Does Life Insurance Become More Expensive When You Turn 50?

I’m not sure if it’s a widely held belief that life insurance becomes drastically more expensive when you turn 50, but I have had more than a few people in their late forties tell me that they want to purchase life insurance before they turn 50. When I ask them why, they tell me it’s because they heard that life insurance gets a lot more expensive after age 50.

I suspect that they heard this as some sort of marketing gimmick, or maybe 50 just seems like a turning point for many people. Whatever the case, it is not true that life insurance premiums jump at age 50. We’ll take a look at some examples and also cover some related topics.

First, life insurance premiums do get more expensive as you age

It is not a secret or surprise that life insurance premiums go up as you age. Other than in certain circumstances (such as newborns or very young people), life insurance premiums increase with age.

When discussing life insurance premiums in this case, it’s easiest to look at products focused only on death benefit protection (and not cash value), such as term insurance or guaranteed universal life insurance.

The analogue for cash value oriented products is the cost of insurance per unit of net amount at risk.

Note that in this section we are talking about premiums, not actual mortality cost. This will make more sense after reading the rest of the article.

So, how much do premiums change at age 50?

The easiest way to answer this question is to look at a few examples. We will look at three different health ratings (the top class, a standard non-smoker, and a standard smoker) for a variety of ages, for $250,000 of 20-year term coverage for a male.

There are too many scenarios to cover in an article, so you can use our quoting tool to see prices for your situation or other situations you might be interested in. You can see prices without entering in contact/personal information.

The table below shows the monthly premium and the percentage change in premium at each age. You can see that there is nothing special about age 50. (Graphs are included below the table to make the data easier to interpret).

Best Class Standard Non-Smoker Standard Smoker
Age Monthly Premium Percentage Change Monthly Premium Percentage Change Monthly Premium Percentage Change
35 $15.00 NA $26.20  NA $67.30 NA
36 $15.80 5.9% $27.70 5.9% $72.40 7.5%
37 $16.70 5.6% $29.50 6.3% $77.90 7.6%
38 $17.60 5.3% $31.50 6.7% $84.30 8.2%
39 $18.70 6.2% $33.70 7.0% $91.10 8.1%
40 $20.00 7.1% $36.10 7.2% $98.80 8.5%
41 $21.60 7.7% $38.70 7.3% $107.40 8.7%
42 $23.30 8.2% $41.80 8.0% $116.80 8.8%
43 $25.30 8.5% $45.30 8.4% $127.60 9.2%
44 $27.70 9.6% $49.10 8.3% $139.50 9.3%
45 $30.40 9.5% $53.50 9.0% $153.10 9.8%
46 $32.30 6.5% $57.60 7.8% $164.30 7.3%
47 $34.80 7.5% $62.50 8.4% $176.70 7.5%
48 $37.40 7.6% $67.80 8.5% $190.10 7.6%
49 $40.30 7.6% $73.70 8.8% $204.80 7.8%
50 $43.60 8.2% $80.50 9.3% $221.10 7.9%
51 $47.10 8.1% $88.00 9.3% $239.10 8.2%
52 $51.30 8.9% $96.60 9.7% $258.90 8.3%
53 $56.10 9.4% $106.30 10.0% $280.70 8.4%
54 $61.40 9.4% $117.50 10.6% $304.90 8.6%
55 $67.50 10.0% $130.00 10.7% $331.80 8.8%
56 $74.60 10.4% $143.70 10.5% $354.90 7.0%
57 $82.70 10.9% $159.10 10.7% $380.20 7.1%
58 $92.00 11.2% $176.90 11.2% $407.70 7.2%
59 $102.70 11.7% $197.10 11.4% $437.60 7.3%
60 $115.10 12.0% $220.40 11.8% $470.10 7.4%
61 $129.80 12.8% $247.50 12.3% $505.60 7.5%
62 $146.70 13.1% $278.50 12.5% $545.50 7.7%
63 $166.80 13.6% $314.60 13.0% $587.00 7.8%
64 $190.50 14.2% $356.80 13.4% $633.60 7.9%
65 $218.70 14.8% $405.90 13.7% $684.60 8.1%

The table clearly shows that there is not a sudden jump in premium at age 50 (or any age). The premiums gradually rise over time, increasing at an increasing rate. This is easiest to see from the graphs below:

The premiums always increase with age, but the percentage change sometimes goes down (the three lines have a similar shape). The smokers in this case have much larger premiums, although their percentage if often smaller.

So, the good news is that if you are healthy enough to qualify insurance, a wide range of ages can be accommodated (more than are shown here).

While age on its own is not a reason to rush to buy insurance, one valid reason to buy it sooner rather than later is that you could become unhealthy in the future, either making you uninsurable or subjecting you to much higher premiums.

Finally, the pattern of premiums is going to be different for every scenario. Here, we only looked at one example. You could change the gender, add more underwriting classes, change the length of the term, etc.

And last, one other way to look at the price of insurance by age

Earlier I said that we were only looking at premiums and not the actual mortality cost. So, I want to explain what I mean by that.

The most obvious factor that affects a life insurance premium is the likelihood of dying, or mortality rates. Mortality rates do increase with age, as you would expect.

But mortality tables also have something called a select period and an ultimate period. The purpose of this is to reflect the effect of underwriting, under the assumption that you can “select” people for particular risk classes by analyzing their health and other personal information.

Eventually, the effect of the underwriting loses its value, and the person enters the “ultimate” period.

What this means is that the mortality rate for a 55-year-old who purchased insurance five years ago is assumed to be different than a 55-year-old who purchases insurance today (assume the two individuals fall into the same risk class).

The 55-year-old who purchased five years ago was known to be healthy then, and probably still is, but the 55-year-old who purchases today is known to be healthy now (and so will have a lower mortality rate).

Eventually though, it is assumed that the two individuals will have the same mortality rate, such as at ages 80 and beyond. The length of time after which they are assumed to have the same mortality rate is known as the select period, and after this period each of them has the same ultimate rate.

The length of the select period varies by mortality table. (A good example of a mortality table of this type is one of the various CSO tables).

What this means is that, in a sense, insurance can actually be cheaper when you get older, assuming you can still qualify for a given class. But when you factor in other things such as interest, the premiums are not going to be lower. And, as mentioned, there is a risk you won’t remain healthy.

So practically speaking, if you need insurance, it’s probably not the best idea to wait around for decades in the hopes that you will still be healthy. Purchase it when you are healthy and the premiums are low. Then, monitor it on a regular basis, and from time to time check to see if you can save any money.

Conclusion

Within the range of ages that people typically buy insurance, there is no special age after which your life insurance premiums are going to skyrocket, and certainly not at age 50.

You should buy it when 1) you need it, 2) you can afford it, and 3) you are healthy, if possible.

At younger ages the premiums are going to be lower, but we also discussed how technically the mortality rate for a newly issued policy on an old person could be lower.

Since many people purchase insurance when they are relatively young, it’s a good idea to monitor policies on a regular basis. Needs and budgets can change, and companies re-price their products from time to time, so savings may be possible.

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