Life insurance rates by age

How does my age affect my life insurance premium?

Age remains one of the most influential factors affecting life insurance premiums. Insurers assess premiums based on multiple personal rating factors, but an emphasis is placed on mortality risk, and the probability of death rises steadily as we get older.

For example, a 20 year old generally presents lower risk and will generally pay less for coverage than a 50 year old, who has a higher statistical likelihood of passing away sooner. When you are shopping for life insurance, it may be important to consider your age and how it will affect your premium. Depending on your age, you might decide to choose one life insurance policy type 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 might 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 five-year-old child might consider purchasing term life insurance policies with $500,000 in coverage over a 30-year term. This may help provide a financial cushion for the surviving spouse and child if one policyholder 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 debts and loans.

Middle-age life insurance

People between ages 40 and 60 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. Life insurance may also be used to leave a financial gift to a spouse or loved one without necessarily earmarking the money for a certain use.

Permanent life insurance will typically have a higher premium than term life insurance policies since the payout is likely guaranteed. This is not necessarily a negative factor if you have the finances to afford the higher premium. Knowing that you have a permanent life insurance policy in place may offer the peace of mind that your beneficiaries will be taken care of in the event that you pass away.

Life insurance for seniors

Life insurance for seniors can be a bit trickier than for other age groups. Most insurance companies will not sell new life insurance policies to people over a certain age, with the cutoff typically between ages 70 and 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, these policies can be expensive and usually have a death benefit cap around $25,000.

Life insurance rates typically increase as you get older. However, insurance companies also look at other important factors like your overall health, family medical history, occupation, lifestyle, gender, tobacco use and the type of policy you buy and the amount of coverage you need in order to calculate your personalized rate. If you are considering buying life insurance, it may be a good idea to consult a licensed life insurance agent or financial advisor on what type of policy makes sense for your age, budget and 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 need and the amount of coverage you choose. You may be able to build a more robust life insurance policy with riders. These add-ons may help you customize your policy and make your coverage more comprehensive, but they will also likely increase your premium. We provide a deeper look into some of these risk factors that insurance companies analyze and how they may impact your life insurance premium below.

Age

Young people tend to pay the lowest life insurance rates whereas older people tend to pay the highest. 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. Life insurance rates usually increase as you get older because advanced age typically corresponds to health complications or a shorter lifespan. This means insurance companies can generally expect a claim payout will come sooner for an older person and will often charge a higher premium to offset that risk.

The table below showcases average monthly life insurance rates by age — particularly highlighting how age influences monthly premiums for 10-year term life insurance policies at different coverage amounts. These sample rates apply to healthy non-smokers with no special risk factors.

As shown, premiums incrementally increase with age across all policy sizes. A 30 year old pays nearly a fourth of the cost of a 50 year old for identical coverage.

Source: Aflac

For whole life insurance rates by age, the following table shows how rates fluctuate for a whole life policy at different coverage amounts. Notice that the 35-year-old female pays nearly half the cost of a 60-year-old female. 35-year-old males can expect to see rates more than double by age 60.

Source: Choice Mutual

Keep in mind that these charts are only an example, rates will vary depending on policy type, length, coverage amount and company.

Health

Health is another major factor that contributes to the cost of life insurance. People who suffer from pre-existing medical conditions — 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 most cases, in addition to a traditional medical exam or health questionnaire, insurance companies use rating tiers to determine your health risks. Each rating category is defined as follows:

• 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 medical issues or risky health habits, like smoking.

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

Gender

It may 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 actuarial data shows that women have a longer lifespan than men, meaning companies may pay out a life insurance benefit earlier for men than for women. 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.

Job and lifestyle

Your job and lifestyle are also factors that are considered by a company when determining your premium. Applicants who engage in low-risk activities often pay less than those who regularly participate in high-risk roles. For example, an office worker may receive lower premiums than a construction worker. Insurers view certain professions as more accident-prone and hazardous. Maintaining good health can help offset higher premiums in high-risk occupations. Discuss your job duties with a life insurance agent to determine if you qualify for standard rates or may pay more due to elevated mortality risk. Leading a safety-conscious lifestyle can potentially reduce costs regardless of your career.

Similarly, the hobbies you choose may also impact your life insurance rates. High-risk hobbies like skydiving, rock climbing, motorcycle racing and scuba diving may drive up your insurance premiums.

Policy type

Life insurance premiums are largely dependent on the kind of policy you buy. Term life insurance is typically  the most affordable policy type because it only offers coverage for a limited number of years. If you do not pass away during the term or convert or extend the policy, the policy expires without a death benefit being paid out. On the other hand, permanent life insurance policies are generally more expensive because they are intended to 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 usually 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 million in coverage. Ultimately, it will cost the insurance company less money to pay out $100,000 than it would to pay out $1 million, so the average cost of premiums would be much lower.

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