Published August 23, 2016|4 min read
Like most insurance, life insurance is cheaper to buy the younger you are when you buy it. This is great news if you’re in your 20s or 30s, but what if you’re a little older and in the market for a new life insurance policy? How old is too old?The answer depends on the type of life insurance you’re shopping for, but one thing’s for certain — no matter what your age today, it’s better to buy a life insurance policy now rather than waiting a year.
Premiums for term life increase by about 8% per year in your late 40s, and that rate of increase continues to climb to 9-12% per year after age 50.To illustrate this, we used the PolicyGenius life insurance quoting tool to pull quotes for a 175-pound man in good health, starting at age 30 and continuing to age 80. This chart gives a good general overview of life insurance rates by age:
(This chart doesn’t present every option — for example, we didn’t start pricing 10 year policies until age 70, whereas you can certainly buy a 10 year policy at age 35 if you like — but it’s still useful for showing the rate at which premiums rise once you pass age 45.)The good news is that even at age 50, it’s possible to find a sizable policy at a monthly premium under $100 if you’re healthy and a non-smoker.On the other hand, you can see that by the time you reach age 65, your monthly life insurance premium for a 20 year term policy (in blue) is as high as a car payment. You can reduce the cost by instead choosing a 15 year term (in green), but you’ll still end up paying close to $300 each month.Above 65, your options become more limited. The top carriers in our quoting engine don’t offer 20 year terms past age 70, but the prices at this level are so high that most people would opt for a shorter 15 or even 10 year term (in burgundy) anyway. By age 80, even a 10 year term costs more than $1500 a month.It’s also worth pointing out that these quotes represent the best case scenario, as they were pulled for a man in excellent health and with a clean family health history. If you’re 55 and have some health issues, you can expect to find higher quotes than this hypothetical fellow.
Insurance is about pooling risks. Individual life insurance, like the kind PolicyGenius sells, groups people of the same age and calculates the risk of death for the average member of that group. The likelihood of death for that average member increases with age—and so the cost of insuring a member of that group increases, too.This is also why you might find yourself subject to more stringent health screening when you buy life insurance after age 45—everything from an EKG to cognitive impairment tests depending on your age.
If buying a new term policy doesn’t seem to be in the cards, don’t worry, because there are still some other options to consider.First, if you already have a term life insurance policy and you’re looking to buy more protection, check whether the current policy has a conversion rider, which will let you convert it into a permanent policy without going through additional underwriting.If that’s not applicable, consider these other insurance products. Each has its own drawbacks, but on the other hand each will provide some level of financial protection that may suit your needs.
Final expense life insurance can be used to cover end-of-life costs like medical and funeral bills.
Guaranteed life insurance typically has a much smaller death benefit than term or permanent life insurance, but will be issued few-questions-asked so long as you can pay the premium.
Simplified life insurance doesn’t require a medical exam, although you still must complete a health questionnaire and can still be rejected.
As you can see by the chart above, a clear way to reduce the monthly premium is to reduce the term of the policy to 15 or 10 years. Another way is to reduce the death benefit, especially since you’re likely to have fewer financial obligations the older you get — for example, most 50-year-olds can do just fine with a smaller death benefit and a shorter term. If you’re finding the cost of a new policy too high, try adjusting one or both of those numbers to see whether you can reach a premium that works for your budget. (The PolicyGenius quoting engine is a good tool for this exercise, because you can quickly adjust term and benefit parameters to see new quotes.)And finally, don’t go it alone! Brokers and agents are free to use, and a good one will be able to show you all of your options and help you shop around for the best life insurance for your specific situation.
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