The age at which you buy life insurance relates directly to the cost of your premium (the amount you must pay for the coverage). The younger you are, the cheaper the premium. A 38- year-old male buying a five-year, term life insurance policy with a death benefit of $100,000 may pay only about $175 per year, while a 48-year-old may have to pay about twice that amount for the same coverage.
If, however, that 38-year-male old wants to buy a cash-value life insurance policy — one that not only provides a death benefit when he dies but also builds some value that he can use when he retires (or that adds to the death benefit) — he may have to pay about $600 a year, about three-quarters of which goes into his cash-value account. When determining how much life insurance you need, you have to take into account how much life insurance you can afford. The cost of insurance goes up every year as you age because your life expectancy is lower and the insurance company knows it has fewer years before you are expected to die. Decide how much you can afford to pay per year and work with that amount to determine how much life insurance to buy.
One way to estimate how much your premiums will be in five or ten years is to find out what the premium would be now if you were five or ten years older. Doing so gives you the price in today’s dollars. You can add about 15 to 20 percent more for five years and about 40 to 50 percent more for ten years to account for inflation.
If, however, that 38-year-male old wants to buy a cash-value life insurance policy — one that not only provides a death benefit when he dies but also builds some value that he can use when he retires (or that adds to the death benefit) — he may have to pay about $600 a year, about three-quarters of which goes into his cash-value account. When determining how much life insurance you need, you have to take into account how much life insurance you can afford. The cost of insurance goes up every year as you age because your life expectancy is lower and the insurance company knows it has fewer years before you are expected to die. Decide how much you can afford to pay per year and work with that amount to determine how much life insurance to buy.
One way to estimate how much your premiums will be in five or ten years is to find out what the premium would be now if you were five or ten years older. Doing so gives you the price in today’s dollars. You can add about 15 to 20 percent more for five years and about 40 to 50 percent more for ten years to account for inflation.
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