How Does Age Affect Life Insurance Cost

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Life insurance is an important financial tool that protects one’s family and loved ones in the unfortunate event of their passing. Like any other insurance policy, a risk assessment of the life insured is undertaken before issuing the life insurance policy to ascertain whether the applicant is high risk. For instance, someone with a dangerous occupation, dangerous hobbies (that might include skydiving, bungee jumping, sports car racing), a smoker or any underlying health conditions, while a low-risk applicant will be considered as one who is young and in excellent health with no immediate cause for concern.

Age’s Effect on Life Insurance Rate

One of the crucial factors that life insurance companies consider when it comes to life insurance is age. When calculating the cost of life insurance (premium), insurance companies consider the applicant’s age. When you are younger, the premiums tend to be lower as a young person is considered healthy and not so close to the life expectancy. Hence not anticipated to claim in the near future, thereby posing less risk to the life insurance company compared to an older person.

Young is usually associated with good health. Most health issues tend to develop later in life, and as such, older people will pay more than young people. Life insurance companies may request the applicant undergo a medical exam to understand the medical history of the applicant. 

Other Factors that Affect Your Life Insurance Cost

Health also plays a huge role in determining the price of life insurance and coverage. Not to say that unhealthy people cannot access life insurance, but they pose a high risk. They might get limited coverage with very high premiums. Whilst at some point, insurers may decline coverage altogether. Of the two (2) types of life insurance policies, these being whole life policies and term policies, whole life insurance can be issued to people as old as 85 years, while term life insurance policies are more restrictive with ages of up to 65-70 years old.

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As you age, life insurance tends to be more expensive as you are now considered high risk. You are prone to ailments and chronic diseases, and as the famous idiom goes, age catches up. At this point, there is limited coverage as compared to younger ages, and the cost of life insurance will be high. 

Why do Life Insurance Premiums Differ by Age

Life insurance policies are generally designed to pay a death benefit to the insured’s beneficiaries in the event that the insured passes on, and the older you are, the more likely it is that you will pass away during the period of insurance hence high rates will be used by the life insurance company resulting in high premiums. Also, as one ages, the life insurance company may be more stringent in the type of health tests they require the applicant to undergo to better understand the applicant’s current bill of health, considering their age.

In conclusion, age is indeed a critical factor in life insurance coverage and price. The sooner one secures life insurance, the cheaper. It is also important that before committing to any life insurance company/product, one does proper research on the available life insurance products, benefits offered, and the price that the different life insurance companies will charge based on one’s risk profile. 

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