How Does Age Affect Your Life Insurance
Age is one of the main factors insurers consider when you apply for life insurance. In general, the younger you are when you take out cover, the lower your premiums are likely to be.
That does not mean life insurance is only suitable for younger people. Many people review their protection needs at different stages of life, such as buying a home, getting married, having children, changing jobs, starting a business or approaching retirement.
The right cover will depend on your circumstances, your budget and who may rely on you financially.
Why does age affect life insurance?
Life insurance is designed to pay out if you die during the period covered by the policy, or in the case of whole of life insurance, whenever you die, provided the policy terms are met and premiums are maintained.
When an insurer assesses an application, it considers how likely it is that a claim may be made. Age is a key part of that assessment because the risk of death increases as people get older.
As a result, taking out a new policy later in life will usually cost more than taking out the same level of cover at a younger age. In some cases, older applicants may also have fewer options available, shorter maximum policy terms, or more detailed medical questions to answer.
Does life insurance become more expensive as you get older?
Generally, yes. For new life insurance policies, premiums usually become more expensive with age.
A healthy 30-year-old applying for cover is likely to pay less than a healthy 55-year-old applying for the same level and length of cover. This is because the insurer is taking on a different level of risk.
The difference can become more noticeable if your health has changed over time. Conditions such as high blood pressure, diabetes, heart problems, cancer history or other medical issues may affect the availability or cost of cover.
Smoking, vaping, alcohol consumption, weight, occupation, hobbies and family medical history may also be considered.
Can I still get life insurance later in life?
It may still be possible to get life insurance later in life, but the options can become more limited and premiums may be higher.
The type of policy available will depend on the insurer, your age, your health, how much cover you want and how long you need it for. Some policies may have maximum age limits at the start or end of the term. Others may offer shorter terms for older applicants.
This is one reason it can be helpful to review your protection needs before life changes make cover more expensive or harder to obtain.
How does age affect the length of cover?
Age can affect the term available to you.
For example, a younger person may be able to take out life insurance over a longer period, such as to cover a mortgage or provide financial protection while children are growing up. Someone applying later in life may find that a shorter term is more realistic or that certain insurers will not offer cover beyond a specific age.
This matters because the term should usually match the financial need. If you want to cover a 25-year mortgage, support children until they are financially independent, or protect a spouse’s income needs, the length of cover should be considered carefully.
Is life insurance only about age?
No. Age is important, but it is only one part of the underwriting process.
Insurers may also look at:
- your health and medical history
- whether you smoke or vape
- your height and weight
- your occupation
- hazardous hobbies or activities
- your family medical history
- the amount of cover you want
- the length of the policy
- the type of policy you choose
This is why two people of the same age may be offered very different premiums.
When should you review your life insurance?
It is sensible to review your life insurance whenever your responsibilities change.
This could include:
- buying a home
- taking on a larger mortgage
- getting married or entering a civil partnership
- having children
- becoming self-employed
- starting or growing a business
- changing jobs
- separating or divorcing
- approaching retirement
- taking on financial responsibility for a family member
You may already have some cover through an employer, sometimes called death in service benefit. However, this is usually linked to your employment and may stop if you leave that job. It may also not provide enough cover for your family’s needs.
Should younger people take out life insurance early?
Taking out life insurance earlier can have advantages, particularly if you already have financial responsibilities or expect to need cover for a long period.
You may be able to secure cover while you are younger and healthier, which can make premiums more affordable. However, there is little value in buying cover you do not need. The key is to match the policy to a clear financial purpose.
For example, life insurance may be useful if you have a mortgage, children, a partner who relies on your income, business debts, or other people who would be financially affected if you died.
What if my existing policy no longer suits me?
Your life insurance needs may change over time. A policy that was suitable when you first bought a home may not be enough after having children or increasing your mortgage.
Equally, you may no longer need the same level of cover once children are financially independent, debts are reduced or retirement plans are in place.
Before cancelling an existing policy, it is important to check whether replacement cover would be available and affordable. If you are older or your health has changed, a new policy may cost more or include exclusions.
Getting the right protection in place
Life insurance is not just about age. It is about making sure the people who depend on you would be financially supported if you were no longer here.
At Beach Financial Advisors, we can help you review your protection needs and understand the type and level of cover that may be suitable for your circumstances. Whether you are arranging life insurance for the first time or reviewing existing policies, advice can help you make an informed decision.
Life insurance plans typically have no cash-in value at any time. If premiums are not maintained, cover will cease.
This article is for general information only and does not constitute personal financial advice.