You may be surprised to learn that you may “Save Age on Life Insurance.” What in the world is it, you’re presumably thinking? As you may be aware, the cost of your life insurance policy is greatly influenced by your age, and the policy will be more expensive as you become older. You may not know that the top life insurance companies in the United States will assess your age in two separate ways.
“Actual Age” is used by certain carriers, although “Nearest Age” is used by the majority.
Backdating to save age is a life insurance secret that may save you thousands of dollars over the course of your policy. Let’s take a look at who would wish to Save Age before purchasing life insurance.
What Companies Think of Your Age
The provider will consider your age in two ways when you apply for life insurance.
- Actual Age
- Nearest Age
Actual Age
Let’s start with your actual age. This is precisely how it sounds and how everyone perceives their age. Here’s an illustration: Let’s say it’s January 1st, and John Doe’s birthday is today. John turned 45 years old this year, and over the following 12 months, he will be 45 years old. Isn’t it rather straightforward?
Actual Age Life Insurance Rates
On January 1st, John Doe became 45 years old. To commemorate this wonderful occasion, he begins searching for quotes on the Life Insurance Blog… (Isn’t it amusing?)
John received the following estimates for a $500,000 30-year term life policy. These rates are calculated using John’s current age. Based on John’s Actual Age, the lowest monthly premium is $80.54.
Nearest Age
Now let’s have a look at how companies see your Nearest Age. Things can get a little complex here, so let’s explain it down in layman’s terms. Your Nearest Age is referred to by life insurance companies as your “Half Birthday,” which occurs six months before your actual birthday.
You’re probably scratching your head right now, so let me give you an example.
Nearest Age Life Insurance Rates
John, in our example, turned 45 on January 1st. On his birthday, he sought life insurance quotations. On his birthday, the lowest monthly cost was $80.54.
What if John’s life insurance policy was not purchased on his birthday? Let’s assume he got distracted and postponed it.
In June, John returned to Life Insurance Blog six months later and received additional quotations. John is still 45 years old, but his Nearest Age is now 46. His insurance is now more costly!
Backdating To Save Age On Life Insurance
What does the term “save age” signify in the context of life insurance? When you preserve age for life insurance, you lock in a premium price based on your actual age rather than the nearest age. You’ll have to spend a few extra premiums upfront in order to save a lot of money in the long run.
How Much Does Life Isurance Cost?
As you can see from the samples above, John Doe’s rate has risen as his Nearest Age has risen to 46. John’s birthday is January 1st, but he’s now looking for insurance for June. His rate will increase when he approaches the age of 46.
The good news is that you may backdate your life insurance policy to your actual age with most life insurance providers.
Saving Age was brought to John Doe’s notice by his agency. This is a service that life insurance agents may provide to the clients that can save them thousands of dollars in the long run. To keep John’s life insurance premium as low as possible, his agent will have the business backdate the policy.
What’s the Catch?
When you backdate a policy, you’ll have to pay life insurance payments from that point forward in order for it to take effect. If you backdate to your “half birthday,” this is typically not a problem.
However, if you’ve gone 8-10 months beyond your real age, it can be considerable.
This is why.
In June, John will celebrate his half-birthday. John Doe will have to backdate his coverage by two months if he doesn’t buy it until August. To preserve age, he’ll have to pay for two months of premium ($80.54 x 2).
Life Insurance Save Age Calculator
We completed the work for you and determined the difference between actual and closest age rates. Let’s take a look at how much money you may save by backdating your life insurance. We’ll demonstrate how much money a person may save over the course of their policy’s lifetime if they choose to Save Age and Backdate.
To keep things simple, we’ll use the same $500,000 term life policy we used for John Doe before. Quotes are based on men who are in good health and do not use cigarettes. For ages 30-55, we utilized a 30-year term; for years 60 and 65, we chose a 20-year term because a 30-year term is not available at these ages).
As you can see, there aren’t any big savings when backdating while you’re young. Backdating, on the other hand, begins to show promise in your forties, and by the time you’re in your fifties, you’re looking at big savings!
Should Your Life Insurance Policy Be Backdated?
You should carefully consider backdating your life insurance policy. Backdating your insurance might save you a lot of money if you’re searching for long-term coverage.
What if you only need coverage for a couple of years? It’s probably not worth it to go back in time. We computed the overall savings, but you must also determine when you will break even.
Backdate of your “Break Even”
Consider our 55-year-old example from earlier. He will save more than $12,000 over the course of his policy’s life and $420 every year. That’s fantastic! The tough thing will be if he needs to go back more than a few months. Here’s how much our 55-year-old will have to pay as a result of the backdating:
- $202 if you go back one month.
- $404 for a two-month backdate
- $606 for a three-month backdate
- Four-month backdate: $808
If our 55-year-old just needs to backdate 1 or 2 months, he will break even after the first year. It’ll take a couple of years if he needs to backdate four months. When it comes to backdating a life insurance policy, it’s critical to consider both the immediate and long-term worth.
How We’ll Help You Save Age In Life Insurance
The life insurance application procedure might be lengthy. It’s fairly uncommon for applications to take six weeks or longer to be granted. Even the greatest life insurance firms are subject to this. A competent life insurance agent will show you how saving age may save you money in order to save you money.
We’ll only show you this at Life Insurance Blog if it can save you money in the long run. We’ll assess the prices with and without conserving age and give you the option to choose. It’s alright to backdate a policy for up to six months, but it’s not required. Contact Life Insurance Blog immediately if you have any concerns regarding backdating, your life insurance effective date, or just want a tailored quote!
Saving Age On Life Insurance
Thank you for taking the time to read our article about saving age. We hope you’ve gained a better understanding of how this method can help you save money throughout the course of your policy’s lifetime.
Expert Life Insurance Agent and health insurance agent
Dylan is your go-to guy for life and health insurance at InsureGuardian. He’s helped over 2,500 clients just like you figure out the best insurance plans for their needs. Before joining us, Dylan was sharing his expertise on TV with Global News and making a difference with various charities focused on health. He’s not just about selling insurance; he’s passionate about making sure you’re covered for whatever life throws your way.