Getting life insurance is the best way to secure your family’s financial security. You need to pay life insurance premiums regularly to continue the policy. These insurance premiums directly relate to your age. As you grow old, your body weakens, and different diseases invade your system. It makes you a riskier venture for life insurance companies.
These companies charge you a higher premium to protect themselves against some probable loss. So your life insurance premiums increase with age. The best way to reduce your cost is to buy an insurance policy early.
Best age to buy life insurance
The best age to buy life insurance is in your 20s. At this age, you are at the peak of your physical capabilities. No mental and physical challenges prove a hindrance to getting life insurance. Consequently, life insurance companies quote you a very reasonable price.
With each passing year, the life insurance premiums become expensive. This cost will significantly increase once you pass the 50s. So, if you need financial protection in the future, you should not delay the application.
If we look at life insurance ownership by age, the results are interesting. The answer might shock you. The most common age group for people to buy insurance is between 35 and 45.
Life insurance is as important as saving for retirement. At a young age, you have several responsibilities. You have to settle mortgages, car payments, and student debt. So, you defer the purchase of life insurance. But this delay can have massive consequences.
How risk class affects your life insurance premium?
Companies charge you life insurance premiums depending on your risk class. They assess several factors to determine your risk class. These include your age, hobbies, habits, family history, occupation, etc.
If an insurance company places you in a high-risk class, it charges you a higher premium. Whereas if you get a low-risk category, you pay a much lower amount. It implies that the insurance company considers you a safer venture.
Life Insurance Value Estimator
How do life insurance companies calculate premiums?
Life insurance companies take into account several factors while calculating the premium. Age is just one of them. Others include:
Your health significantly impacts the amount of premium you need to pay. Preexisting medical conditions reduce your life expectancy. As a result, the companies charge you a higher premium.
They also look into your family’s medical history. After assessing your health risks, they assign you a category. Each category carries a different price. Those who belong to the substandard category pay the highest premium.
The amount of your premium also depends on your gender. Women generally live longer than men. That’s why insurance companies charge them a smaller life insurance premium.
According to a recent census, a woman’s average life is five years more than a man’s.
Amount of coverage
Your life insurance premium also depends on the amount of coverage you get. Higher insurance coverage makes the life insurance policy quite expensive. But it also proves more beneficial for your dependants.
Type of policy
The type of policy you buy directly impacts the life insurance premium. Generally, term life insurance is the most affordable option. It offers you coverage for a finite period. If you survive that period, the beneficiary gets no death benefits. In comparison, permanent life insurance policies are on the expensive side.
If you opt for the guaranteed life insurance policy, you buy a costly one. It has the highest premiums because it does not require a medical examination. It also produces a small reward that only suffices for end-of-life expenses.