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  • Writer's picturejimmy ting

Does the cost of term life insurance go up as you get older?

Understand the difference between level term and annually renewable life insurance so you can make the right coverage decision for you and your family.

Term life insurance is an affordable and straightforward option for many people. You pay premiums every month and the coverage lasts for the term length, which can be 10, 15, 20 or 30 years.

But what happens to your premium as you age depends on the type of term life insurance coverage you buy. If you choose a term life insurance policy with guaranteed level premiums, you pay the exact same premium rate every month through the end of the term you select, no matter how long your coverage lasts. In fact, if you take out a 30-year, level term life insurance policy, it may be the only item in your budget that still costs the same amount 30 years from now.

Sounds good. Sounds simple. But level term life insurance might not be right for everybody. Here’s what you need to know about guaranteed level premiums, how level term policies compare to annually renewable term life insurance, and the steps to take to find the right life insurance policy for you and your loved ones.

What is level term life insurance?

When you buy level term life insurance coverage, your rate is locked in. As long as you continue to pay your insurance premiums each month, you’ll pay the same rate during the entire term length – which, for many term policies, is typically 10, 15, 20 or 30 years. When the term ends, you can either choose to end your life insurance coverage or renew your life insurance policy, usually at a higher rate.

Level term policies can lock in affordable life insurance rates for the duration of your coverage. For example, a 35-year-old woman in excellent health can buy a 30-year, $500,000 Term policy, starting at $35.40 per month. Over the next 30 years, while the policy is in place, the cost of the coverage will not change over the term period.

Let’s face it, most of us don’t like for our bills to grow over time. A term life policy with a guaranteed level premium can offer high-quality coverage at an affordable price.

How does level term life insurance work?

Your level term rate is determined by a number of factors, most of which are related to your age and health. Other factors include your specific term policy, insurance provider, benefit amount or payout.

During the life insurance application process, you’ll answer questions about your health history, including any pre-existing conditions like a critical illness. You’ll also be asked about your family’s health history, so insurers can evaluate whether you might be at risk for serious health issues in the future. You’ll also answer questions about potentially risky lifestyle behaviors, such as smoking. Most applicants will need to complete a short medical exam. All of this information will help place you in a health class that will, in turn, help determine your monthly premium and financial obligation.

If you are up to age 59 and are seeking a $1 million death benefit or less, you may be considered to skip the exam based on the information provided during the application process.

Keep in mind that it’s always very important to be honest in the application process. Issuing the policy and paying its benefits depends on the applicant’s evidence of insurability – which is determined by your answers to the health questions in the application.

A medically underwritten term policy can lock in an affordable rate for your coverage duration, whether that be 10, 15, 20 or 30 years, regardless of how your health might change during that time. The life insurance payout, known as a death benefit, of a level term life insurance policy also does not change. With this type of level term insurance policy, you pay the same monthly premium, and your beneficiary or beneficiaries would receive the same benefit in the event of your death, for the entire coverage duration of the policy.

How much does level term life insurance cost?

So how does life insurance work in terms of cost? The cost of level term life insurance will depend on your age and health as well as the term length and coverage amount you choose.

Regardless of what coverage you choose, what the policy’s cash value is, or what the lump sum of the death benefit turns out to be, peace of mind is among the most valuable benefits associated with purchasing a life insurance policy. It gives you, the insured person, the reassurance that you’re leaving behind financial protection for your loved ones. The insurance product you choose will decide the payout your beneficiary receives after your departure. Having the safety net of a life insurance death benefit will help your loved one cover final expenses like a funeral, meet their day-to-day living expenses or plan for their future should the unexpected happen.

Level versus renewable term life insurance

Renewable term life insurance is different from level term life insurance. With renewable term life insurance, the premiums will go up over time as the policyholder ages. In other words, the premium payment will change from year to year, and might cost you more money than level term life insurance.

In the first few years of an annually renewable policy, the premium might be less than what you’d pay for a similar level term policy. But since an annually renewable policy increases in cost every year, over time it’s possible to pay more in premiums than what you would have paid for a level term policy.

Why would someone choose a policy with an annually renewable premium? It may be an option to consider for someone who needs coverage only temporarily. For example, a person who is between jobs but wants death benefit protection in place because he or she has debt or other financial obligations may want to consider an annually renewable policy or something to hold them over until they start a new job that offers life insurance. In the short term, renewable life insurance might be a more affordable choice than a level term policy, which makes it an option that might be worth considering.

For most term life insurance buyers, however, coverage is needed for longer periods of time – like, until the kids are adults or the mortgage is paid off. If you’re seeking coverage for an extended term length, a renewable term life insurance policy may not be as cost-effective as level term coverage.

What happens to level term life insurance at the end of the term?

If your policy has guaranteed renewability, you can maintain your underwriting status and extend your coverage for short periods of time. You can usually renew the policy annually which gives you time to consider your options if you want coverage for longer.

Be aware that those options will involve paying more than you used to. As you get older, life insurance premiums become significantly more expensive. That’s why it’s helpful to purchase the right amount – and length – of coverage when you first get life insurance, so you can have a low rate while you’re young and healthy.

How to find the most affordable term life insurance coverage for you

Buying a life insurance policy is one of the best ways to financially protect your loved ones. It’s critical to select a term life policy that provides your family with the right amount of coverage, and at a rate that will not be harmful to your budget. Fortunately, with term life insurance, that’s usually easy to do. Here’s how to choose a policy that’s a good fit for you:

How much coverage do you need?

Everybody’s life insurance coverage needs are different. Your coverage needs will likely depend on your age, your income, your debts (including a mortgage or student loans) and your family’s plans for the future. You’ll want to take into consideration everything from day-to-day living expenses to what it might cost to cover final expenses.

Don’t make the mistake of assuming that life insurance coverage should be solely based on your current income – and don’t assume that a partner who provides a caregiving role doesn’t also need life insurance. This type of thinking has helped create a life insurance gender gap that can hurt families financially in the long run. If you contribute vital unpaid labor to the household, such as child care, ask yourself what it might cost to cover that caretaking work if you were no longer there. Then, make sure you have that coverage in place so that your family receives the life insurance benefit that they need.

How long should your term length be?

Term insurance policies with guaranteed level premiums are usually available in 10-, 15-, 20- or 30-year term lengths. For that set amount of time, as long as you pay your premium, your rate is stable and your beneficiaries are protected.

Does that mean you should always choose a 30-year term length? Not necessarily. In general, a shorter term policy has a lower premium rate than a longer policy, so it’s smart to choose a term based on the projected length of your financial responsibilities. For example, if you have a 30-year fixed mortgage, buying a 30-year term length policy might be a smart move. If you’re 10 years away from retirement, a 10-year term length may make more sense.

Some people prefer a permanent life insurance policy, such as whole life insurance. Permanent policies, as the name suggests, are permanent – they provide coverage for the rest of your life, and often include a cash accumulation feature. However, these whole life policies are often significantly more expensive than term life policies for an insured person.

Choosing the right term length– not too short and not too long – can also make your insurance plan more affordable. These are all important factors to keep in mind if you were thinking about choosing a permanent life insurance such as a whole life insurance policy.

Do you need any policy riders?

Many life insurance policies give you the option to add life insurance riders, think extra benefits, to your policy. Some life insurance policies come with riders built-in to the cost of premium, or riders may be available at a cost, or have fees when exercised.

With term life insurance, the interaction that most people have with their life insurance company is a monthly bill for 10 to 30 years. You pay your monthly premiums and hope your family will never have to use it. F

Why life insurance is worth it

Although the premiums of a level term life insurance policy won’t go up as you age, putting off that application for a year or two might stick you with higher rates. If you’re thinking about applying for life insurance, you can easily estimate your rate now.

Whatever life insurance coverage you decide to buy, the peace of mind of knowing you’ve put financial protection in place for your loved ones is worth it.

For more information about Life Insurance call JCT Insurance Agency at (626)354-2000 or email

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