Strictly speaking, it is never too late to buy life insurance. However, the longer you wait to purchase a policy, the higher your premiums and the more limited your options. If you wait too long, you may have to settle for a policy that is less than you want at higher rates.
The younger you are when you buy life insurance, the cheaper your premiums will be. Age is one of the most important factors underwriters consider in determining your rates. If you are in your 20s when you purchase a policy, you may be able to buy term life insurance for as little as $20 a month for up to $300,000 in coverage. Some term policies can last for several decades. If you wait until you are older, you almost always pay more for the same amount and type of coverage.
Whether you are buying term life insurance (for a limited term) or whole (permanent) life insurance, age is the primary factor affecting your premiums. Other life factors affecting the amount you will have to pay include:
Term life insurance premiums increase by approximately 8% to 10% for every year of age. For example, for a 20-year term policy with $1,000,000 in death benefits, a 46-year-old person will pay $100 more than a 45-year-old, and a 47-year-old will pay $200 more. From the insurance company’s perspective, this is because every year of age brings you one year closer to death, increasing the likelihood the insurer will have to pay out death benefits.
The older you are, the more limited your life insurance options will be. Age affects whether you qualify for coverage at any price. Most term life insurance carriers only offer 20-year policies to people between 18 and 70 years of age. After the age of 70, you are limited to a shorter term. And once the term of your policy expires, your rates could increase significantly, based on your age.
Health screening is another factor. Insurers require more testing for older people. A medical exam is standard, with bloodwork and urine testing. Beyond a certain age, however, the carrier may require additional screening, such as an EKG. The more testing is done, the more health issues are revealed, and the higher your rates are likely to be. If you are a senior citizen when you apply for life insurance, the carrier may want to assess your mental condition as well as your physical condition.
If you are considering life insurance, the sooner you buy a policy, the better, and it should be before your next birthday. It pays to shop around to find the best rates for the life insurance coverage you want. Our knowledgeable agent will be happy to assist you.