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How does Age matter when you buy a Life Insurance Plan?

By PolicyBazaar
  | Published: 25 November 2020 | Last Updated On: 08 February 2021

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There is one common question that everybody wants an answer to- What is the ideal age for buying a life insurance plan? Your neighbour might already have a life cover, even though his age is around 24 years only. On the other hand, you may have decided to invest in life insurance when you turn 45.

There is no time limit or age limit for buying a life cover as such, it isn’t too late and there is no wrong or right age. Life insurance offers protection to the family and dependents from financial difficulties, hence it is obviously smart to have one.

When to buy it is based on what all things align with your investment and financial requirements. However, it is essential for you to have a knowledge of age impact on life insurance price, or the insurance premium you will have to pay under this plan.

What does a life insurance premium mean?

An insurance premium charged on your life plan is the amount of money charged on the policyholder on a regular basis to the insurance provider for maintaining the life insurance coverage. The insurance premium makes payments for the price of insurance under the pure protection policies, whereas in policies with the component of investment, a portion of the premium amount will go into investment. These premium payments have to be done regularly.

The inability in making such payments can lead to the lapse of the policy. Taking into consideration that the premium charged on life insurance is the insurance policy price, it is an essential element in the insurance buying process. There are various factors, which determine what premium amount you will pay.

These factors involve your medical history and conditions in a way that being having critical illness will lead to a higher amount of premiums. Your habits of alcohol consumption and smoking are considered in similar light for the calculation of premiums. The other factors involve your occupation, medical history of your family, your hobbies, and gender.

Ultimately and most importantly, your age. Your age is amongst the biggest determinants of the insurance premium under life insurance policies. Although age is not a part of the life insurance eligibility, it is termed as one of the main factors for determining the insurance prices.

What is the age impact on life insurance prices?

The general thumb rule states that the best time for purchasing life insurance is when you are still young. This is because keeping everything else constant, the amount of premium will be low. The logic is pretty easy, it is considered that when you are younger, you are healthier and there are fewer chances of having illnesses, which lead to the decay of life. Hence, you have fewer risks related to health, and by extension a lower amount of premium. The insurance providers might need you to get a medical test done before issuing a plan above a particular age. This way, the youth turns out to be in your favor.

The lower your age is; the comparatively cheaper policy you get due to the lower risk of mortality. In the later years of your life, there will be more debts, responsibilities, and obligations that means there will be a greater need for financial protection for securing the future of your family. It is recommended to purchase a term insurance plan with a huge cover. Again, this would lead to a higher amount of insurance premiums. Getting life insurance in the early stage of your professional life is a wise decision- the sooner, the better.

What is the ideal age for buying life insurance?

While generally younger is better when your life insurance plan term should start may be based on the time you anticipate other people depending on the income you earn also. You would want the policy term to last till the time your nominees will need the income. For the parents, it usually lasts till the time their kids are grown. The people who are in couples and own property together might want to get coverage until the mortgage amount is paid off.

In case both the people in the couple earn an income, which is important to the family, then both must be covered. The parents who do not earn an income might also wish to consider the coverage because their unpaid labor such as childcare may require to be replaced by paid services such as daycare in the case of their demise.

A life insurance policy might be prudent even before there are dependents in case you have unsecured debt like private student loans, personal loans or credit card debt. The balance on your credit card needs payment upon the demise of the holder.

The premium amount contributed to the whole life plans bought at an early age could accumulate a considerable amount over the long-term duration because the insurance cost is fixed for the whole term of the plan. The cash value can also be used in the form of a down payment for the first house you purchase. If you hold it long enough, the amount you accumulate may have the ability to supplement your retirement income. But the money requires time for growth, this is the reason why starting early is the best.

Irrespective of the kind of plan that is correct for your circumstances, ensure that you research the insurance providers you are considering to work with thoroughly for getting the best life insurance plan possible.