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Term life insurance rates are greatly affected by your age. It s easy for an insurance agent to tell you that it s in your best interest to buy a policy while you re still young, but what are the real advantages to doing such a thing? You need to look at your current age, your level of health and the term of your policy to determine what your rate is going to be.
When you opt for term life insurance, you are determining how long you want a life insurance valid for. Unlike whole life insurance, you must decide on a term. This will vary from 5 to 35 years. The term you choose will be based on how old you are, what your financial situation is and what your ultimate goals are. Trying to get low insurance rates will be impacted by the term you ultimately select.
Why Age Matters with Term Life
Since most companies only allow you to choose a term up to 35 years, you must be very cognizant of how your age affects your policy. If you choose a 30 year policy when you are 30, you re going to be covered until the age of 60. Most like insurance companies will likely provide you with an affordable policy for a few reasons.
These reasons include:
– Low risk of filing a claim
Generally speaking, the younger you are, the healthier you are. Insurance companies look at this when determining what they will charge for the insurance premium. Those who are in good health are likely to remain in good health for a number of years. This means there is a significantly reduced risk of filing a claim that an insurance company would have to pay out. Obviously, age is not all the insurance companies will evaluate. They also look at your medical records and family history, what your height and weight is in order to determine whether or not you are overweight or obese, as that can cause many health conditions, such as sleep apnea, diabetes, and pulmonary embolisms. as well as activities you engage in, in order to assess whether you participate in hazardous sports like scuba diving, rock climbing, or sky diving.
It s important to note that a term life insurance policy is only valid for the term selected. If the term expires and you are still alive, the policy is null and void and you no longer have life insurance on yourself. About 90 percent of all term policies are never paid out.
This is why it s important to consider age with a term policy.
Goals are also important to consider. If the goal is to have a policy in place for your death to protect your loved ones financially and provide coverage for final resting expenses, then the term needs to go until you think you will no longer be around. You can use life expectancy charts for your state and your nationality to help you with this.
If the goal is to protect you in the event that you have a premature death and you just want to get through to retirement, then your term is going to change drastically. If you plan on retiring at 65, you want to choose a term that will get you to that point. The likelihood of finding an affordable policy is also great because most insurance companies don t get claims.
Comparing Rates by Age
Insurance companies look at age as a way of deciding on the cost of a premium. There is a significant difference in cost between what a policy will cost a healthy 35-year-old and a healthy 45-year-old. It all comes down to life expectancy and the likelihood of an insurance company having to pay a claim. When a term policy takes a person past the age of 65, when health problems and death are greater factors, the cost of the policy goes up with your assessed high risk.
Making online comparisons will prove this point. You can enter your ZIP code and basic information onto the website to see rate quotes from multiple companies. Use your current age when you re getting the quotes to see what you would pay.
Now, do all of the quotes again, but this time, create the information so that you are 10 years older than you really are. If you were born in 1962, say you were born in 1952. You will see how much more expensive the quotes are because you are older and therefore more likely to have health problems. For instance:
Male Age 50 Born in 1962
Male Age 60 Born in 1952
$500,000 of 20 year term coverage = $2,545.00/year
As you can see the rate increased by almost 3 times during that 10 year period, and that is with no reported health conditions. If you are being treated for medical conditions by age 60 that rate can continue to multiply.
The amount of insurance you are looking to purchase will impact the rates substantially as well. If you are looking to purchase a large amount of life insurance, for example to pay off your estate tax with life insurance, and provide your heirs with the necessary means to pay off your existing debt take a look how those rates can change.
Comparing Rates by Company
Every insurance company has a slightly different formula when it comes to quoting term life insurance policies. It is in your best interest to find out what all of the major insurance companies are going to quote you before you decide on one company s policy.
There s no need to go to each individual company s website. You can enter your basic information on a single website and get quotes from all the companies. This makes it easy to make comparisons between each of them to see where the best deals are.
Companies will be different based on the claims they have had in the past. If a company has had to pay out a lot of term life claims, they will likely be more expensive. Some companies will also put a higher emphasis on the amount of the term, the health of the person as well as the age of the person.
Term life will be affected by your age, and whether or not you participate in higher risk activities. A fee will added to those who are scuba divers, sky divers, and rock climbers. When you make comparisons, it will be easier for you to get the best premium based on your current age and the term you select.
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