How does age affect life insurance rates?

How old you are affects life insurance premiums

“People should think about life insurance when they think they need it the least,” says Natalie Trimble, financial security advisor and investment representative for Freedom 55 Financial, a division of Canada Life. “The longer one waits to get it, the higher the chances that they may experience a health issue. With health issues or lifestyle changes, the possibility of increased costs or maybe even a rating [where you are approved, but with higher premiums] is a direct result.” 

The bottom line is: The older you are, the more likely your passing becomes—and with that higher risk comes higher premiums. So if you’re relatively young and healthy, and you have dependents, now is the time. You’re low risk, so your premiums will be low to reflect that. (Read: How life insurance works)

How life insurance premiums are determined

The general consensus is that at this stage of life, term life insurance is the most sensible and cost-effective way to go. Just bear in mind that life insurance premiums increase with age, so each time you renew term life insurance (if you choose to), your premiums will go up. However, many term policies come with the option to convert to permanent life insurance before your policy expires—which is a nice way to feel like the money you spent on a term policy was worth more than just your peace of mind. Another factor to consider is the age at which life insurance goes up; while premiums generally climb gradually with age, the price increases start getting a bit steeper around the age of 50. 

For life insurance that doesn’t increase with age, permanent life insurance is the way to go. It’s more suited to a later life stage, when your debts and mortgage are paid off and your children are grown up. It’s more expensive because there’s a guaranteed payout, but the advantages are that you have lifetime coverage and your premiums won’t go up, even if your health fails. (Keep in mind that the older you are when you acquire the policy, the more expensive it will be.) It’s also another investment vehicle for savings you want to grow for your beneficiaries.

(Our guide to finding the best life insurance in Canada.)

How does age affect life insurance?

Here is a quick chart comparing the monthly costs of 20-year term and whole life insurance policies based on age. We went with 20-year term, as it is the most common term insurance policy chosen by Canadians. Pricing is based on healthy non-smoking men and women, and the average three cheapest life insurance options. Life insurance is more expensive for males than females because statistically their live spans are shorter (79.8 years for males, and 83.9 years for females, according to Statistics Canada), so that is how these ranges are created.

Other factors that affect your life insurance premiums

There are a few factors besides age that can affect how an insurer assesses how high risk you are. 

• Gender Women typically pay less for life insurance than men because they live, on average, five years longer. 
• Smoking Smokers are more likely to face certain health conditions, so this factor can up your premiums by quite a bit.
• Past and current health issues Chronic illness will increase your premiums, and even minor problems like high blood pressure or being overweight can up what you pay since they can indicate potential future health issues. 
• Driving record If you have a lot of driving violations in your recent history (the past three to five years), you might be considered higher risk.
• Mental health This is also a consideration for insurers since people with depression or other mental illnesses have higher mortality rates. 
• High-risk activities If you jump out of planes or climb sheer mountains on a regular basis, expect that to impact your premiums.
• Payment schedule If you pay annually for your life insurance, you can save some money

Most insurers don’t require you to have a physical these days, but they will ask you questions about your health and you have to be honest—if you lie or omit key information and it’s discovered after you die, that could decrease the payout your survivors receive or even void your policy.