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Life insurance rates by age

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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 premiums will be. Life insurance policies are designed to pay a death benefit when the insured passes away. Anything that increases the odds of an insured’s death can also increase rates. 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.

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.

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 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, a 30-year-old will likely receive a lower premium quote than a 40-year-old, and a 40-year-old will 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 — typically do not live as long as healthy people with no 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 is the most affordable policy because it 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 charge extremely 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 higher your coverage limit is, 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. To mitigate that payout, the insurance company will price your policy accordingly.

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.

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 generally at their peak of health and may only need a small amount of coverage. Most 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 40-60 years old will usually benefit the most from a permanent life insurance policy that offers protection for their lifetime. 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

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 approved for almost everyone. 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.

Frequently asked questions

Who has the best life insurance policies?

The best life insurance company for one individual will not always be the best for another. Each policyholder has their own unique needs. Additionally, some insurance companies specialize in different areas. For instance, the best company for a term life policy may not be the best for a whole life policy, and the best for individual policies may not be the best for business life insurance.

How can I find cheaper life insurance?

One of the best ways to find the cheapest life insurance company for you is to understand your coverage needs. While shopping around might help you save a bit of money, life insurance rates don’t vary as much between companies as home or auto insurance rates. Working with an agent to determine the best type of policy, level of coverage and riders for your situation could help you find a policy that fits your needs and budget.

How much life insurance do I need?

Deciding how much life insurance coverage to purchase can seem daunting, but there are strategies that can help. Before determining how much life insurance you need, it’s important to assess a few relevant variables. The amount of debt you have, how much you contribute to household income and financial goals for your children (like saving for college) are all essential variables to consider. From here, it can help to follow a guide (or use a calculator) to determine how much financial protection you may need in the face of these variables.

Written by
Elizabeth Rivelli
Insurance Contributor
Elizabeth has two years of experience writing for insurance domains such as Bankrate.com, The Simple Dollar, Coverage.com and NextAdvisor, among others. In addition to auto insurance, Elizabeth regularly writes about home insurance, renters insurance and life insurance. She also covers industry trends and general insurance education.
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