When choosing a life insurance policy, two key factors play a highly significant role in determining the term life insurance rates. These are age and health. An insurer assesses these two factors to determine pricing and eligibility while approving term life insurance.
We always want to ensure our loved ones are safe and financially secure, even in our absence. This is why applying for term life insurance can help our beneficiaries enjoy the claim benefits when our time has come. However, applying for a life insurance policy too late can deprive us of many opportunities and benefits.
In this article, we will provide a thorough discussion and guidance on term life insurance by age so that you can understand the best time to apply for life insurance and establish a financially secure future for your loved ones.
Before we begin, let’s first understand how term life insurance works.
How does term life insurance work?
Term life insurance is a model of life insurance policy where the plan is for a fixed term period. This can be within 10, 20, to 30 years, where the dependant receives the benefits if the insured dies within the policy period.
If the insured is alive and the policy period expires, there will be no claim benefit; however, the insured always has the option to renew the policy and continue to pay premiums accordingly.
The most intelligent way to make the most of term life insurance is by applying early when one has less risk of health issues. This makes them eligible for a higher claim amount and a lower premium.
Now, we will demonstrate the term life insurance rates by age chart to show how the premium rates differ per age and health.
Term life insurance by age chart demonstration
Choosing to apply for term life insurance at an earlier age, when you are soundly healthy, sets you up for the best rates your insurer offers. The more you delay, the age bar rises, and premium rates simultaneously take a hit. Moreover, the average cost of life insurance increases at an average rate of (8-12)%. Therefore, the more you delay, the higher the premiums.
We have prepared a chart of the term life insurance rates age-wise, dissecting it further into smokers and non-smokers so that you can have a fair idea of the amount you need to pay as monthly premiums. This chart has taken the death benefit at $1 million for candidates in sound health, with a gap of 10 years.
Please note: This is for demonstration purposes only and to help you have further clarity on the subject.
|20 years old||$123||$58|
|30 years old||$137||$65|
|40 years old||$332||$135|
|50 years old||$982||$317|
|60 years old||$2,540||$790|
Buying term insurance in different age periods and how it can help beneficiaries
- Buying term life insurance in your 20s
The 20s are considered the best time to invest in insurance plans. This is the age when one is at the prime of their health and at a much lesser risk of experiencing health conditions that would leave them uninsured. Investing in term life insurance in your 20s would enable you to pay lesser premiums and be eligible for higher premium rates.
If you are in your 20s, recently married, and have children to care for, your 20s are the best time to invest in term life insurance. This would help your beneficiary with the capacity to pay off mortgages or housing payments, cosigned debts such as student loans, education expenses for children, and final expenses.
- Buying term life insurance in the 30s
The 30s are the time in one’s life when they are more likely to take on more responsibility in terms of job, family, and possessions. Most people in their 30s are hassling through meeting bill due dates and house payments. In such a scenario, your 30s are a great time to reconsider your financial needs and the kind of legacy or benefit you would like to leave behind for your family.
While people in their 30s working in corporate firms may be eligible for a term life insurance that goes to the beneficiary when the employee passes away, these coverages are usually insufficient to cover significant expenses.
Hence, if you are in your 30s and haven’t applied for term life insurance, it is the best time to consider financial requirements and apply for the insurance. With a term life insurance you purchase in your 30s, you could provide a financial safeguard to your dependant and ensure your children’s expenses and requirements are covered.
- Buying term life insurance in your 40s
If you are in your 40s, chances are you are considering applying for a life insurance policy to keep up with the responsibilities that life has rolled out to you, or your current term life insurance is close to expiring, and you need further financial security.
This is the best time to renew an existing term life insurance policy at a standard premium rate or apply for one if you haven’t yet. This would help your beneficiaries take care of the remaining house payments or mortgages in your absence, cover expenses for your child’s education if they are still young, and take care of medical bills or day-to-day expenses.
- Buying term life insurance in your 50s
While buying insurance in your 50s implies high-term life insurance rates, if you have dependents or assets that depend on your earning, you must apply for the claim to offer a financial cushion to your dependents.
While the premium rates will be skyrocketing if you are thinking of applying for term life insurance at this age, it is important that you choose an insurance adjuster or financial advisor who offers you the best policy plan that does not make a hole in your pocket every month.
A term life insurance policy in your 50s can help your dependents clear off mortgages or unpaid bills, a non-working partner can be financially secure, and the claim benefit could also be a legacy you leave behind.
- Buying term life insurance in your 60s
60 is a sensitive age, and any form of financial investment must be carefully thought through. While the rate of term life insurance at this age is naturally high, as the candidate is a high risk for insurers health-wise, applying for a term life insurance will ensure that your dependant is financially secure.
You can apply for a shorter-term life insurance period, as the eligibility criteria rule out more extended premium plans at this age. It is equally important that you browse different options, and if you choose to invest in term life insurance, you must opt for an insurer that offers the best rates and benefits.
This is because the chances of you availing multiple benefits from the term insurance at this age are slim; hence, you must make the most of the policy you apply for with complete knowledge of the benefits.
Now that we have discussed the perks of applying for term-life insurance at different ages, let’s look at the common mistakes most people make while applying for term-life insurance.
Common mistakes to avoid while applying for term life insurance
One of the policyholders' most common mistakes is considering applying for term life insurance when they have children. While this is a good financial decision to ensure your kid’s expenses are covered in your absence, it takes away years of low premium rates that you could have enjoyed by applying for the claim early.
Most corporate employees are eligible for term life insurance employee benefits and do not consider added means of financial safety for their loved ones. Term-life insurance benefits by corporate firms only cover one or two times one’s annual salary and can be insufficient to cover the debts or expenses of your children’s education.
It is essential to consider added coverage benefits to beinsured even if you switch companies or lose your job. A financial backup is imperative and necessary by all means.
Choose the proper term life insurance policy at the right age!
While we may work hard all our lives to offer the best lives to our partners and children, investing in an insurance plan that takes care of them in our absence can help us relieve the stress of what could happen to them if something were to happen to us.
We hope this article will help you understand the term life insurance rates by age and why applying for the same at an earlier age is important. To learn more about term life insurance and create a financial cushion for your loved ones, you can check out the other blogs on our Asteya website.