Term life insurance only lasts for 10 to 30 years, but it offers significant coverage for affordable premiums. That said, premiums increase with age. Older life insurance policyholders will pay more than younger policyholders for the same amount of term life insurance coverage. This article will compare term life insurance rates across the age spectrum and explain when people should consider getting a term life insurance policy.
Average term life insurance rates by age
According to Forbes, these are the average annual term life insurance rates by age for healthy men for a 20-year term life policy:
Here are the average term life insurance rates by age for healthy women for a 20-year term life policy:
These tables illustrate age's impact on term life insurance rates alone. Different term lengths, health, the prospective policyholder's occupation, and other factors will also impact the policyholder's premiums.
When should people get term life insurance?
Life insurance is generally a good idea to consider for anyone who will soon go through a major life event. Circumstances that might warrant getting a term life policy include but are not limited to:
- Getting married: Term life insurance can make sure the policyholder's partner is financially protected if the policyholder passes away.
- Having a child: Term life insurance can make sure the policyholder's partner can replace the policyholder's income and provide for the child if the policyholder passes away.
- Buying a home: Term life insurance can help the surviving partner pay off the home's mortgage to prevent foreclosure.
- Retiring: Term life insurance can help retired policyholders protect their partner and leave more money to their heirs since the death benefit is tax-free when received.
A prospective policyholder should ideally get a life insurance policy the moment they start planning for one of these major life events. That's because the younger they get the policy, the cheaper their premiums will be.
Additionally, those premiums never change over the policy term. A male policyholder that buys a 20-year, $500,000 term life insurance policy at age 30 for $300 per year will pay that same premium now as they do at 50 when they pay their last premium.
The bottom line
Many factors impact the cost of term life insurance, but the one that has the clearest effect is age. The older the prospective policyholder is when they begin looking for life insurance, the more term life insurance rates by age will increase.
That means people considering life insurance should find a policy as soon as they believe they need coverage. Once they get their policy, they can lock in those premiums for the entire term length, which could potentially save a lot on premiums.
That said, another way to reduce premiums is to shop with multiple insurers and gather quotes. This will allow prospective policyholders to compare rates and select the insurer that offers the best coverage for the policyholder's budget.
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