Life Insurance -
Life insurance is cheaper than expected
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Life insurance is a very important insurance to take out as it protects your loved ones against the worst possible scenarios. However a growing number of people are getting married, buying first homes and starting families later in life. In fact, recent research from the Office for National Statistics (ONS) reveals pregnancies in women aged 40 and over have risen by almost 50% over the past decade.
That means the need for life insurance could surface a lot later than you might expect. But will you still be able to buy a value-for-money policy when you're older?
The simple answer as to why life insurance is more expensive for older people is because a claim is more likely to be made under the policy if you're older. The majority of people in their twenties have enjoyed a clean bill of health. If you took a 25-year life policy out at the age of 25, there's a high probability you will survive until the end of the policy at the age of 50.
But, if you're already 50 and you took out a 25-year policy, the chances of you surviving to 75, while still good, are undoubtedly lower. For this reason, life cover premiums for older people will be higher than for someone in their twenties or thirties.
However, buying cover later in life won't necessarily be beyond your means. If you thought taking out life insurance in your forties, fifties and beyond would be outrageously expensive, think again. Take a look at the cheapest premiums available through The Motley Fool Life Insurance Service. These policies provide £100,000 as a cash lump sum if the policyholder dies within the 25-year term.
The premiums for a 40-year old woman could cost as little as £10.11 per month, while a 40-year old man could pay just £12.49. This shouldn't cause too much of a dent in your finances. Of course, the costs rise for people aged 50. Women aged 50 might pay £24.81 per month for their life cover, while men would pay a little more at £33.08.
But be warned: these figures are based on standard quoted premiums. The actual cost you might pay for your life insurance policy will depend -- not only on your age -- but also on a wide range of other factors including your medical history and current health. For this reason, the premium an insurer asks you to pay for your policy could be higher.
For example if you have a life-threatening condition (not to be confused with a terminal illness) chances are life insurance will cost you more as you are more likely to make a claim. Similarly if you engage in extreme sports on a regular basis or any other relatively dangerous activities your premium will again rise. These factors are to be kept in mind when comparing different insurers’ offers.
Once your application has been assessed by an insurer, if the probability of a claim being made under your policy is no greater than average, you should enjoy reasonably-priced life insurance. And the cost of cover is coming down as average life expectancy improves.
According to figures from the ONS, women aged 40 this year will live to 83.1 years on average while, men aged 50 will live to reach 80.5 years. Because people are living longer, the cost of life insurance is falling. So -- as long as you have a clean bill of health -- getting a policy that lasts well into your sixties or seventies should be fairly easy on the pocket.
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