Age is a factor that affects most insurance premiums, for example, a younger person will generally pay more for car insurance as they are likely to have less driving experience and a greater chance of being involved in accidents. However, when it comes to life insurance, the opposite applies. Generally, the later you sign up, the higher your premiums will be.
You want to give yourself and your family peace of mind that they will be protected and financially capable in the event of your passing. If only there was an easy way to understand the intricacies of life insurance premiums so that you could give your family the best life cover without the headache of hours of research.
Oh wait, there is an easy way! Transparency is our vibe, so we have detailed everything you need to know about how age affects life insurance quotes here.
Why does age affect life insurance?
As your age increases, so too will the cost of your premiums. This is true whether you’ve had life insurance from 24 or if you’re just signing up at 45. The price of life insurance is determined by actuarial life tables, which assign a probability of passing away while the policy is still in effect. This is done by calculating mortality rates and life expectancy. All very serious and intense stuff, but the bottom line is that regrettably, the older you get, the greater your chance of passing on becomes.
How age affects life insurance premiums
For each year that you age, the life insurance premium amount typically increases by 8% to 10%. If you are above 50 years old, your premium could increase as high as 12% annually. Your age also affects whether or not you are eligible for life insurance as you pose more health concerns as you age.
Instead of boosting annual premiums, many insurance companies maintain constant term life insurance prices. This means that the premium that you as the policyholder will pay is averaged throughout the years into a single monthly payment. This means that you will pay the same rate each year rather than starting with a lower premium that increases as you age. Does that make sense?
Term life insurance versus whole life insurance
There are two main branches of life insurance available, term life insurance and whole of life insurance. With term life insurance, you will be covered for a set number of years, usually up to 90 years of age (although some people may choose a shorter term). Generally speaking, a maximum term of 40 years and a minimum term of 1, 2, or 5 years is offered.
When it comes to whole of life insurance, this type of cover will continue right up until you die, however, there is usually a limit on when you can apply. The maximum age for most insurance providers is typically between 70 and 85 years of age.
What else should you consider when looking at life insurance?
Other factors, besides your age, determine the cost of your life insurance premiums. Your lifestyle and habits are also considered. People who smoke and drink frequently, for instance, might have to pay a larger premium. You may have to pay higher insurance premiums if you have a known history of certain illnesses, such as malignancies, high blood pressure, etc.
The premium calculation takes occupation into account too. Workers in the mining, oil and gas industries will pay a higher premium than those working desk jobs.
When should you get life insurance?
Taking your age, lifestyle, health, and other factors into consideration, it makes sense to sign up for life insurance as young as is reasonably possible. Many people don’t even think about life insurance until they begin to share living expenses with someone or want to start a family.
However, these important life events will take place at different stages for everyone. Depending on how late in the game that time is for you, your starting insurance premiums may be higher than is necessary or affordable. Getting into the habit of paying your premiums from a young age makes it easier for you to make space for the ongoing costs without giving it much thought, all while ensuring your loved ones are protected even after you pass. Like eating and sleeping, money management is a habit that you can cultivate.
At Hollard, we offer personal, comprehensive life cover that you can rely on to keep your loved ones safe and cared for, while still being affordable so that you can maintain a high quality of life while you’re living it.
Let’s get you covered by life insurance and put your mind at ease today.
