Life insurance rates by age

How does my age affect my life insurance premium?

Age remains one of the most influential factors affecting life insurance premiums. Insurers assess premiums based on multiple personal rating factors, but an emphasis is placed on mortality risk, and the probability of death rises steadily as we get older.

Your life insurance needs might also change as you age. Specifically, circumstances in your life and your financial obligations might be different based on where you’re at in life.

• Example: A young person living with their partner with no plans of having children may need less coverage and will often qualify for cheaper life insurance rates.
• Example: An older person who is supporting a family or running a business will likely require a larger policy that lasts longer. This policy, because of the larger overall coverage and older age of the applicant, may be more expensive compared to the younger person who needs less coverage.

Young adult life insurance

Young adults are often in good health and may only need a minimum amount of coverage, which might translate to lower rates. Many individuals will find that a term life insurance policy offers adequate coverage for their needs and budget, but the best policy for young adults might depend on their family situation. Young families often purchase term life insurance because it’s a more affordable option at a time when they’re typically the most financially vulnerable. For instance, young adults might be raising children, paying off mortgages or trying to save for retirement.

To give you an example, take a 35-year-old couple with a five-year-old child. They might consider purchasing term life insurance policies with $500,000 in coverage over a 30-year term. This may help provide a financial cushion for the surviving spouse and child if one policyholder passes away. The death benefit could be used to help pay the mortgage, replace the lost spouse’s income and cover the child’s educational expenses. In most cases, life insurance policies for young adults are based on what fits your budget and covers immediate outstanding financial concerns, such as debts and loans.

An additional option could be purchasing two policies: a 20-year term policy to provide coverage for the child (up to age 25) and a 30-year policy for the benefit of the spouse (mortgage and income replacement). This tailors the coverage to the need and may reduce the overall premium.

Middle-age life insurance

As people age, they often benefit from a term life insurance policy that is in effect until they hit retirement. For instance, instead of purchasing a 30-year policy, a middle-aged adult might purchase a 10-year policy if they’re only a decade out from retiring.

If you’re planning on providing a financial cushion for your loved ones, you might consider purchasing a small permanent policy. A $50,000 to $100,000 permanent policy offers long-term financial protection for as long as the premiums are paid. The payout is likely guaranteed, so your beneficiaries could use the funds to pay down debts, pay for your end-of-life expenses or keep the funds as a financial gift.

A larger permanent policy could protect your resources if you have a bigger estate. In many cases, the policy could generate cash value that might be valuable in retirement. The death benefit on a larger policy could also help your loved ones. For example, a death benefit could provide an inheritance or pay estate taxes.

Keep in mind that permanent life insurance premiums are usually 10-15 times higher than term life insurance premiums because policyholders have a much longer period of coverage, and the policy can earn cash value.

Life insurance for seniors

Older adults might have a harder time purchasing life insurance. In fact, many insurers stop issuing new life insurance policies to seniors over a certain age — usually around age 80.

Life insurance for seniors can often be cost-prohibitive depending on your health and the type of coverage you qualify for.

Of the life insurance products available, a guaranteed life insurance policy might be one of the only options a senior can qualify for. With guaranteed life insurance, no medical exam or health questionnaire is required, and approval is guaranteed. However, these policies can be expensive and usually have a death benefit cap of around $25,000. Read through policies carefully since they typically come with a graded death benefit period of two years. You might also do the math to find that the cost of the policy isn’t worth the death benefit it provides.

How life insurance rates are determined

Life insurance companies use a few different criteria to calculate your premium. Some of the most significant ones include your age, overall health, gender, lifestyle factors (e.g., your job or hobbies), the type of life insurance policy you need and the amount of coverage you choose. You may be able to build a more robust life insurance policy with riders, which may also increase your rate. We provide a deeper look into some of these risk factors that insurance companies analyze and how they may impact your life insurance premium below.

Age

Young people tend to pay the lowest life insurance rates, whereas older people tend to pay the highest. Although there are exceptions — usually based on the health of the applicant — a 30-year-old will likely receive a lower premium quote than a 40-year-old. Note that term policies and some forms of permanent life insurance have fixed rates that are set when you purchase the policy. If you take out the policy when you’re younger, you’ll usually enjoy cheaper rates that are fixed for the length of the policy.

Life insurance rates usually increase as you get older because advanced age typically corresponds to health complications or a shorter lifespan. This means insurance companies can generally expect a claim payout will come sooner for an older person and will often charge a higher premium to offset that risk.

The table below showcases examples of monthly life insurance rates by age — particularly highlighting how age influences monthly premiums for 10-year term life insurance policies at different coverage amounts. These sample rates apply to healthy non-smokers with no special risk factors.

As shown in these examples, premiums incrementally increase with age across all policy sizes. A 30-year-old pays nearly a fourth of the cost of a 50-year-old for identical coverage.

Source: Aflac

For whole life insurance rates by age, the following table shows examples of how rates fluctuate for a whole life policy at different coverage amounts. Notice that the 35-year-old female pays nearly half the cost of a 60-year-old female. 35-year-old males can expect to see rates more than double by age 60.

Source: Choice Mutual

Keep in mind that these charts are only for illustrative purposes. Your rates will vary depending on your health and lifestyle factors, policy type, length, coverage amount and company.

Health

Health is another major factor that contributes to the cost of life insurance. People who suffer from pre-existing medical conditions — like diabetes, heart disease or obesity — may not live as long as healthy people with few or no medical conditions. As a result, insurance companies may charge higher rates for people with health issues or a family history of disease.

In most cases, in addition to a traditional medical exam or health questionnaire, insurance companies use rating tiers to determine your health risks. Each rating category is defined as follows:

• Preferred Plus: People in the Preferred Plus category are in excellent health, with no family history of disease or pre-existing conditions.
• Preferred: Those in the Preferred category are typically in great health, but they might have a family history of one or two illnesses.
• Standard Plus: The Standard Plus category means the individuals are mostly healthy but may be slightly overweight or suffer from minor conditions without a long family history of disease.
• Standard: People in the Standard category suffer from moderate health issues and have a strong family history of disease.
• Substandard: This category is for applicants with moderate to severe medical issues or risky health habits.
• Preferred tobacco: Insurers might place you in this category if, after reviewing your health history and exam, the provider may have placed you in the Preferred or Preferred Plus category if not for your tobacco use.
• Standard tobacco: People in the Standard Tobacco category may have been placed in the Standard or Standard Plus category if not for their tobacco use.

Insurance companies may use different categories depending on their own regulations.

Gender

It may come as a surprise to learn that your gender also plays a key role in your life insurance premium. Men typically pay more for life insurance than women. This is because actuarial data shows that women have a longer lifespan than men, meaning companies may pay out a life insurance benefit earlier for men than for women. According to data from the Centers for Disease Control, the projected average life expectancy for a female in 2022 was 80.2 years old, and for men, the projected average was 74.8 years old.

Job and lifestyle

Your job and lifestyle are also factors that are considered by a company when determining your premium. Applicants who engage in low-risk activities often pay less than those who regularly participate in high-risk roles. For example, an office worker may receive lower premiums than a construction worker. Insurers view certain professions as more accident-prone and hazardous. Maintaining good health can help offset higher premiums in high-risk occupations. Discuss your job duties with a life insurance agent to determine if you qualify for standard rates or may pay more due to elevated mortality risk. Leading a safety-conscious lifestyle can potentially reduce costs regardless of your career.

Similarly, the hobbies you choose may also impact your life insurance rates. High-risk hobbies like skydiving, rock climbing, motorcycle racing and scuba diving may drive up your insurance premiums.

Policy type

Life insurance premiums are largely dependent on the kind of policy you buy. Term life insurance is typically the most affordable policy type because it only offers coverage for a limited number of years. If you do not pass away during the term or convert or extend the policy, the policy expires without a death benefit being paid out. On the other hand, permanent life insurance policies are generally more expensive because they are intended to provide coverage for your entire lifetime up to a maximum age which can range from 95 to 120.

If you purchase a guaranteed life insurance policy, you could end up paying the highest rate. Guaranteed life insurance policies do not require a medical exam, so to make up for the added risk of insuring older or health-compromised individuals, insurance companies usually charge expensive premiums in comparison to other forms of life insurance. Despite the high rates, guaranteed life insurance policies usually have very low policy limits, as they are generally designed to cover end-of-life expenses.

Coverage limit

The last factor that determines your life insurance premium is your policy’s coverage limit. The more life insurance you need, the more expensive your insurance premium will usually be. If you pass away while the policy is inforce, your insurance company agrees to pay your beneficiaries a certain amount of money. Higher limits present a greater financial risk to the company, and that means a higher premium to compensate.

For example, someone who has a coverage limit of $100,000 will likely have a much lower premium than someone with $1 million in coverage. Ultimately, it will cost the insurance company less money to pay out $100,000 than it would to pay out $1 million, so the average cost of premiums would be much lower.

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