If you have been procrastinating about buying a life insurance policy, it may be time to act sooner rather than later if you have an upcoming birthday.
When purchasing a life insurance policy, most people realize that your current age is a major factor determining the premium.
How life insurance companies calculate the age component often confuses many of our clients.
It is important to understand how to save money by either using your attained age or saving age on your life insurance policy.
Many applicants falsely assume premiums will be based on their current age (actual age) as long as the application is completed before their birthday.
This may not be the case because most life insurance companies use your attained age (age nearest) for calculating an insured’s age.
Attained Age Life Insurance Calculator
Actual Age or Age Last Birthday is a method for determining the applicant’s age for life insurance premium calculations.
Age Last Birthday uses the proposed insured’s actual age in years. Actual Age is utilized by only a few insurance companies and describes their current age for most people.
Here is how to calculate actual age when buying life insurance coverage. Since you do not turn 70 until tomorrow, you can still use a life insurance age of 70.
ACTUAL age example
| Your Date of Birth | June 12, 1950 |
| Today’s Date | June 13, 2020 |
| Your Life Insurance Age Today | Age 70 |
Attained Age or Age Nearest is a way of determining the policyholder’s age for pricing calculations on insurance policies.
Age nearest birthday is a popular method and determines your age on the day you move to within six months of your next birthday.
So, how is attained age calculated? Since you turn 71 in less than six months, you would use a life insurance age of 71 on your policy.
attained age example
| Your Date of Birth | June 12, 1950 |
| Today’s Date | January 13, 2020 |
| Your Life Insurance Age Today | Age 71 |
Save Age on Life Insurance
So, you missed the date, now what?
If you did not apply for life insurance in time, there is easy to recapture your previous age called back-dating.
Back-Dating is a legal method to back-date the “policy date” up to six months to save age and save you money.
We only recommend you save age if it saves you money over the balance of the years that you will maintain the policy.
It is possible to back-date the policy under both actual and nearest age scenarios.
However, you will still need to backdate your policy and pay premiums for the policy as if the contract were activated before your birthday changed.
How Much Does Life Insurance cost at my age?
You can also run insurance quotes with our free life insurance rates by age calculator.
If you could benefit from using your actual age, companies like Mutual of Omaha, Prudential, and Cincinnati life are excellent options.
When you enter your birth date, you will notice that your quote is rounded to your nearest age with some companies and remains the same with others.
- Select Duration
- Select Amount
- Press Get Quote
How to Calculate Life Insurance Premiums
Obviously, age is not all that insurance companies will evaluate when calculating the price you pay for life insurance.
The primary unit for figuring out a life insurance rate is the cost per $1000 of insurance which can vary and often depend on many different factors.
These other aspects of the underwriting process also play a significant role in what your life insurance policy will eventually cost you.
Factors in the Calculation of a Life Insurance Premium:
- Attained Age
- Gender
- Tobacco Usage
- Health
- Family History
- Type of Policy
- Death Benefit
How does gender affect life insurance rates? Gender plays an important role in determining how life insurance rates are calculated. Healthy females at all ages will always lock in much cheaper rates than males at any age.
Why are life insurance premiums higher for males? This is because men live for a shorter period of time than females. This means that the life insurance company is more likely to pay a death benefit sooner and collect less premium money before a man’s death.
The type of policy you select will be another factor in determining how your premium is calculated. Term insurance is much cheaper compared to a longer-running whole or universal life coverage at any age.
The premiums for your life insurance are also based on many personal factors like age attained, smoking status, height, weight, medical background, and family history.
Most insurance agents will always tell you the best time to compare life insurance rates and buy a policy is while you are still young and healthy.
The great thing about buying life insurance for young people is that it is affordable to purchase either term or permanent coverage.
People in good health can get great life insurance rates at almost any time in their life. In fact, the average age of the typical life insurance buyer is around 45 years old!
Many middle-aged couples often own a home, and mortgage protection life insurance is usually a high priority.
They are also in the prime of their careers and are now making more money than they were at any point in their lifetime. Many married people purchase life insurance in their 50’s to protect each other’s income.
If you are a healthy senior and people depend on you financially, you might want to consider life insurance to protect your family.
Term life insurance is the cheapest type of policy for older aged people looking to obtain a large death benefit at a low cost. Plus, term life insurance for seniors is not nearly as expensive as whole life or universal life.
Since term life is a type of coverage that only lasts for a short time, it is always the most inexpensive life insurance for seniors needing, say, a $500,000 policy with a specific need in mind.
Term insurance is not the best plan for older people only looking for a small death benefit to pay for final expenses. Instead, seniors should normally have permanent coverage like universal or whole life to cover burial costs or pay off bills.
Life Insurance Age
Life insurance premiums will increase on average by about 3% to 12% for every year, depending on your current age.
The rates increases are less significant for younger applicants, with the average increase between 3% to 8% every year.
While your premium will increase in cost more rapidly when you are over the age of 50, we normally see rate increases each year in the neighborhood of 9% to 12% for middle-aged and senior clients.
Most companies offer level term coverage rather than increasing your premiums every year. So, carriers spread your premiums over 20 or 30 years and average them into a static, fixed payment.
This eliminates the worry of paying low premiums when you are younger and super high premiums when you are older.
The increase in cost is that every birthday puts you one year closer to your life expectancy. The premium increases really escalate as you start to look into securing longer running 20 and 30-year term lengths.
The reason is that the tail end of your term policy extends even further into your older age, putting the insurance company at greater risk for paying a claim.
So, every year counts when looking at your life insurance age!
A 47-year-old male buying a 20 term policy with a $1,000,000 death benefit will pay $1,221. The same policy would cost $1,336 waiting for a year and purchased at age 48.
Let’s jump forward and take a look at the life insurance age of 57 vs. age 58.
A 57-year-old male buying a 20-year term with a $1,000,000 death benefit will pay $3,222. The same policy would cost $3,622 a year if purchased at age 58.
Wow, getting a year older takes a big price jump in just ten years!
The saving also needs to be calculated over the total number of term years.
If you save $400 per year for twenty years, this amounts to $8,000 of cost savings during the full policy duration.
As you can see, when looking at larger death benefits at older ages, it really makes sense to look into a company that offers age last birthday.
Remember, actual age pricing is only offered by a few life insurance companies.
Affordable Life USA can help you find these niche insurance carriers and determine if they will be cheaper for you.
In some cases, an age nearest company will actually offer more affordable premiums, but normally not as often as people reach more advanced ages.
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Affordable Life USA is dedicated to providing comprehensive life insurance solutions to families and business owners throughout the United States.
For over thirty years, our agency has provided a platform for comparing hundreds of life insurance policies without the stress of high-pressure sales tactics.
Our experienced team of financial planners has helped thousands of clients obtain affordable coverage through our efficient online application process.
Our founder, Eric Van Haaften, expanded our consumer-centric sales model nationally by leveraging the influence of renowned publications such as Time, Newsweek, and The Wall Street Journal.
Eric acquired his love for quantitative analysis while getting his business degree from Ferris State University, which provided a solid foundation for his analytical approach to financial planning.
Eric Van Haaften, LUTCF
1-877-249-1358
