How Does Age Affect Life Insurance Rates?

There are many different kinds of life insurance policies, each with its own set of specific terms and conditions. Naturally, this also means monthly payments are evaluated in various ways – with some policies maintaining the same premium amount while others change over time. 

Term Life Insurance

As the name suggests, term life insurance provides coverage for a specific term, meaning it expires once the period is over – though there are options for converting it to permanent coverage. Generally speaking, these policies usually come in terms of 10, 15, or 20 years. 

Because these policies don’t have a savings component (meaning they have no real value outside the death benefit) and expire after a specific period, they’re the cheapest policies to maintain despite advanced age. What might cost you thousands of dollars a month in permanent life insurance might only set you back hundreds in term insurance. 

Permanent Life Insurance

Permanent life insurance is an umbrella term for any policy that covers a person’s entire lifespan versus just a few decades. Because of this, insurers usually combine life insurance with a savings component or trust that beneficiaries and primary policyholders may withdraw against, if needed. However, all withdrawals are usually made from the death benefit, so there is a bit of cost-to-benefit weighing necessary.

Furthermore, permanent life insurance plans cost much more on a monthly basis, which can be risky for some policyholders since they have to pay the costs for the rest of their lives. 

Beyond age, a person’s general health is naturally one of the main determining factors of your premiums. If you have a history of chronic illness or your immediate family members suffer from relevant health conditions, you may be flagged as more expensive to insure, and this will be reflected in your premiums. 

To understand this a little bit better, policyholders are usually categorized as Preferred Plus, Preferred, Standard Plus, Standard, or Substandard, with folks in better health receiving better appraisals. 

However, some group insurance policies don’t require a medical exam which can be beneficial to certain kinds of applicants. These types of plans are usually included in compensation packages for employees. 

Some jobs and hobbies are riskier than others – and insurers pay close attention when determining your monthly bills. For example, if you and your sibling were on completely even footing health and age-wise but you liked sitting at home crocheting while they liked skydiving, naturally the skydiving sibling would be charged more. 

This logic also applies to jobs, where professions that keep you indoors at the office would be less risky than deep sea mining or construction. 

Although it may seem like a non-issue to the regular person, insurers are hyper-cognizant of a potential policyholder’s gender when determining their premiums. On average, men tend to pay more than women on monthly premiums because women are more likely to live longer lives.

A policy’s coverage amount refers to the value of the death benefit that’s paid out at the end of the policy. Different policyholders can ask for larger or smaller coverage amounts, depending on what their family or beneficiaries require for their quality of life to be maintained. 

However, larger policy amounts naturally mean heftier premiums, so be sure to keep that in mind.