Summary of this article
Term insurance premiums at 40 may be 70–100 per cent higher
Age and health risks can make life cover significantly costlier
Medical underwriting may lead to higher premiums or additional policy terms
Buying term insurance early can lock in lower long-term premiums
Term insurance is often something people put off buying when they are young, particularly if they do not yet have major financial responsibilities. But waiting until 40 can prove costly. By then, the premium for the same amount of cover could be significantly higher than what someone in their late 20s would pay.
Term insurance premiums are largely based on the risk an insurer takes while providing cover. Age is an important factor in this calculation because mortality risk generally rises as a person grows older. Health conditions that emerge with age can further affect the premium offered.
“A customer buying the term insurance at the age of 40 can expect to pay 70–100 per cent higher premiums than someone purchasing the same cover in their late 20s, depending on health, lifestyle, and underwriting,” says Ajai Kumar Tripathi, chief and appointed actuary, Aviva India.
The difference can be even steeper depending on the applicant’s circumstances.
“The premium can be higher by 100 per cent to 200 per cent, and in some cases, it can be even more. The exact difference depends on additional factors such as the individual’s lifestyle, health profile, policy tenure and the sum assured,” says Sarita Joshi, head of life and health insurance, Probus.
Why Waiting Can Make Cover Costlier
As people grow older, the possibility of lifestyle-related diseases and other health conditions increases. Insurers may therefore carry out more detailed medical underwriting before deciding whether to offer cover and at what price.
“Medical underwriting evaluates these risks, making younger and healthier individuals eligible for more competitive pricing. Therefore, purchasing term insurance while one is young and healthy not only improves affordability but also increases the likelihood of getting comprehensive coverage,” says Tripathi.
Existing medical conditions may lead to higher premiums or additional policy terms. In some cases, underwriting decisions may also make obtaining the desired cover more difficult compared with buying while younger and healthier.
“Medical underwriting becomes more comprehensive with age and any health concerns identified during evaluation may result in higher premiums or additional policy terms,” says Joshi.
Buying Early Can Lock In Lower Premiums
For most traditional level-premium term plans, the premium fixed when the policy is issued remains unchanged throughout the policy term. Buying earlier can therefore help a policyholder lock in a lower premium for many years.
However, affordability should not be the only consideration. Young earners should choose a sum assured that can adequately support their family if their income is no longer available.
The cover should take into account future financial needs, outstanding liabilities and long-term goals. The policy tenure should also ideally extend through the individual’s major earning years and the period during which dependants are likely to rely financially on them.
Buying early, therefore, is not merely about paying less. It can also help secure adequate protection before age or changing health conditions make the same cover substantially more expensive.
FAQs
1. Why does term insurance become more expensive with age?
Insurers price term plans based on risk. As age and the likelihood of health problems increase, premiums may rise, and medical underwriting can become more stringent.
2. How much more can term insurance cost if bought at 40?
Premiums at 40 can be 70–100 per cent higher than in the late 20s, and in some cases even more, depending on health, lifestyle, tenure and sum assured.
3. Does buying term insurance early lock in a lower premium?
For most traditional level-premium term plans, the premium remains fixed after issuance. Buying young and healthy can therefore help secure lower premiums for the policy term.
