advice

At what age should I buy life insurance?

Est. 6 min read

Did you know life insurance premiums can increase by an average of 8-10% every year? When it comes to setting your life insurance rates, your overall health is the leading determinant, followed by your age. Other factors like your driving record and hobbies come into play, but your health and age are so closely correlated that waiting just a single year to apply for life insurance can have a dramatic affect on your rates.

So sure, buying life insurance when you’re young and healthy will get you lower rates, but is it possible to buy it too early? Or are you just throwing money away?

To illustrate this point, we’ve asked Jim to help us.

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Jim is a perfectly healthy and hypothetical young man. He’s a 6-foot, 180-pound New Yorker. He’s never used a tobacco product, doesn’t take medication for any health issues, doesn’t have a history of family health problems, and has a clean driving record for the past few years.

Jim also happens to be in the market for term life insurance (convenient!). He’s looking for a $500,000, 30-year term policy. He’s a savvy shopper, so he goes to PolicyGenius to get quotes from the nation’s top-rated life insurance carriers all in one place.

Let’s look at Jim’s life insurance rates by age and see how his premiums change as he puts off buying life insurance over the years: when he’s 25, 35, 45, and 55 years old.

Life insurance quote samples

If Jim waits until he’s 55 years old to get term life insurance, he’ll pay over $200 more dollars a month than if he had gotten it when he was 25. But there’s a lot more than just your age when it comes to life insurance, right? So how do you when the best time to buy is?

Here are some things to keep in mind when it comes to figuring out when you should apply for life insurance.

Health and other issues matter

Jim has been pretty lucky considering he remained in good health his whole life. But most of us won’t be that lucky, and the longer you wait, the more you open yourself up to more serious health issues.

High cholesterol and high blood pressure are common issues in raising life insurance rates, and gaining weight (which, sadly, is inevitable for most of us as we get older) can also increase your premium. Plus, if you’re pregnant, you’ll need to time your life insurance application so it’s before you gain some baby weight (or after you lose it) and are subject to conditions like gestational diabetes.

In short, you can avoid the premium spike by planning ahead and getting insured while you’re younger – and healthier.

Consider your financial situation

We recommended that you get life insurance as soon as you can. You may not need that coverage now, but there’s a chance you will in the future, and you can lock in your low rates if you get it while you’re younger. That doesn’t mean that’s the right choice, though, if you have other financial obligations.

Say Jim decides to wait on life insurance and doesn’t buy until he’s 35, because that’s when he has a mortgage and family; he’s paying just $7 more a month than he would be if he bought at 25 years old, but over the life of a 30-year policy that’s over $2,500 more.

Of course, Jim has to look at the cost benefit. If he buys his policy at 25 years old, he’ll pay $3,800 more over the next 10 years. When you consider that someone in their 20s can already have over $50,000 in total debt, Jim has to make a choice on where he wants to spend his money: tackling his current debt, or getting the lowest price on ensuring that debt doesn’t become his cosigner’s or future family’s problem.

Should Jim buy early and save $2,500 over the life of the policy, or put it off and use his money on his immediate financial situation? That depends on his life plans and how comfortable he is with debt, but he can use a financial checkup to make see where he can fit protection into his budget.

You probably don’t need as much coverage as you age

A 30-year policy makes sense when you’re in your 20s and 30s but is probably excessive when you’re in your 50s. We kept Jim’s policy at $500,000/30-year for an apples-to-apples comparison on age, but that’s also why it was so expensive later on: when you’re in your 50s, there’s a higher chance that you’ll die during the term of the policy then there is in your 20s, so you’ll pay more for the policy.

So what does that mean? If you do wait until later in life to buy a policy, you can probably opt for a shorter term. For example, here are a few of 45-year-old Jim’s options for $500,000 worth of coverage:

Monthly premium change

A 20-year term still gets him to retirement age, but saves him a lot of money in the long run.

On that same note, the coverage amount you opt for will affect your premiums just like term length. Take stock of what you need coverage for: a mortgage? Student loans? College for the kids? Retirement savings? If you’re buying a policy later in life and you know you’re in good shape in terms of a 529 account, retirement savings, and your mortgage, you can save by scaling back your coverage.

For both term length and coverage amount, calculating your life insurance need is a necessary first step. You don’t want to underestimate your costs at a given point in your life and be underinsured, but you also don’t want to be paying for coverage that’s above and beyond what your family would actually need to cover costs.

Choose a company and policy that will grow with you

We looked at the cheapest policy options to look at to show how affordable life insurance can be, but keep in mind that that doesn’t necessarily mean it’s the best option for you.

PolicyGenius guide to  life insurance

You should choose a carrier that you’re comfortable with – one that has a good financial rating so you can be sure it’ll be around for years and decades to come – or is easy for you to use (for example, allowing a lot of tasks to be done online). You should also learn which riders you can add to a policy so you can tailor it to your specific situation. For example, you could add child riders to provide some protection for children without the need to shell out for expensive individual policies for them. Or you might choose an accelerated death benefit rider so you can receive death benefit money to pay for medical expenses in the case of terminal illnesses.

Luckily, you don’t have to hunt around for these details. You can find this information, along with customer service ratings and affordability scores, pricing charts, and rider options for the top-rated life insurers in our Company Reviews.

The age at which you buy life insurance depends on a few things, like your financial situation and the costs you have to cover. But remember that you’re buying term life insurance for decades to come. It never hurts to look into the future to see what expenses you’ll have 10, 20, or even 30 years from now and make the smart financial choice – which could mean purchasing life insurance years before you think you’ll need it.

Published on August 10, 2016

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Colin Lalley writes for PolicyGenius, a digital insurance brokerage trying to make sense of insurance for consumers. He previously wrote for Lulu Press.
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