Impact of Age on Life Insurance

by Vinaya HS on February 19, 2016

in Finance

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Most people do not expect to die at a young age. However, there are many cases when such an incidence actually occurs. A premature death of your loved one can leave you in great financial difficulty sometimes with huge debt liabilities. Repaying these obligations may be impossible, which can result in you losing all your assets to lenders.

To prevent such harsh outcomes, it is crucial to procure insurance cover on your life. This is the best way to protect the financial interest of your family members in the event of your premature demise. The carriers consider many factors while calculating the premium on such policies. Some of these are in your control but certain factors like age cannot be controlled by you.

Know about your insurance age

It is a commonly known fact that as your age increases, so does your life insurance policy premium. This is because the premiums are directly proportionate to life expectancy and as you age, the life expectancy decreases thereby increasing the premium amount. It is also beneficial to know that women are expected to live at least five years longer than men, which is why a woman of the same age as that of a man will have to pay a lower premium.

Insurance age is your age within your policy if you make an application today. Although this appears simple, it is not so easy to state your exact age. Insurance age may be different for every insurance company. Since life insurance relies on statistics, the carriers work with “the nearest age” principle to determine the premium. This means if your birthday was more than six months ago, the carrier will consider your age one year higher than your current age. Every year the amount increases because you approach the life expectancy age.

Risk assessment factor
Age can be easily defined, is simple to verify, and can be predicted over a period of time. This factor is the basis of calculating the mortality risk, which is why it plays a crucial role in determining the life insurance premium. Additionally, your age will help in determining the possibility of suffering from any kind of medical ailments. Several studies and statistics prove that this possibility significantly increases as you grow older.

To save money on the premium, it is advisable to purchase life insurance cover before your next birthday. Additionally, it will be helpful in saving some money if you check with two or three insurance companies before acquiring a policy. Taking help from an experienced and knowledgeable independent agent (who works with multiple carriers) to find the best policy at the lowest possible rates.

About HDFC Life

HDFC Life, one of India’s leading private life insurance companies promoted by HDFC Ltd. & Standard Life Ltd., offers a range of individual and group insurance solutions. HDFC Life’s product portfolio comprises solutions, which meet various customer needs such as Protection, Pension, Savings, Investment and Health.

Further reading:

  1. All You Need to Know About Cancer Insurance in India
  2. Health Insurance Riders
  3. Commonly Used Terms and Phrases in the Health Insurance Sector
  4. Lesser Known Facts about a Mediclaim Policy
  5. 6 Common Health Insurance Mistakes You Should Avoid

Thanks for reading this article. I'd love to hear your opinion. Please use the comments section below to share your thoughts. I frequently write new articles that also cover several other aspects of personal finance including credit cards, financial goals, health insurance, income tax, life insurance, mutual funds, retirement planning, and much more. You can Subscribe through Email and receive new articles directly in your Inbox or you can Subscribe through the RSS Feed and receive new articles in your feed reader.

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