outstanding debts or loans.

Middle-age life insurance

People who are between 40 and 60 years old may benefit from a permanent life insurance policy that offers protection for their lifetime (as long as premiums are paid). Life insurance for middle-aged policyholders may be geared toward helping a spouse pay down the remaining amount on a mortgage and pay off other debts if their partner passes away. Life insurance can also be used to leave a financial gift to a spouse or loved one without necessarily earmarking the money for a certain use.

Life insurance for seniors

Life insurance for seniors can be a bit trickier than it is for other age groups. Most insurance companies will not sell new life insurance policies to people over a certain age, usually around 70 to 80. For people who are older or suffer from pre-existing health conditions, a guaranteed life insurance policy may be the best or only option. This type of policy does not have a medical exam and coverage is guaranteed. However, even though coverage is guaranteed, affordability is not. These policies can be expensive. Guaranteed life insurance policies usually have a death benefit cap around $25,000.

Life insurance rates typically increase as you get older. However, insurance companies look at other factors, like your overall health, your gender, the type of policy you buy and the amount of coverage you need in order to calculate your personalized rate. If you are thinking about buying life insurance, it is a good idea to figure out what type of policy makes sense for your age, your budget and your coverage needs.

How life insurance rates are determined

Life insurance companies use a few different criteria to calculate your premium. Some of the most significant ones include your age, overall health, gender, the type of life insurance policy you buy and the amount of coverage you choose. Here is a deeper look into these five categories and how they impact your life insurance premium.

Age

The first factor that determines your life insurance premium is your age. Young people tend to pay the lowest life insurance rates and older people pay the highest rates. Although there are exceptions — usually based on the health of the applicant — a 30-year-old will likely receive a lower premium quote than a 40-year-old, and a 40-year-old will probably pay less than someone who is 55 or older.

Life insurance rates increase as you get older because advanced age typically corresponds to health complications or just a shorter lifespan. This means insurance companies can expect a claim payout will come sooner for an older person, and will often charge a higher premium to offset that risk.

Health

Health is another major factor that contributes to the cost of life insurance. People who suffer from pre-existing health issues — like diabetes, heart disease or obesity — may not live as long as healthy people with few or no medical conditions. As a result, insurance companies may charge higher rates for people with health issues or a family history of disease.

In addition to a traditional medical exam or health questionnaire, insurance companies use a rating system to determine your health risks. Represented are the following categories:

  • Preferred Plus: People in the Preferred Plus category are in excellent health, with no family history of disease or pre-existing conditions.
  • Preferred: Those in the Preferred category are typically in great health, but they might have a family history of one or two illnesses.
  • Standard Plus: The Standard Plus category means the individuals are mostly healthy, but may be slightly overweight, or suffer from minor conditions without a long family history of disease.
  • Standard: People in the Standard category suffer from moderate health issues and have a strong family history of disease.
  • Substandard: This category is for applications with moderate to severe health issues or risky health habits, like smoking.

Insurance companies may use different categories, depending on their own regulations.

Gender

It may not come as a surprise to learn that your gender also plays a key role in your life insurance premium. Men typically pay more for life insurance than women. This is because statistics show that women have a longer lifespan than men. According to data from the U.S. Census, the projected average life expectancy for a female in 2020 was 81.9 years old, and for men, the projected average was 77.1 years old.

Policy type

Life insurance premiums are also a reflection of the kind of policy you buy. Term life insurance can be the most affordable policy because it only offers coverage for a limited number of years. If you do not pass away during the term, the policy expires without a death benefit being paid out. On the other hand, permanent life insurance policies are generally more expensive because they provide coverage for your entire lifetime.

If you purchase a guaranteed life insurance policy, you could end up paying the highest rate. Guaranteed life insurance policies do not require a medical exam, so to make up for the added risk of insuring older or health-compromised individuals, insurance companies usually charge expensive premiums in comparison to other forms of life insurance. Despite the high rates, guaranteed life insurance policies usually have very low policy limits, as they are generally designed to cover end-of-life expenses.

Coverage limit

The last factor that determines your life insurance premium is your policy’s coverage limit. The more life insurance you need, the more expensive your insurance premium will be. When you pass away, your insurance company agrees to pay your beneficiaries a certain amount of money. Higher limits present a greater financial risk to the company, and that means a higher premium to compensate.

For example, someone who has a coverage limit of $100,000 will likely have a much lower premium than someone with $1,000,000 in coverage. Ultimately, it will cost the insurance company less money to pay out $100,000 than it would to pay out $1,000,000, so the average cost of premiums would be much lower.

Frequently asked questions

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