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How does age affect life insurance rates?


How old you are affects life insurance premiums

“People should think about life insurance when they think they need it the least,” says Natalie Trimble, financial security advisor and investment representative for Freedom 55 Financial, a division of Canada Life. “The longer one waits to get it, the higher the chances that they may experience a health issue. With health issues or lifestyle changes, the possibility of increased costs or maybe even a rating is a direct result.” (A rating means being approved for coverage but also paying more for it.)

The bottom line is: The older you are, the more likely your passing becomes—and with that higher risk comes higher premiums. So if you’re relatively young and healthy, and you have dependents, now is the time. You’re low risk, so your premiums will be low to reflect that.

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How life insurance premiums are determined

The general consensus is that at an early stage in life, term life insurance is typically the most sensible and cost-effective way to go. Just bear in mind that life insurance premiums increase with age, so each time you renew term life insurance (if you choose to), your premiums will go up. However, many term policies come with the option to convert to whole life insurance or universal life insurance—which are forms of permanent life insurance.

Why consider switching to a permanent policy? While premiums generally climb gradually with age, the price increases start getting a bit steeper around the age of 50. With permanent insurance, the premiums don’t increase with age.

Permanent life insurance is more suited to a later life stage, when your debts and mortgage are paid off and your children are grown up. It’s more expensive because there’s a guaranteed payout, but the advantages are that you have lifetime coverage and your premiums won’t go up, even if your health worsens. (Keep in mind that the older you are when you acquire the policy, the more expensive it will be.) It can also serve as an investment vehicle for savings you want to grow for your beneficiaries.

Learn more about how to get the best life insurance in Canada.

Life insurance rates by age in Canada

The chart below shows the monthly costs of a whole life insurance policy and a 20-year term life insurance policy at the ages of 30, 40 and 50, respectively.

We chose a 20-year term for the term life insurance policy because it’s the most common term length chosen by Canadians. The monthly premiums represent the average of the three least expensive life insurance policies offered to healthy non-smoking people. Life insurance companies often still rely on biological sex to determine risk profiles, so we’ve run the calculations for people who are born male and female; life insurance is typically more expensive for males, whose lifespans are shorter than females’ (79.8 years for males, and 83.9 years for females according to Statistics Canada).


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