The general public believes they have it figured out and that after age 50 life insurance prices take an astronomical leap into a realm delegated only to those with so little time left that express applications start to take on some real importance. To lend some credence at least to the urban legend, it seems an inordinate number of people in the their late 40’s start inquiring about life insurance for the first time.
Once you get on the other side of 50, the good news is that you probably already have your life insurance in force. The bad news. You could have drug your feet even longer. There is no target date where life insurance rates go ballistic, even in your 70’s when statistically you really are a bit closer the average life span. Does the cost per thousand go up every year after age 50? Of course it does. The same as it does at age 40 and age 45 except that with each passing year the cost per thousand goes up just a little bit more than the last.
The variable in all of this is of course your health. Most of us are at some point in our lives a preferred plus mortality risk. While controlled blood pressure or cholesterol with medication won’t knock you off that throne, things like weight, drinking too much, a poor driving record, cardiac issues or diabetes will. Medically those things can just be another bump in the road but from a life insurance standpoint they all have measurable mortality statistics.
So you can see how this works, let’s start with a 30 year old male at preferred plus rates buying term life insurance to protect his bride and new baby. He has decided to buy $500,000 of 30 year term.
At age 30 he would pay $375.00 a year. That’s a lot of insurance with a guaranteed level premium for thirty years.
If he waited to age 35 he would pay $435.00 a year. The cost of waiting $60 a year for 30 years, $1800.
At age 40, with no health changes it would be $615 a year, still an incredible value. At 45 it would be $970 a year, still taking you through most of your working years and child raising years and home buying years for only about $85 a month. Now let’s step delicately toward 50 so as not to scare anyone. There is another urban myth that once we hit middle age we also no longer qualify for preferred plus rates. You might not, but if you’ve taken reasonable care of yourself as in the criteria I covered above, preferred plus can go on for quite a while. My oldest approval at preferred plus was age 82. But, here we go……
At age 48 our 30 year term would be $1260 annually, but it is also at this age that we really need to think things through. Is 30 years necessary or will your assets overcome the need for life insurance in 20 years. A 20 year term would be $785.
At 49 a 30 year term would be $1385 and a 20 year term would be $855. And (drum roll please) at age 50, the big five zero, a 30 year term life insurance would be $1530 and a 20 year term would be $930.
At age 51 the 30 year term is now taking you past the average mortality of 78 and the cost is $1710 and the rate for a 20 year term is $1020. So, you get the drift. There is no quantum leap from one year to the next. I think the source of the urban legend really comes from someone who prudently should have purchased coverage at age 35 and then finds him or herself at age 50 with a few health issues and only qualifying for a standard rate. What they should have bought at 35 when it cost $435 a year is now faced, if they still need $500,000 and really believe it’s necessary to age 85 would be looking at at a little over $5000 a year but if you were still hanging in there with most 55 year olds, preferred plus rates would be $2805.00 for 30 years and $1470 for 20 years. Preferred rates would be $3505 and $1770 respectively. At age 56 comes the end of 30 year term life insurance for us old folks.
But let’s be realistic. With age generally comes a lot better understanding of what our short term and long term life insurance needs are and, with many of the needs mentioned above gone or waning, the need is often less and the term length could be 10 or 15 years versus 20 or 30. Maybe you’re in a position where you need some amount of 10 year term just to get through the income replacement age and then a small permanent policy for final expenses, if that.
Bottom line. Age is not always a friendly thing, but all else being equal, the mortality risk of age alone is really very fair. When things are perceived to be out of proportion is when health isn’t equal or you’re just ticked at yourself for not buying when you should have. If you have any questions or want to determine what rate class you qualify for, call or email me directly. My name is Ed Hinerman. Let’s talk.