How age plays a role in life insurance premiums
At a glance
Buying life insurance cover in early adulthood can result in lower premiums, because insurance companies consider these applicants healthier and with a lower risk of dying in the near term.
Therefore, other things being equal, life insurers generally charge less for life insurance cover for younger applicants.
However, this starts to change between the ages of 35 to 55, because later adulthood tends to bring with it larger financial obligations. You might also choose to insure a larger sum to leave to your beneficiaries, and the premiums often grow as your cover accommodates your growing needs.
In Australia, pre-retirement age is between 55 and 65, and it is also a time when many people consider buying life insurance. However, starting cover at this later stage in life can seriously affect your premiums.
Starting your life insurance policy after the age of 65 is also not generally an ideal time (though for some people it may be a sensible time to do so, depending on their particular circumstances).
Premiums are generally the highest in this age group, mostly because the remaining life expectancy of the policyholder is increasingly lower.
Keep in mind that there is also typically a maximum entry age for life cover – for example, age 69 is a common upper limit beyond which you won’t be eligible for life insurance cover.
However, that doesn’t mean that you can’t start your life cover later in life. By this point, many people have some savings and fewer financial obligations. Therefore, you can reduce the overall cost of insurance by deciding to take on a lower insured amount.
When considering life insurance, it’s essential to analyse your finances.
Know how much money you’ve saved already. Know how much debt you have, and how much your family members would have should you no longer be around. Perhaps they’ll need help with your children’s education expenses, for example.
These factors can help you determine if life insurance cover makes sense for you and help you calculate how much cover you might need.
Not everyone takes out life insurance for the same reasons, or at the same age. However, purchasing cover is one way to help provide for your loved ones, after you pass.
Even though the idea of life cover may seem simple enough, there’s a lot to learn before choosing a policy – from understanding how premiums work to reviewing different insurers and products, and other related issues.
Do you need life insurance? That is a question only you can answer. You may choose to get some professional advice, or to carefully consider your own needs and circumstances and deal directly with a life insurer like NobleOak, who can provide you with general advice and product information.
This is general information only and does not take into consideration your individual circumstances, objectives, financial situation or needs. You should carefully consider the product disclosure statement before making a decision on a life insurance product.
NobleOak is CPA Member Benefits’ Australian life insurance partner and provides special offers to CPA members. To get a quote, visit www.nobleoak.com.au/cpa or call one of NobleOak’s friendly team members on 1300 041 494 and mention ‘CPA’.
Important information: Please note, cover available to Australian residents only.
The Target Market Determination for NobleOak’s Premium Life Direct insurance is available on our website.
NobleOak Life Limited ABN 85 087 648 708 AFSL No. 247302 issues the products. This information is of a general nature only and does not take into consideration your objectives, financial situation or needs. Always consider the Product Disclosure Statement (PDS) to see if the product is right for you.
