Life insurance rates go up as you age.
The belief is that the younger and healthier you are, the lower the cost of your life insurance. However, many people don’t begin to think about getting life insurance until after they have settled down and started a family. This means that by the time most people start thinking about life insurance, their chance of getting good deals has dropped. And not in leaps and bounds, either. These rates go up year to year, meaning all other factors being equal, a 39-year-old will pay less than a 40-year-old for the same coverage.
But this doesn’t mean that if you are over 40 you are out of luck.
Consider your terms.
There are two basic types of life insurance, term and permanent. Term life insurance insures the party in question for a given term. The factors that must be considered with term insurance: the protection or death benefit, the premium or cost to the insured, and the length of the term.
There are several kinds of life insurance that fall under the umbrella of permanent insurance: whole life, universal, limited-pay, and endowment. All forms of permanent life insurance extend for the life of the insured assuming the owner continues to pay premiums. They also accrue cash value. Whole life insurance provides death benefits for fixed premiums and entitles the owner to a cash value reserve which may be accessed via policy loans. Universal life insurance is a relatively new kind of coverage which aims to provide the same advantages as whole life insurance but with greater flexibility regarding premiums and death benefits. A limited-pay policy offers essentially the same benefits but the lifetime premiums are paid over a fixed period, after which no additional premiums are due. With the case of endowments, the accrued cash value is equal to the death benefits at a certain age. That age is called the endowment age. Endowments, unlike other forms of insurance, are paid out regardless of whether the insured lives or dies, either after a specified time period or once the insured reaches a certain age.
Guest Post by Jeff Orloff
Jeff covers health and other lifestyle topics and how they affect life insurance premiums for the Term Life Insurance blog.