There’s no one-size-fits-all figure when it comes to life insurance costs. Learn more about how age and other key factors dictate premium prices.
Key Takeaways:
- Younger people typically pay lower premiums compared to older ones due to lower mortality risks.
- The type of life insurance policy and the desired coverage amount will impact the overall cost.
- Health conditions, smoking habits, and dangerous hobbies can affect premium rates.
If you don’t have any life insurance now, you’re not alone.
Last year’s figures from LIMRA showed just 51% of Americans had some form of it in place, meaning over 169 million people are currently unprotected.
Haziness on how much life insurance costs by age is one of the main factors creating reluctance to learn more about these policies, with LIMRA also highlighting that many consumers overestimate premium rates, which makes them forego coverage altogether.
So, there’s our first positive! Life insurance is likely to cost less than you think. While calculating premiums can get a little confusing given the number of factors they’re based on, NICRIS Insurance is here to shed some guidance for you.
We’ll start by first focusing on how age can influence life insurance costs. Then, we’ll explain how other variables can directly affect how expensive your life insurance premiums are in correlation to your age.
Age as a Major Factor
There’s no getting around it: aging does make everyone a riskier prospect in an insurer’s eyes, simply because getting older increases our chances of illness, accident, and death.
Better life insurance rates become a greater possibility the earlier you open a policy, since younger adults are more likely to be in sounder health.
And, since insurance is, at its heart, a preemptive measure, younger adults can get a valuable head start on saving for things like injury, illness, or family expansion.
Older adults may be more interested in protecting their loved ones until retirement, or be concerned with final expenses or leaving some sort of financial legacy for their family.
What are the average life insurance costs by age? The best any insurer can do without deeper knowledge of your personal circumstances is provide a ballpark figure (and even that will vary between providers). It’s always a subject with many variables involved.
Regardless of age—yes, even if you’re a senior—there’s always a case for life insurance.
Now, let’s look at some options and how they relate to cost.
Policy Type and Coverage Amount
Insurance for how long, and for how much? These important questions help dictate your premium rates.
Consider two of the main kinds of life insurance:
Term Life Insurance
Term life insurance covers a specified period (10, 20, 30 years etc.) and has a fixed payment amount on death.
It’s typically cheaper than whole life since there’s a clear cut-off point beyond which policyholders won’t be paying for premiums, and those premiums are a fixed rate.
This means they won’t increase over time, so you always know how much premiums will cost.
Whole Life Insurance
Whole life insurance covers a lifetime and further diversifies the notion of average life insurance costs by age due to its flexibility. Policyholders can choose the amount payable on death and whether they pay monthly, annually, or bi-annually.
There’s also the option of choosing a whole life insurance policy that skips the medical exam, but these usually come with higher premiums.
Term life policies can suit younger or older people.
For example, there are term life policies starting at age 65 or beyond which can cover seniors for a decade or more (level premium term) or one to five years (annual renewable term).
Then, there’s Guaranteed Universal Life insurance. This coverage can provide for people up to age 121 and, while that may seem like an impossible figure, keep in mind that the American lifespan is now longer than ever.
Like term life, these policies have fixed premiums up until the designated age, allowing for more confident cost projection.
Health and Lifestyle Factors for Life Insurance Premium Calculation
Health and lifestyle factors contribute hugely to deciding if a longer lifespan is a likelihood. They’re also two of the main ways an insurer sets its premium costs.
Think of the hierarchy of preference like this:
- At the top, we have a healthy person with healthy life habits like exercise and avoiding drugs, smoking, junk food, and excessive alcohol. They also don’t engage in any hazardous leisure pursuits.
- Then comes a currently healthy person, with all healthy habits, but who may enjoy rock climbing or another high risk endeavor.
- Next, a currently healthy person who smokes or engages in other physically damaging habits.
- Toward the bottom, we have those with current health conditions, who engage in no regular exercise, eat poorly, smoke, or have poor driving records.
Of course, adding advancing age to any of those categories increases the chances of higher premiums. The same goes for having a family history of health conditions even if you’re currently in good health.
The money-saving focus, therefore, shifts to those factors that are within our power to influence. Consider speaking to your doctor to see if it’s safe for you to engage in a more active lifestyle and to make healthier dietary choices.
You should also compare life insurance policies from different providers. Shopping around could lead to more favorable rates. It can also make things even more confusing and time-consuming for some.
That’s why it’s best to speak to an experienced insurance provider who can guide and advise you, saving you time and, hopefully, money.
Get the Right Life Insurance Policy for You With NICRIS
Are you considering life insurance? Maybe you’d like to learn more about how your current policy fits with your present needs and future plans?
The NICRIS Insurance Agency is here either way, ready to make you more confident and informed about life coverage.
We offer an hour-long insurance review that’s completely free, or you can send us your life insurance questions via our contact form.
We also love to meet people at our Plainview, NY office, so don’t hesitate to drop by!