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How Age Affects Term Insurance Premiums?

Today, when it comes to financially securing the future of your loved ones, term life insurance has become a standard. It enables policyholders to ensure that their beneficiaries (usually family members) get a lump sum payout to cater to their financial needs in case of the former’s unfortunate demise.

Most individuals tend to wait until they are a certain age to purchase their term life insurance policies so that they have adequate financial stability to pay the premium. However, this is a mistake that should be avoided, as term insurance premiums tend to rise with age.

Thus, if you are planning on buying a policy, understanding how does age affect life insurance premiums can help you make an informed decision.

Keep reading for a deeper insight!

Why Do Term Insurance Premiums Increase as You Age?

As your age increases, term insurance premiums tend to rise because of the following reasons:

Health Profile Decline

A health profile refers to a document that helps summarise an individual’s overall medical condition. As a person ages, their health stats usually tend to decline, making it riskier for the insurer to provide coverage. Hence, to cover this increasing risk, the policy provider increases the premium amount.

Mortality Rate Influence

Mortality rate refers to the number of deaths occurring at a certain age within a defined population during a specific time period. Insurance companies generally use this rate as a standard to calculate the policy premiums. Thus, as your age increases, so does the mortality rate, resulting in a rise in the premium amount.

Understanding the Concept of Mortality Premiums

To get a clear idea of how does age affect life insurance premiums, let’s get an overview of mortality premiums:

What is Mortality Premium?

A mortality premium is a fee charged by the insurance company to provide coverage to the policyholder. It covers the financial risk borne by the insurer of the insured individual's premature death.

This fee is chargeable against the sum assured that is payable by the insurance company as a death benefit upon the holder’s death during the policy period.

Below is a table showing how the mortality rates rise with the increase in a person’s age:

Person’s Age	Graduated Mortality Rates
35	0.000847
36	0.000913
37	0.000984
38	0.001061
39	0.001144
40	0.001234
41	0.001332
42	0.001438
43	0.001553
44	0.001679
45	0.001815
46	0.001964
47	0.002125
48	0.002302
49	0.002495
50	0.002705
51	0.002936
52	0.003188
53	0.003464
54	0.003768
55	0.004101
56	0.004468
57	0.004871
58	0.005316
59	0.005807
60	0.006349

How Mortality Premiums are Calculated?

An insurance company calculates mortality premiums in the following manner:

It creates a mortality table by taking into account previous data about life expectancy.
This helps the insurer’s actuaries estimate the insured individual’s human life expectancy by considering factors like health stats, existing diseases, and the development of medical science.
In this regard, the mortality premium tends to rise with the increase in the policyholder’s age. However, the decided mortality premium amount remains the same throughout the policy period.

An Example of How Premiums Increase with Age

Let’s take a hypothetical example to show you how term insurance premiums tend to rise with age.

Suppose Mr Banik and Mr Das have both opted for a 25-year term life insurance policy with a coverage amount of ₹10.5 Lakhs. Also, both individuals are non-smokers and do not have any hereditary diseases in their family medical history.

However, Mr Banik started at the age of 20, while Mr Das started at 35.

Thus, over the years, their policy premium payments will be:

Policy Payment Details	Mr Banik	Mr Das
Premium amount	₹1,889.32/month	₹3,148.86/month
Premium payment over the years	₹{(1,889.32 X 12) X 20} = ₹4,53,436.8	₹{(3,148.86 X 12) X 20} = ₹7,55,726.4

So, by starting early, Mr Banik paid ₹4,53,436.8 for the ₹10.5 Lakhs coverage, while Mr Das paid ₹7,55,726.4 for the same, just because he availed the policy at a later age.

Factors Beyond Age that Influence Term Insurance Premiums

Now, besides age, insurance companies take into account several other factors in order to calculate term insurance premiums. Here they are:

Lifestyle Choices

Lifestyle choices like smoking and drinking highly increase the chances of death. Thus, if you are a smoker, you have to pay higher premiums compared to individuals who are non-smokers.

Medical History

Having certain diseases like cancer, diabetes, heart ailments, etc., in your family medical history can make the insurer consider that you may be susceptible to them on a hereditary basis. In this case, you have to pay higher premiums.

Risky Occupations

If you are engaged in risky occupations like working in mines, fisheries, oil fields, etc., it significantly increases your chances of death, resulting in higher insurance premiums.

Riders and Add-ons

If you add riders and add-ons to your insurance policy, like Accidental Death Benefit Rider (ADB), Accidental Total & Permanent Disability Rider (ATPD), Child Support Benefit Rider (CSB), etc., you need to pay higher premiums to cover the cost of these benefits.

Policy Tenure

Generally, the longer the policy tenure, the more is the premium amount and vice versa.

Premium Payment Term

If you select a premium payment term shorter than the policy tenure, you will need to pay a higher premium. You must pay the premium for the entire policy period within your selected time frame.

Eligibility Criteria for Buying Term Insurance Based on Age

The eligibility criteria to purchase a term insurance policy are as follows:

Age Limit	18 to 65 years
Citizenship	Indian
Health Status	Applicants must be in good health. Pre-existing medical conditions like heart disease, asthma, cancer, etc., can raise premiums or even lead to the denial of coverage.
Employment Status	The insurance company verifies the applicant’s employment status to assess their ability to pay the premium amount.
Lifestyle Habits	Engaging in smoking, drinking, or other hazardous activities can lead to higher premium amounts or denial of insurance coverage.
Medical Tests	For higher coverage amounts, insurance companies can ask the applicant to undergo medical tests in order to determine the associated risk.

Disclaimer: The table above contains some of the basic eligibility criteria, and it may tend to differ across insurance providers.

As you now know how does age affect life insurance premiums, it is advisable that you opt for a suitable plan as soon as possible. Also, do not forget to choose an appropriate coverage amount and go through the policy’s benefits and terms and conditions before making your final decision.

FAQs about How Age Affects Term Insurance Premiums

Does the term insurance premium stay the same if I buy young?

Yes, once you buy a term insurance plan, the premium amount stays the same throughout the policy tenure. So, availing of a policy at a young age can help you get a lower premium amount.

Can older individuals still get term insurance?

Generally, the maximum age for availing of term life insurance is between 60 and 70. However, some providers can offer term insurance plans with a maximum entry age of 75, albeit for a higher premium amount.

How can lifestyle changes affect my term insurance premium as I age?

Lifestyle changes like smoking, drinking, and working in risky areas like mines, oil rigs, fisheries, etc., significantly increase your chances of death, thereby raising the premium amount as you age.

Does the term insurance premium amount change with time?

No, once you have availed the policy and the premium amount has been locked, it stays the same throughout the policy period.

What is the age limit for availing of a term insurance policy?

Generally, the age limit to opt for a term insurance policy ranges from 18 to 65 years. However, this tends to differ across insurers.

What is the youngest age to opt for a term life insurance plan?

You can go for a term insurance policy after you turn 18.

What is the best age to get a term life insurance policy?

The best age to get a term life insurance policy is in your early 20s. Usually, at this age, an individual starts earning, which fulfils one of the basic criteria. Due to their young age, they can get premiums at very low rates.

Can a retired individual purchase term life insurance?

Yes, some insurance companies offer term life insurance policies for people up to 65. However, the policies come with a high premium.

What is the maximum age for availing of a term insurance plan?

For most insurers, the maximum age to apply for a term insurance plan is 65 years. However, some insurance companies have a maximum age of entry ranging from 70 to 75 years.

Can a senior citizen aged 65 years get term insurance?

Yes, several providers offer senior citizen term insurance plans with 75 years as the maximum age of entry.

Are there any specific age restrictions for different term insurance policies?

The age restrictions for term life insurance policies usually range from 18 to 65 years. However, these limits tend to vary across providers and policy types.

At what age does term life insurance coverage end?

The age at which the coverage for your term life insurance policy will end depends upon the age at which you availed the plan and the policy tenure.

What is the general age range for term insurance plans?

The general age range for term insurance plans is 18 years to 65 years.

Do women have to pay more for life insurance premiums as they age?

Usually, women have to pay less for their term insurance premiums as they age compared to men, as they tend to have a higher life expectancy.

How does age affect term insurance premium rates?

As a person ages, usually, their health profile declines and mortality rate increases, making it riskier for the insurer to provide coverage. Thus, with the increase in the applicant’s age, the premium amount tends to rise.

Do term insurance premiums generally increase with age?

Yes, the older the applicant’s age, the more will be the term insurance premium. However, once an individual buys a plan, the premium amount remains the same throughout the policy -period.

How does age affect the cost of availing of term insurance?

As the age of a person increases, the term insurance premium also rises in tandem. Thus, experts always advise availing of term plans at a young age to lock in lower premiums.

What is the connection between age and term insurance premiums?

Age is a vital factor when it comes to determining term life insurance premiums. Thus, as the applicant’s age increases, so do the term insurance premiums and vice versa.

Are term insurance premiums usually calculated based on age?

Yes, term insurance premiums are usually calculated based on the applicant’s age and other factors, such as health profile, lifestyle choices, family medical history, type of occupation, policy tenure, riders and add-ons, and premium payment terms.

What are the factors affecting term life insurance premiums?

Age, pre-existing diseases, family medical history, lifestyle choices, risky occupations, riders and add-ons, policy tenure, and premium payment terms are some of the major factors affecting term life insurance premium rates.

Why is age such a crucial factor in term life insurance?

Age is a vital factor in term life insurance as it helps insurers assess the risk associated with providing coverage to an applicant. As the individual’s age increases, their health stats decline, increasing the chances of mortality and their beneficiaries making a claim. Thus, the premium amount also rises.

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