What is the Cut-off Age for Affordable Life Insurance? (Updated for 2023)
Many people assume that when they turn 40, 50, or 60, life insurance rates automatically shoot through the roof...but thankfully, they are wrong! There are a lot of different variables that come into play as every person has different circumstances to consider.
Let’s take a look at how these variables can cause life insurance to be no longer affordable for different people.
We’ll start with talking about the cutoff age for life insurance and how different factors can affect affordability, We've also provided some insider's tips and strategies that you can consider before it becomes too late.
Here’s what we'll cover in this post:
Quick Article Guide
Here’s what we'll cover in this post:
The (Supposed) Cut-off Age for Affordable Life Insurance
It's amazing how many clients I speak to that are 49 years old, and somewhere have heard that they better buy life insurance right now before they turn 50, or their rates will increase 50%... or something to that tune.
The truth is that life insurance pricing increase as you age on a fairly consistent basis.You might see life insurance rates increase about 8%-10% from ages 48 to 49, and about the same amount from 49 to 50.
However, the more you age, the more susceptible you are to other variables that could increase your premiums, besides just age.
The following can affect the affordability of life insurance either individually or can be a combination of several factors which make life insurance too expensive including:
- Your Age
- Your Health
- Your Income
- Your Budget
- Type of Policy
- Amount of Coverage
- Length of Coverage
- Additional Riders
Let’s look at these in more detail.
How Age Can Affect the Cost of Life Insurance
There is one rule of thumb to always keep in mind: life insurance becomes more expensive as you age. For the most part, the cost of a policy for someone between ages 20 – 35, who is in good health and doesn’t smoke, is the least expensive. The premiums change little for those in this age range.
However, as you creep into your 40’s and especially into your 50’s and beyond, the cost for a policy begins to rise more substantially. Health issues such as weight gain, increased cholesterol levels, and hypertension or elevated blood pressure, could prevent you from qualifying for the top rating available, "Preferred Best.”
You may get “Standard Plus” or “Standard” ratings which will bump up your premiums by at least 20% to 30%. After the age of 50, or when you hit your 60’s or 70’s, you might not think you will need life insurance, but surprisingly many mature persons still require policies.
A typical age cutoff for permanent life insurance, a more expensive form of insurance that covers you for the rest of your life, is 75 or 80. Some companies offer “final expense” insurance to consumers as old as 85, but the benefit is generally limited to $40,000 or less and may not pay off at all if the insured dies in the first two years.This is why it’s a good idea to periodically review your existing life insurance policy sooner rather than later. Obviously “Term Life Insurance” is the most affordable for anyone and at any age, but it depends on your needs, the amount and length of coverage.
Having a “Conversion” feature in a term policy is a good buy because it allows you to convert a term policy into “Permanent Life Insurance” or, you could opt a “Renewable” form of term life insurance.
Both options allow you to continue your policy without having to take a medical exam. However, premiums will be based on your age so you can expect to pay more for continued coverage.
Keep in mind that those policies which allow you to convert your policy have an expiry date!
How Health Affects Life Insurance Affordability
Another aspect that can make life insurance unaffordable for a person and at any age is the state of your health. Now, keep in mind that just because you have a health issue such as a pre-existing condition doesn’t mean the policy will be too expensive.
Surprising, some health issues have a very minimal effect on the cost of a policy, while other health issues can make a policy very expensive or you could be declined altogether.
In addition, every company sets their own guidelines, so some companies are more lenient than other. In general, health issues that can be corrected or treated through surgery and/or with medication may require that a waiting period before you will be approved for a policy.
Certain cancers and other conditions will be automatically declined if you have been recently diagnosed with the disease. The premiums can be expensive if you apply immediately following the required waiting period if the disease has been in remission and there have been no relapses.
The cost of your life insurance will continue to diminish the longer you are cancer free and there are no other mitigating health issues.
If you can’t afford a traditional policy you may still be eligible for a “Guaranteed Issue” policy. These types of policies don’t require a medical exam and provide lower amounts of coverage, but they are more expensive than what you would pay for an equivalent amount term policy for example.
How Income and Budget Affects Life Insurance Affordability
I won’t spend much time on these two items because they are self-explanatory. Clearly, the amount of money you make and how you budget your money will determine what you can spend on life insurance. It can also affect how you are able to maintain payments on an existing policy.
If you have an existing policy that you can no longer afford, one approach is to simply replace your coverage limit with a lower amount and have the policy re-written.
You may not be able to afford a $500,000 policy but if you reduce the coverage to say, $250,000 or even $100,000, the premium will be reduced and can perhaps be more in line with your budget.
Type of Policy and Life Insurance Affordability
There are 2 types of life insurance which you can buy including:Permanent Life Insurance
Term is the most affordable and the preferred choice for the majority of people who buy life insurance. It covers death benefits only and you buy a policy for a period of time such as 10, 15, 20, 25 or 30 years.
The disadvantage is that when the policy is about to expire, and you need ongoing coverage, you'll have to pay an increased rate or buy a new one. If your health has declined, a new policy might not be affordable. Especially if you living on a fixed income.
That’s why it’s very important that when you first buy a policy you consider the term length because choosing between a 20 or 30 year, or even an age specific policy can be very crucial.
It’s also important to consider policies which have a convertible or renewable option which allows you to continue your coverage. Companies like A+ rated Banner Life even offer 35 and 40-year level term policies.
Now, “Permanent” insurance is much more expensive. It covers you for life and some policies offer a cash accumulation feature which grows over the life of the policy. These types of policies available include Whole Life, Universal Life, and Indexed Universal Life or hybrid variations of these policies.
How Amount of Coverage and Length of Coverage Affect Affordability
The amount of coverage also directly impacts the cost and relates to death benefits. The more you buy – the more it costs. So, a $100,000 policy will cost a lot less than a $1,000,000 policy regardless of your age or health.
You might not need a more expensive policy in your latter years and should consider reducing the amount of coverage as you age.
The same applies to the length of coverage and, here, we are only referring to term insurance. A 10 year policy will be much less expensive than a 30 year policy. Also, as you age, keep in mind that some term polices will no longer be available. For example, you will no longer be eligible to buy a 30 year term after age 58.
Strategies to Find Affordable Life Insurance
As you can see, there is really is no specific age when life insurance becomes no longer affordable because it all depends on your circumstances. Life insurance for a 45 year-old with multiple health issues may be less affordable than a comparable policy for a 62 year old in excellent health.
The best approach in finding some form of affordable life insurance is to use an independent agent such as those here at JRC. We have access to over 50 highly-rated life insurers and thousands of insurance products. Having so many options allows us to comparison shop for you to ensure that you are matched with the best policy for your particular circumstances.
If you have a pre-existing health issue, we will find the most lenient companies for that condition, and we can advise you on both your short and long term needs. Unlike the giant call centers you see on TV, our agency is owner-operated. We will reach out to you each year to keep in touch, and to help you address changing life insurance needs as you age.
It’s important to periodically review your life insurance needs as circumstances change. You might have paid off your mortgage, had a new addition join your family, started a business, or incurred some debt. The reverse may also be true, and you might be paying for a policy which you no longer really need.
If you think you can't afford life insurance, or if you would like an accurate quote, please give us a call today at 855-247-9555. There is no cost to apply for life insurance and our shopping services are free. You can also request a free quote online using the form below.
Managing Partner and Co-founder
Cliff is a licensed life insurance agent and one of the owners of JRC Insurance Group. He has helped thousands of families of businesses with their life insurance needs since 2012 and specializes with applicants who are less than perfect health. In his spare time he enjoys spending time with family, traveling, and the great outdoors.