How Does Age Affect the Cost of Life Insurance?

Life insurance rates are determined by such factors as health, length of term and coverage amount. However, an applicant’s age has a big influence on the annual premium he or she will pay. Insurance rates go up as a person ages, making coverage more affordable for healthy individuals under age 50 than for older adults nearing or in retirement.

Whole Life and Term Life Insurance Rates by Age

Life insurance is available to children as young as a few weeks old. Parents and grandparents who lock in whole life insurance policies for babies and toddlers can achieve a monthly rate that’s as low as the price of a latte. And that premium rate will stay the same even when the child grows up and becomes an adult. If your child wants to buy coverage as an adult, the cost will be higher due to their age, health and other factors. Getting life insurance coverage while young means you're locking in a much lower rate than you will get as an adult.

When parents are thinking about life insurance for themselves, they generally consider Term or Whole. Term policies are those that provide coverage for a specific period of time (or "term") typically 10, 20 or 30 years. As the name implies, Whole Life provides lifetime coverage (assuming premiums are paid of course). Parents often choose term coverage because they are looking for life insurance to replace their income. Term is generally less expensive, allowing you to get a more coverage for a lower cost (than whole life insurance). The greatest amount of coverage is needed when your kids are young. If something happened to you, your kids would need enough financial support to last until they become adults.

Whole Life is another type of life insurance to consider depending upon what you're looking to achieve. Whole life policies build cash value and can be a financial safety net while you're alive. (If you needed emergency funds, you could borrow* against the cash value that accumulates in your policy over time. Or if you cancel the policy, the accumulated cash value would be paid out to you.) However, if you're concerned about giving your family the most financial protection when you pass, Term is a better choice, simply because you can get more coverage on a dollar for dollar basis with Term.

*Policy loan interest rate is 8%. Loans may impact cash value and death benefit.

Ways to Get Lower Rates

Health is another big factor in determining insurance eligibility and rates. Keeping yourself healthy with diet, exercise and giving up tobacco products can help you get better premium rates on life insurance. Insurers offer preferred pricing for healthy non-smokers with acceptable BMI, cholesterol level and blood pressure. Another way rates can be lower is to shorten the duration of Term coverage to 20 or 10 years instead of 30.

Considerations

Life insurance coverage protects the people you love. If you're thinking about getting life insurance, don't wait, it will only cost you more.