How does age affect life insurance rates?

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PolicyMe
Does age affect life insurance? Do you even need it if you’re still young? Is ever it too late to qualify? We answer these questions and more.
Presented by
PolicyMe
Does age affect life insurance? Do you even need it if you’re still young? Is ever it too late to qualify? We answer these questions and more.
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Most of us go through life assuming we’ll reach a ripe old age—and that’s fair, because most of us do. But if you have dependents, it’s wise to protect them from financial fallout in the unlikely event of your death, even if you’re still young and healthy, by getting life insurance. Your age is a pretty big factor when it comes to the type of life insurance you should get and how much you’ll pay for it. Read on for some insight on this, and a few other factors that may affect your 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)
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.)
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.
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There are a few factors besides age that can affect how an insurer assesses how high risk you are.
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.
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I don’t see anywhere that lists the amount of the life insurance in the above chart. Wouldn’t that affect the monthly premiums?
I am 73 and have a term life insurance policy that expires soon. I am in good health. In this article, it was mentioned that you can switch from a term policy to a permanent policy. Question. Should I renew my term policy, switch to a permanent policy or just let them go? How much would term or permanent policies cost? Thanks. John
Thank you for the question. Due to the large volume of comments we receive, we regret that we are unable to respond directly to each one. We invite you to email your question to [email protected], where it will be considered for a future response by one of our expert columnists. For personal advice, we suggest consulting with your financial institution or a qualified advisor.
What is the face amount for your chart of 20YRT vs WL premiums?
Problem with this article is that it doesn’t specify the payout in the event of death, especially for term insurance so how can you compare apples to oranges to grapes.
As someone who had term insurance for about 20 years whilst my children were at home, going to school and university and my wife wasn’t earning money outside the house, the principal amount decreased each year (or every 5 years) as the capital required to support my family during this period decreased. I completely ceased buying personal term insurance when the youngest turned 20. I also had company life and disability insurance. In my opinion, whole life insurance is a rip-off.