Just How Old am I Anyways? Saving Age in a Life Insurance World

Imagine if you will, two brothers, identical twins, same parents, both born on the 4th of July, 1964. They have the same birthday, so they are the same age, right? that’s kind of the point of the whole twin thing, isn’t it?.

The brothers, being responsible parents, both decide to get life insurance and request quotes from their life insurance agents a couple months before their birthday. When the quotes come back, ONE BROTHER IS A 46 YEAR OLD AND THE OTHER IS A 47 OLD. What’s the difference? Who messed up? How can they be different ages? The answer lies in an unusual variation in how life insurance carriers determine the age of life insurance applicants.

In general polite society, your age is a factor of how old you were on your last birthday. This isn’t necessarily the case with life insurance underwriting. Many life insurance companies determine the age of an applicant using his “Nearest Age” – how old he was, OR WILL BE in the birthday which falls closest to the application date. Under an age nearest calculation you become 40 six months before your 40th birthday, and remain 40 only for six months after your birthday. Your insurance age changes upon your half birthday, and is calculated by whichever birthday is closest. Other companies, use an “Attained Age” calculation and figure your birthday the old fashioned way.

The discrepancy in how carriers calculate your age – a major factor in determining the quoted price of a policy – means that the policy which might be cheapest when you are 39 and 3 months might not be cheapest when you are 39 and 7 months. Even worse, is finding that waiting a few extra months can cost you hundreds of dollars per year over the course of a 20 year policy. Whether you are applying with an “Age Attained” company or an “Age Nearest” company, if you find yourself a month or three over the threshold into a higher price, most companies will allow you to drop the price by “Saving Age”.

When you save age, you backdate the policy application and effective date to the last day before your insurance age changed. (The day before your birthday for an Age Attained company, or the day before your half birth day for an Age Nearest company.) The downside of doing so, is that your first renewal date will thereby come sooner than one year out, and you will have essentially purchased life insurance to cover a few months when you clearly weren’t already dead. On the upside, the lower policy price can save you many thousands of dollars over the life of the policy. So, when reviewing policies, always give a quick look to how the carrier is aging you, and ask your agent whether “Saving Age” can help you also save a few dollars.


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