We hear a lot of excuses for putting off life insurance:
“I know I need life insurance for my family, but I’m not going to die anytime soon.”
“Why should I spend money on life insurance now when I can just wait until I really need it?”
“When is the cut off and the best age for life insurance when a man can still get a good deal on life insurance?”
“I do not want to wait until the insurance is too expensive to buy, and I know that it is best to buy insurance when I am healthy , but I don’t want to waste money if I don’t have to.”
The right time to buy Life insurance should not be based on your age… it should be based on your need.
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By planning ahead you can set yourself up to save a substantial amount of money in the future. Some people regardless of their age do not need life insurance.
However; if you are like most Americans with a mortgage, a family, and bills, then your need for insurance should be based around these factors, not your age.
Let’s face it, we don’t know when our time is going to come, and we don’t know what our health will look likein the future. If we did, life insurance probably wouldn’t exist.
Let’s a look at insurance rates for healthy males at different age bands to see the changes in price with age. Please note, the rates for a healthy female are typically about half of the price of the rates for a healthy male.
Each of these rates for males are for the top health or “preferred plus” category. Please note only 5- 8% of Americans are in the top health category and health tends to decline with age.
Each of these rates are guaranteed to stay level for 30 years and are based on monthly cost. (30 Year Level Term)
The rates listed are from companies that are rated A (Excellent) or better by A.M. Best. Learn more about A.M. Best here
*Please note that these rates are valid as of 05/2014, but life insurance rates can increase or decrease at any time.
|Age||$100,000 of Insurance||$250,000 of Insurance||$500,000 of Insurance|
|60||30 Year Term Not Available||30 Year Term Not Available||30 Year Term Not Available|
After the age of 59, a 30 year level term policy is no longer available. (Please note there are 10, 15, 20, 25, and 30 year options available from our trusted carriers. We also offered guaranteed Universal Life policies.
Each of these rates below for healthy males are guaranteed to stay level for 20 years and are based on monthly cost. (20 Year Level Term) The rates listed are from companies that are rated A (Excellent) or better by A.M. Best.
|Age||$100,000 of Insurance||$250,000 of Insurance||$500,000 of Insurance|
|75||20 Year Term Not Available||20 Year Term Not Available||20 Year Term Not Available|
As you can see from these charts, the sooner you buy the policy for your needs, the less expensive it will be. In fact, the rates practically double every five years past the 40 years old.
If you need a policy to take you to retirement age, the difference between buying $500,000 of coverage at the age of 45 vs. 50 in excellent health is about $350 dollars a year. That’s 36% more for only being 5 years older.
Over 20 years that a difference of $7,000 dollars. That money could be earning interest in a 401k fund, paying down a mortgage, or even starting an account for your children’s college tuition.
The vast majority of American men want to lock in coverage at least until they reach retirement age, most a few years longer.
For most men, retirement age is between 65 and 70, however, in the last 20 years this number has increased dramatically. According to Emily Brandon of US News, the average age most men 40 and older expect to retire is 68. Read the full article here.
With number increasing every decade it is important to consider coverage at least until the age of 70 or longer if you are considering pension maximization. Everyone’s need for insurance is different and we can help you assess how long you need coverage for if you are not sure.
Let’s say you want to lock in coverage until you’re 80 years old, because the average American man lives to be 77. We can compare the difference in cost using the chart above.
If you buy a 30 year level term for $500,000 of coverage when you are 50 years old, and you’re in excellent health; you will end up paying $1654.00 per year for coverage or $137.00 monthly.
If you decide to wait until you are 60 to buy the same amount of insurance, you’ll see a completely different picture.
At the age of 60, the option for a 30 year term is no longer available. You can still lock in coverage until you reach your 80th birthday by purchasing a level 20 year, $500,000 policy. At the age of 60 however, the annual cost is almost 40% more at a rate of $2,620.00 per year or $218.00 per month.
You may say to yourself, “But if I wait to buy my insurance until I’m 60, I won’t pay any premiums from the age of 50 to 60.”
That is completely correct, however; even when we add in the additional 10 years of premiums, the person who bought the policy when he was 50 will still save about $3,000 over the course of the policy.
Saving money is not the only reason we recommend you buy coverage sooner though. You also want to consider health.
Health can change dramatically, especially if you have a family history of cancer, heart disease, diabetes, or stokes. Even with a favorable family history, as we get older we tend to have more health issues, and any health issue may affect your rates.
These rates are illustrative, but they are actual competitive rates for the excellent or “preferred plus” category from top-rated life insurance companies. If your health declines between the ages of 50 and 60, you might not be insurable.
Or, if you are insurable, you may have to pay a lot more. The difference between being overweight at the age of 45 vs. 55 could can affect the cost of your life insurance by as much as double resulting in thousands of dollars you could have saved.
In addition to saving money by locking in your insurance and locking in a better health category, you also want to consider income multipliers.
Believe it or not, the amount of insurance you can qualify for is directly proportional to your earned income or your household income.
The reason, insurance companies do not want you to be worth more dead than alive.
In other words, the insurance company will not allow someone to buy an insurance policy unless it makes financial sense to the insurance company. Life insurance is designed to replace income or serve as a safety net.
If you make $50,000 dollars a year and you are in your 40’s its completely reasonable to have a million dollars of life insurance.
The reason behind this logic is that you have about 20 working years left and you make about $50,000 a year. $50,000 (your current income) x 20 (working years left until retirement age) = $1,000,000.
If you passed away today, your family would be out roughly $1,000,000 of income. If you were applying for a $5,000,000 dollar policy in this scenario, the insurance company would want to see at least $200,000-$250,000 of gross income each year to consider.
There are exceptions to this rule, factors like a high net worth may allow you to qualify for more insurance coverage. Please call us if you have specific questions and we can find the best company for you.
If you make about $50,000 a year and you wait until you are in you mid to late 50’s, with only 10 years of “income earning” years left, you might not qualify for more than $500,000 of coverage. In fact, most clients past 70 years old have a hard time qualifying for more than $100,000 of coverage.
However, in some cases we can get the insurance company to make an exception if it is reasonable or if the coverage is needed for a business or estate protection.
Everyone’s need for insurance and health category are different, but some companies are much better with some issues than others.
Here at JRC we work with over 40 companies directly (most call centers work with less than 10) and this allows us to find the company that is the best for you. We focus on life insurance only and we will not try to get you to buy auto insurance or sell your information to solicitors.
By working with such a vast majority of carriers we are always able to find you the best match. Some companies are more lenient with “income multipliers” other companies are more lenient with travel, family history, tobacco use, blood pressure, cholesterol, etc.
When is the best age to buy life insurance?
As soon as you have a need for life insurance. We are here to help you assess you needs and find the most affordable policy on the market for you. If your needs change over time because of additions to your family, a new mortgage, or whatever; we are here to help you.
We reach out to our client’s every year to make sure they are still getting the best deal on their life insurance and to make sure they still have the amount of insurance they need.
Our company is owner operated so you know you’ll get the best customer service in the industry.
Our agents have multiple years of experience with thousands of happy clients. Do you still have questions or do you want to see what your rates would be? Please feel free to call us at 855-247-9555, or send us a quote request and we’ll call you.
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