Of all the factors that affect the cost of a life insurance policy, one of the biggest is age.
There can be a huge difference in the cost of life insurance policy. The same policy for one person can cost $25 a month to over $1,000 a month! That’s because so much of the cost depends on the person getting the policy.
There are a lot of factors that go into calculating the cost of your premium. And age is a biggie. So, how does age affect life insurance premiums? Let’s find out below.
The reason age has such a big impact on the cost of life insurance is that, as you age, the chances of you passing away are greater. It’s just a fact of life. Your resistance to disease and injury weakens as you age. So your “mortality risk”, as life insurance companies call it, increases as you get older.
This increased risk means the chances of the insurance has to pay out get bigger. And the greater their risk, the more you have to pay.
How Insurance Companies Determine Risks
Life insurance companies use statistics and data analytics to determine how much of a risk a person is. With this data, they determine how much risk they can take on while still being financially stable.
You might notice that life insurance premiums are greater for those who are elderly. This is because the older you get, there is a higher probability that the insurance company will soon be writing out a large check for your death benefit.
Your physical condition and occupation are also a big factor. If you’re in your older years, and you have a stressful job, the chances of stress triggering unhealthy habits and health hazards are higher. Therefore, you’ll get a higher premium.
What is the Best Age to Get Life Insurance?
Some people may think it is ideal to get life insurance once you’re settled down and ready to start a family. However, it is actually more ideal to get a life insurance policy earlier than that.
It’s all about planning for the future, and your loved one’s financial security. Financial advisors highly recommend getting a life insurance policy as soon as you get a full-time job in your early 20s.
For a term life insurance policy, you can probably find a 30 year policy with a $500,000 to $1,000,000 death benefit for around $30 a month. That rate will NOT change as you get older (so long as you keep paying your premiums).
That’s a real good incentive to get that life insurance policy sooner rather than later. The longer you put off getting a policy, the more it will cost you in premiums over the years.
