What is the right age to take out life insurance?

September 13th, 2022
What is the right age to take out life insurance?

A comprehensive life insurance policy can ensure that your loved ones are protected financially should you pass away within its term. But when is the best time to start thinking about taking out the right policy for you and your needs?

Do I need life insurance?

Life insurance policies are designed to ensure that your loved ones can continue enjoying a similar quality of life without encountering any financial difficulties in the event of your death. If you don’t have an active policy but do have financial responsibilities of any kind, your dependents, family or partner could be left with ongoing financial difficulties that could result in the loss of a home or mounting debts.

Are there different types of life insurance?

Yes. There are three main types of life insurance, each of which has different benefits for different people.

– Decreasing term insurance

As its name suggests, the coverage with this type of insurance reduces over time. It is particularly beneficial for people aged between 30 and 60 who have a mortgage and/or a family.

– Level term insurance

With a level term policy, you will have the opportunity to choose how long you want coverage for. Insurance providers generally offer policies in 10 year increments, however some others also provide the chance to obtain coverage in 5 year increments.

– Whole life insurance

Again, as its name indicates, whole life policies offer coverage for the rest of your life. This type of life insurance is typically the most expensive option because your insurance provider knows that you will pass away at some point and a payout will need to be made.

When should I start looking at life insurance quotes?

There are no legal requirements to purchase a life insurance policy, nor is there a specific age you should be. However, if you have started or are planning to start a family in the near future, you likely already know that there is no better time than the present to start evaluating the overall health of your finances, research your options, and weigh up the pros and cons of different policies.

Conversely, looking at quotes for life insurance is likely to be the furthest thing from the forefront of your mind if you are single and don’t have any dependents. However, it is important not to automatically assume that life insurance is something you don’t need to think about right now because taking out a policy earlier could save you a significant amount of money in the long run.

Are there any life insurance age limits?

You must be at least 18 years of age to purchase a life insurance policy. There are also upper age limits for life insurance policies, however this tends to vary between different providers so it is important to pay close attention to the terms and conditions of the specific policy you are interested in. Most people will find that they can obtain cover up to the age of 90, however this is not a guarantee and will depend on individual providers.

What affects life insurance costs?

Two of the most significant factors that influence the cost of life insurance premiums are things we cannot control: sex and age.

– Age

In general, the younger you are, the less you will pay for life insurance because you are more likely to have a clean bill of health.

– Sex

Additionally, men may find that their life insurance premiums are higher than women because many insurers view them as a riskier prospect.

However, there are also a variety of factors that you can control, at least to a certain extent.

– Health

Health is a main factor, as many insurers will consider your height, weight, and your medical history. Some policies will require you to undergo a medical examination, however there are also plenty of policies out there that don’t require this.

Many insurance providers also offer optional critical illness cover, which will increase the cost of your premium but may provide additional peace of mind that you and your family will be covered if you were to become seriously ill.

– Occupation and lifestyle

If you have a high risk occupation, such as a pilot, firefighter or police officer, you may find that your insurance premiums are higher than someone with a lower risk job. Some insurers will also ask you about your hobbies and if you like to spend your free time skydiving rather than collecting stamps, this may well be reflected in the cost of your premiums.

Life insurance rates by age

Every insurance provider has its own unique selection of policies, each with different associated premium costs. However, let’s take this opportunity to look at an example life insurance rates by age chart, which should help to paint a clearer picture of how much premiums can rise with age.

Let’s say that you want to purchase a £250,000 insurance policy. If you were to purchase this policy in your 20s, you could expect to pay premiums of £12-£14. Although your premiums are unlikely to rise significantly into your 30s, by your 40s the same policy is likely to have premiums ranging between £15 and £17.

If you were to purchase this policy in your 50s your premiums would be closer to the £30-£33 mark, and by your 60s they would rise again to between £56 and £75.

What type of life insurance policy is best for me?

The type of life insurance policy that will best meet your needs is likely to vary depending on your age and your circumstances.

– Life insurance for under 50s

Statistics show that in 2017, only 2% [1] of people in the UK with a life insurance policy were aged between 18 and 24. In the same period, research revealed that people aged between 45 and 54 were most likely to be covered by a valid life insurance policy.

For the vast majority of younger people, a term life insurance policy is likely to be the best option because of their affordability. After all, at this point you may be more focussed on repaying student loans or saving for a deposit on your first property.

However, if you have a more flexible budget to work with, it is worth considering a whole life policy that permits you to purchase your ideal coverage amount for a set price.

Remember, whole life term policies gradually increase in price as you get older, so purchasing this type of policy sooner rather than later makes good financial sense. For example, premiums for a life policy purchased by someone under 30 will be noticeably more affordable than a similar policy purchased by someone over 40.

Generally, purchasing an affordable insurance policy is better than forgoing insurance altogether. In terms of the level of cover you should be looking for as a young person, if you have significant debt most financial professionals will advise you to take out a policy that is worth between five and 10 times your annual income. If you don’t have a significant level of debt, a policy that will pay out up to three times your annual income in addition to funeral costs should be enough for most people.

– Life insurance for over 50 years of age

A whole life insurance policy is a solid option for the over 50s, however, this does depend on your financial situation and your overall health. If, for example, you have a significant amount of debt such as a mortgage or car loan, selecting a high-value term policy is likely to deliver the best value for money until that debt is cleared. Over 50s who don’t require such a large amount of coverage should think about purchasing a mid-range life policy because it has the potential to grow and prove to be a solid investment over time.

It is important to note that over 50s who smoke or who have experienced medical concerns should expect to pay higher premiums than non-smokers with a clear health history.

– Life insurance for over 80 years of age

It can be trickier to obtain life insurance if you are over the age of 80, however, there are insurers out there who do offer cover. A term life insurance policy is likely to be your best option because its premiums will be consistently lower throughout the duration of your policy’s term.

I didn’t purchase life insurance when I was younger. What should I do?

If you don’t have a life insurance policy, don’t panic. For many of us, our circumstances change and you may find that you are now in a position where you don’t need a large policy to cover the cost of a mortgage or childcare.

When the time is right to look for life insurance UK providers typically have a variety of options to consider. So, when you’re getting started with your search, It is worth using an online life insurance calculator tool to obtain quotes based on your circumstances and needs, which can be used at virtually any age to find suitable coverage at the right price.

I have a life insurance policy but my circumstances have changed. What should I do?

It is natural for our circumstances to change at different stages of our lives, however, it is important to ensure that your insurance policy reflects your current situation and offers the level of coverage you need right now.

You may decide that you would benefit from increasing or decreasing your coverage, or increasing or reducing the length of time your policy will be valid for. You may require a lower amount of coverage if you received an inheritance that helped you to pay off your mortgage earlier than expected. Or you may want to increase the length of your coverage if you have had children later in life to ensure they would be fully protected, should the worst happen.

It is important to note that some insurance providers will charge a fee to make amendments to your policy and it is best practice to consult your provider before deciding to make any changes. There are certain instances when making adjustments to a policy will require special attention, such as if you are diagnosed with a medical condition.

Ultimately, it is a good idea to think about obtaining a life insurance quote sooner rather than later. Purchasing cover becomes even more important if you have dependents, a mortgage, or debts, however, you could require life insurance at any stage of your life.

You will find that when the time comes to look for a quote life insurance options are numerous. So, take time to explore your options and consult with your preferred provider to ensure that you are purchasing the right policy for your needs and lifestyle.

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