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Did you know life insurance rates increase with age? Use this chart to see how much you can save by shopping early.
Term life insurance rates increase 8-10% each year you put off buying a policy
Rates are determined by your age, health, and policy term length and death benefit
Simplified issue life insurance can be a good option for older people who can’t find coverage
If you’re thinking about buying life insurance, the best time to do it is right now — unless you’re older, sick, or have no dependents or people who rely on you financially. But if you’re young and at least a little healthy, there’s a very good reason to buy life insurance now rather than later: you’ll pay significantly less money for the same coverage.
When you purchase life insurance, you agree to pay the insurance company what’s called a premium, a monthly or annual cost ensuring that your policy stays in effect. If you haven’t been keeping up with your insurance premiums, your insurer will not pay out the death benefit to your beneficiaries when you die, rendering the whole thing useless. The rate is based on your medical history, including any pre-existing health conditions, as well as that of your family, and such lifestyle choices as whether you’re a smoker or have dangerous hobbies.
That’s because the older you are, the more like you are to die while you’re insured, so life insurance companies need to account for that risk by charging you more. Check out the Policygenius quote calculator for an estimate and read on to learn what it’ll cost you at every age.
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Life insurance costs depend on several factors in addition to age, like health, gender, death benefit amount, and term length.
Sample monthly premium rates based on Preferred health ratings for a 20-year term life insurance policy; quotes based on policies offered by Policygenius in 2019.
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Your rate is set when you sign the policy, and it won’t change during the term of the policy. But every year you put off buying a life insurance policy, premiums increase by an average of 8-10% and begin accelerating even more the older you get. People in their 40s can expect to see rate increases of 5-8% each year they wait to buy life insurance, and those in their 50s may pay as much as 12% more in life insurance premiums each year they delay.
Life insurance policies are meant to complete your financial plan. Just as you plan for retirement by stashing away money in an individual retirement account or 401(k) program, you should plan for how your unexpected demise could affect your family financially.
The best reason to buy when you’re younger is that you’ll get the same life insurance coverage for a much lower price than you’d pay when you’re older. You’re guaranteed to pay the same premium when you take out the policy as when the term comes to an end twenty or thirty years later. If you don’t have any dependents now but think you’ll have some in the future, you could save hundreds of dollars a year by planning ahead — and that means coverage for your kids’ child care and college expenses, even if right now they’re just a twinkle in your eye.
A 30-year term life insurance policy you buy when you’re 25 will cost you a little less than the same plan if bought at age 30, and the premiums just get more expensive from there. By age 55, you could be paying as much as $200 or more per month to get the same coverage you could’ve gotten when you were in your 20s.
But buying when you’re young usually also means buying when you’re healthier. When the insurer checks your eligibility for life insurance and determines the premium, a process known as underwriting, they will run a complete check on your medical history that could include an in-person examination. Unless you have a chronic medical condition, it’s a matter of physics that you’ll be healthier when you’re younger. Any conditions you develop later in life could mean paying a higher premium.
There are times when it makes sense to buy a life insurance policy when you’re older. For one, maybe you started a family later than usual, a trend among many millennials who can’t afford to settle down earlier.
However, the older you get, the more expensive your premiums cost – even a healthy person in his or her 50s can expect to pay between three to six times as much per month than in his or her 20s. At age 60 and up, you’re looking at paying hundreds of dollars per month in premiums for a 20-year term.
It usually doesn’t make as much sense to buy when you’re older. For one, you’ll hopefully have fewer people who rely on you for financial security, as your dependents become independents and you start paying off long-term expenses like your mortgage or car loan. Not only will you not need as much coverage, but insurers may not even offer it to you past a certain age.
If you’re in your 50s and want to take out a new traditional term life insurance policy, try reducing the term to 10 or 15 years in exchange for a lower premium.
At that stage in life, your financial obligations are much smaller and you’re almost ready to start tapping into your retirement accounts. Shopping around can help — some life insurance carriers may offer more competitive rates for people with a certain medical condition than others, so it’s always best to compare premiums after plugging in your data.
If you can't qualify for term life insurance, or you need less coverage than the term life minimum of $25,000, there are other options, which are often referred to collectively as final expense insurance.
Simplified life insurance: If you don’t want to take a medical exam, or don’t think you’ll be able to pass one, you might consider simplified life insurance. Because there’s no medical exam, this type of life insurance will be more expensive, but you might be offered coverage as high as $40,000.
Guaranteed life insurance: Sometimes described as a “last resort,” guaranteed life insurance has very high premiums and a relatively small death benefit (policies usually max out at $25,000). However, you’re guaranteed to receive coverage regardless of your age, though some policies will require that you don't have specific medical conditions, like HIV/AIDS or terminal cancer.
Read more about the best life insurance for seniors.
Last updated March 22nd, 2019
Policygenius’ editorial content is not written by an insurance agent. It’s intended for informational purposes and should not be considered legal or financial advice. Consult a professional to learn what financial products are right for you.
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Yes, we have to include some legalese down here. Read it larger on our legal page. Policygenius Inc. (“Policygenius”) is a licensed independent insurance broker. Policygenius does not underwrite any insurance policy described on this website. The information provided on this site has been developed by Policygenius for general informational and educational purposes. We do our best efforts to ensure that this information is up-to-date and accurate. Any insurance policy premium quotes or ranges displayed are non-binding. The final insurance policy premium for any policy is determined by the underwriting insurance company following application. Savings are estimated by comparing the highest and lowest price for a shopper in a given health class. For example: for a 30-year old non-smoker male in South Carolina with excellent health and a preferred plus health class, comparing quotes for a $500,000, 20-year term life policy, the price difference between the lowest and highest quotes is 60%. For that same shopper in New York, the price difference is 40%. Rates are subject to change and are valid as of 2/17/17.
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