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Affordable Term Life Insurance Rate – When people come to us to consult about buying life insurance, our experts usually recommend buying young. The reason is not that we are trying to sell you anything – insurance advisors have no relationship with any insurance company. Rather, the reason we recommend buying life insurance at a young age has to do with the cost of life insurance and the way monthly premiums are calculated. Read on to find out more.
When you apply for life insurance, you have to fill out a detailed questionnaire about your health and lifestyle. You may also have to undergo a medical exam. The information from your application and exam is forwarded to the insurer’s team of underwriters, who pore over every detail and determine the statistical probability of you dying at a young age.
Affordable Term Life Insurance Rate
Why is there an entire team of underwriters dedicated to calculating people’s mortality rates? Quite morbid, no? Although it may not be the most pleasant subject, this type of statistical analysis (based on life expectancy) is the most accurate way for life insurance companies to assess their risk.
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According to data published by the Boston University School of Medicine, the healthier someone is, the less likely they are to die early. The more health complications someone has, the higher their risk of dying sooner. For this reason, the healthier you are, the lower your life insurance rates will be. The more complications you have, the higher your premiums will be.
Term life insurance is a type of policy that lasts for a period of time and is purchased in blocks of years such as 10, 20 and 30 etc. When it comes to this type of life insurance, the longer someone lives, the less likely the insurer will need to pay. Pay the death benefit.
For example, if a 30-year-old buys a 30-year life insurance policy, it will expire at the age of 60. If the person does not die within 30 years, the life insurance company does not have to pay out anything. If the person dies within the 30-year term, the company will need to pay the death benefit.
In most cases, the death benefit of term policies is never claimed, which is why term monthly rates are more affordable than whole life insurance.
Term Vs. Whole Life Insurance: What’s The Difference?
Unlike term, whole life insurance has no expiration date and lasts the policyholder’s entire life. The insurance company will always need to pay. This is why monthly premiums for whole life insurance are higher than those of term. This is true at any age and for any amount of coverage.
So we understand why someone in excellent health can get better rates than someone in poor health, but what does health have to do with buying life insurance at a young age? It is simple. Age and health are innately intertwined. According to the NCBI (National Center for Biotechnology Information), the younger you are, the fewer health complications you have.
This is true for every age bracket. People in their 40s are healthier than people in their 50s, people in their 50s are healthier than people in their 60s, and so on. Therefore, insurance advisors recommend buying life insurance in your 20s and 30s because it will enable you to lock in lower insurance rates and can save you money in the long run.
Below is a chart of average term life insurance rates by age for men and women in relatively good health. In this case, we looked at a $500,000, 20-year term policy for people located in New York (prices can vary by state).
Term Plan Checklist
Next, compare the rates for smokers and non-smokers. If you thought buying life insurance at age 60 was expensive, try being 60 and a smoker. The rates are through the roof. At all times, the rates for smokers are double or even triple the rates for non-smokers. The reason for this is because the mortality rate for both male and female smokers is three times higher than people who never smoked, according to the CDC (Centers for Disease Control and Prevention). There are several things to do here. First, look at the price jump between the ages of 40 and 50. The difference is more than $50 per month for men and more than $30 per month for women – that’s a lot. The difference between the ages of 50 and 60, however, is considerable. A male 60-year-old non-smoker applying for the same policy as a 50-year-old non-smoker can expect to pay more than $150 more in monthly premiums. Female applicants in the same categories can expect to pay more than $100 more per month. The figures speak for themselves.
Note that for women, the average cost of monthly premiums are significantly less than those of men across the board. This is because women statistically live longer than men.
Whole life insurance is more expensive than term at any age. This is due to the nature of this type of insurance: it lasts a lifetime and also has a cash value component. How much more expensive is it than term? Check out the chart below.
Here is a chart of whole life insurance rates by age. These quotes are for New York-based, relatively healthy males and females with steady jobs, no credit issues and no DUI (driving under the influence) convictions.
Term Vs. Whole Life Insurance: What’s The Difference?
For men and women, the pricing pattern is similar to the term, albeit on a higher scale. Women pay less for life insurance than men at all ages, while smokers can expect to pay double or more at all ages. The price difference between ages 50 and 60 is more significant than the price differences between other age brackets.
Age is one of the main factors that affect life insurance premiums, but it is certainly not the only factor. As shown by the charts above, gender and smoking status play a significant role in determining a person’s life insurance premiums. Other reasons include:
Still have questions about average life insurance rates by age? Here are some frequently asked questions and answers.
With term life insurance, monthly premiums increase between 8% and 10% on average each year. That means someone who buys life insurance at age 40 can expect to pay about 8% more than someone who buys at age 39. Likewise, someone who buys at age 55 can expect to pay about 10% more than someone who buys at age 54 Every year counts when it comes to costs.
Term Vs. Universal Life Insurance: What’s The Difference?
The good news is, if you buy term life insurance at a young age, the premiums are locked in for the duration of your policy. So if you buy a 20-year policy at age 40, you’ll pay the same amount in monthly premiums until you reach age 60. The same is true for most whole life insurance policies.
The exact age limit depends on the insurer, but most insurers offer term policies up to 75 or 80.
If you live your term life insurance policy (which is the hope!), you will have several options, depending on your policy. Many policies offer the option of renewal. Keep in mind that if you renew, you will not receive your original rates. Instead, you’ll get rates that reflect your current retirement age. If you don’t want to renew, you can buy a new policy, but that still leaves the issue of getting higher rates than before. Some insurers offer the option to convert the expiring term policy to a permanent policy without the need to qualify. In this case, the rates are based on your age at the time of conversion.
Due to the fact that life insurance costs more as you get older, it is crucial to make sure that you purchase enough coverage initially. For example, if you are on the fence about getting a 20-year or 25-year term policy, it may be worth buying the longer policy. Yes, the term has an impact on the amount you pay in monthly premiums, but you’ll likely pay more if you end up renewing or buying a new policy 20 years down the line. If you’re not sure what the right move is for you, you can talk to a licensed sales advisor.
Term Life Vs Whole Life Insurance: Which Should You Get?
This specific question is part of the broader question: At what age should you get life insurance? Unfortunately, there is no definitive answer, and the reason for this is because life insurance is highly personal.
Your reason for buying life insurance will affect your decision when to buy it. If you are 25 years old and have college debt, buying life insurance is a good idea. If you are 25 and have no debt, there may not be a reason to buy life insurance. Similarly, if you are 25 and married with a child, you will want life insurance! If you are 25 and do not have any family obligations, life insurance may not be necessary.
This is another very personal question, but we can give you some tips for helping you. With term life insurance, there are two things to decide:
To determine the amount of coverage you need, we recommend
