When you buy a life insurance policy, your age may be a significant factor that your insurance provider may consider when calculating your life insurance rates.
This blog discusses how and why your premiums may increase with age and the right age to get life insurance at affordable rates.
How Do Life Insurance Rates Work?
Life insurance means that after you buy a policy, you must pay your premiums regularly to ensure that your beneficiaries receive a death benefit once you die. Life insurance policies are of two types:
- Term life insurance
- Permanent life insurance
As the names suggest, for term life insurance, you pay the premiums for a fixed pre-decided term, and for permanent life insurance, you pay the premiums as long as you live. The term life premiums are typically lower than permanent life insurance rates.
Your insurance provider may use an actuarial table to estimate your life insurance rates. This table calculates life expectancy and mortality rates, important criteria for calculating your premium.
Risk Class and Life Insurance Premiums
When you buy life insurance, your insurance provider classifies you in a risk class based on which your premiums are determined. The factors that decide in which risk class you will be placed include:
- Age and gender
- Health status
- Family history
- Occupation
- Smoking habit
- Indulging in risky activities
How do Life Insurance Premiums Rise with Age?
There is an increase of about 8-10% each year in your permanent life insurance premiums which means the older you are, the higher will be your premium. It is because as you grow older, you get one year closer to your life expectancy and are placed in a higher risk class.
Qualifying for Coverage
Your age can be a significant factor in deciding whether you qualify for life insurance. You may need to undergo medical tests. With increased age, you may have to take more tests than at a younger age. The number of tests you need can also determine your life insurance rates.
Senior citizens may need a mental assessment for their overall health check-up.
Ideal Age to Get Life Insurance
There is no right age to get life insurance but at a younger age, you get better coverage options at more affordable rates.
What Happens to Life Insurance Rates as You Get Older?
If you buy life insurance at an older age, you must pay higher premiums. Usually, for term life insurance, the age restriction is 70 years, and for permanent life insurance, it may extend to 80 or 85 years beyond which you may be denied insurance.
Where You Do Not Have to Pay Higher Premiums as You Grow Older?
The only option where you may not have to pay higher life insurance rates with increasing age is your company-sponsored group life insurance.
Get Life Insurance Coverage at the Best Rates with J. Archer Insurance!
If you are planning to buy life insurance in Texas, our team at J. Archer Insurance Group can help you select the right coverage at affordable rates based on your specific needs. Contact us today to know more about the types of life insurance policies we offer.
