How Life Insurance Premium Changes with Age?

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  • Post last modified:March 21, 2022

People often inquire about “the best time” to buy a life insurance policy.

The most important factors that help us in deciding to buy a life insurance policy are- its buying cost and the value of premiums.

But do we know whether what are the prime factors that contribute to deciding the cost of our premiums towards the policy?

Perhaps if we know this answer it will be easier for us to determine the best time (age) to buy a life insurance policy.

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As there are three types of life insurance policies that are mainly considered by the people- term, whole life and universal- premiums for all of them are decided on the basis of various factors.

Your health, financial position, occupation and sources of income, demographic section, lifestyle good and bad habits, family history and your age!

As here in this article we are going to discuss the policy premium rates on the basis of the age of the applicant, we must suggest our readers that it is never too late or early to buy the life insurance policy.

Age is Not the Only Factor

Although the rates of premiums vary with age as well as various other factors but life insurance policy is the need of time in today’s uncertain world.

It helps in securing the financial future of your loved ones in your own absence from the world.

Moreover, it is a form of savings for the future that you will cherish once you find the accumulated sum from your little monthly savings later on.

In our previous articles, we have already discussed the benefits of buying a life insurance policy at different stages of life.

So, let us discuss how the “age factor” affects the premiums of life insurance policy!

The Age Effect on Life Insurance Policy

older age higher premiumThe premium for the policy is decided at the time of buying it. The good news is that the rates that are determined at the time of buying of policy are not going to change in the future.

So, let us say that you buy a whole life insurance policy at the rate of x amount as a monthly premium when you are 40 years old, is going to be the same when you become 50 or 60 years old. It means you will pay x amount only when you grow with age.

The rate of premium varies as per age only at the time of buying the policy.

For example- a 30 years old applicant will get premiums at lower rates than another 60 years old applicant if they buy a policy today.

It is believed that the percentage of premium increases by approximately 10% with each additional year of age.

It can be understood as- if a 40 years old person buys a policy at the rate of $x, then the cost of the same policy for a 41-year old person will be $1.1x.

The difference in price is determined as per the matrix of insurance company policies and varies from one firm to another.

The rate of increase can vary from company to company. It can be lesser or higher than 10% in any case.

Why Is There Such a Significant Cost Difference for Every Succeeding Age?

The reason is very simple- human life expectancy. Every year that passes by- just pushes us one more year closer to mortality.

This is directly proportional to the risk factor assessment of life insurance companies.

Therefore, the cost of premiums rises for the applicants with each increasing number on the scale of age.

Why Does the Insurance Premium Remain Steady When the Policyholder Ages in Number?

After reading the above explanation of being a “risk factor” for insurance companies, many people must be wondering that why doesn’t the rate of premium rise for those who already hold a policy.

Well, their risk has already been covered. The insurance companies are never going to look up to a run of loss.

Therefore, they spread the risk factor in the number of years in case of a customer who has already bought the policy at a younger age.

Therefore, instead of paying lower premiums when they are young and higher when they age- the rates of premiums for them is the same all throughout their policy duration.

It keeps the insurance company on the safer side and also helps the customers to plan their monthly/annual budget accordingly.

Let Us Learn More About Several Age Brackets that Affect Rates of Insurance Policies in Different Ways

In between 20-30 years of age

This is the beginning phase of an average adult’s career when they actually start earning after completing their college studies. The money starts pouring in and the expenses are lesser.

However, one must note the salary is also lesser in this phase.

Generally, people start with little savings in this phase and do not know where to invest their money unless they support their parents or themselves for personal expenses.

However, if you buy life insurance policy just as term insurance at this early age there will be two significant advantages to do so-

  1. You will purchase the insurance policy at very economical rates as you are at the lowest stage of risk for the insurance company.
  2. You will accumulate wealth for some important project in life that will appear as a huge bonus amount when you will actually need it.

This can be explained as- if you purchase a term life insurance policy in early 20 years of life, you will get it for very cheap prices let us say $50 per month for 15 years at the age of 25.

So, you are paying a little amount every month and when the maturity comes you will turn 40 years of age.

The lump-sum money you derive at this time is going to help you in a million ways if put to use.

You can pay the fee for your children’s education, afford down payment of your property, buy a new vehicle or shop, etc.

This money, invested at the right time, is going to help you at the ‘peak age of spending’ in life.

In between 30-40 years

The general life course during this bracket of life is about getting married, having children and starting up a business.

People see the big picture of expenses that need to be catered in the future and realize the importance of savings.

Many youngsters in this age group (generally beyond 35) start thinking about insurance in a serious way. They understand the expected mortality aspects of life and want to secure the financial future of their family.

However, the expenses seem to be unending at this age- marriage and childbirth expenses, school fee for children, holidaying and vacation expenses with family, home loan, car loan and in some cases even the aged and dependent parents, etc.

Amidst everything, you should think of life insurance as a matter of priority. You still can afford to put aside a little extra money for buying a policy that can help your family to meet all sorts of expenses even if you die in an accidental mishap!

It prepares them for various financial contingencies. The advantage is that the price of life insurance policy will still be lesser here than any other year in future and your salary will have an annual increment and bonus every year to help you in meeting the other challenges.

In between 30-40 years

During this age period, people actually start enquiring about life insurance and plan to invest for retirement.

However, we bring you back to the big picture. Those who have already invested in life insurance at the age of 20-25 are going to derive the lump sum amount during this age.

Coming back to the present stage of life, here a person usually is in the mid of major expenses and feels quite settled with life- loans being paid, children already into school or college, responsibilities being catered to- and source of income becomes quite evident and trustworthy.

Thus one can always consider planning to safeguard the future of their loved ones at this stage if they haven’t done it earlier.

People also plan for retirement as we will be more dependent in our old age and sources of income will be lesser. Timely planning can help in avoiding the unfavorable circumstances in the future.

In Between 40-50

This age group has mixed experiences from different sections of people. Some of them get free from their major expenses and avail benefits of term insurance lump sum amount that must have been started in their 20s or 30s.

Their responsibilities towards children’s expenses and education lesson as most of them finish college and most of the loans also get fulfilled during/until this age. At the same time, fear for future and lack of financial planning can be daunting.

Therefore, they invest in life insurance at this stage- however expensive it is- just to make sure that their future of old age doesn’t suffer.

Above 60 years

Many people ask why do we need to buy life insurance when we have already retired from our working life and responsibilities.

Well, we have ample reasons to give you- medical bills will start mounting any time soon, your partner can be left alone to struggle if you die all of a sudden, burial and funeral expenses, the expectations of your children who always look up to you, self-dependency and dignity, etc.

Therefore people actually invest in whole life insurance at this stage of life- however expensive it is! Not only 60s, but people also buy insurance in their 70s, 80s, and 90s as well!


We suggest our readers to start considering life insurance investment planning as soon as they realize its importance. No doubt the earlier we start, the better it is but there is never too late to start investing in a life insurance policy.

Linda Chavez

I'm a burial & senior life insurance expert, independent agent, Founder & CEO of Seniors Life Insurance Finder. I have been working in this sector since 2004 and established my own company in 2014. I have a team of seven members, and we are trying hard to share the knowledge we've gathered. We know how difficult often it is to find an affordable policy. Hence, we are doing our best to help you.