You have finally realized how important it is to protect your family in the event of your passing. So, your search to purchase Life Insurance begins.
It is worth mentioning, the sooner you decide to purchase your policy, the better. Age is one of the main factors that determine the price of Life Insurance. Therefore, the sooner you start your process, the lower the cost.
For example, if a 41-year-old decides to purchase Life Insurance, he will surely get a better cost on his policy than someone who has just turned 42, assuming both are individuals in good health. However, insurance companies have an option to help you in these types of cases.
If your birthday happens when your insurance application is in process, the insurer will allow you to set the price of your policy on the date the process started. This rule is known as the Save Age in the industry.
Age is a factor that impacts the cost of a Life Insurance policy. However, it is possible to use it as an advantage, to obtain a better rate, and this is known as Save Age.
It allows you to set the policy start date with the age at which the application process began in exchange for paying a few months of premium in advance. It is possible to carry out this strategy due to how the insurance policies are dated and activated. In addition, this way is possible to avoid variations in the cost of Life Insurance during the application process, and the policy will be active before signing all the documentation.
On the other hand, the applicant is only allowed to have a previous date of up to six months, and some companies use the closest age to determine the price of the policy.
The idea behind Save Age is to save as much as possible on the cost of a policy. First, we need to compare the price of the previous and current age in the life insurance policies to decipher if it makes sense to carry it out.
For example, let’s imagine that a 38-year-old woman wants to purchase Life Insurance, and her birthday is coming up. The first quote she received was for $36.50 a month. However, during the application process, the applicant will turn 39, which means her fee will increase to $38.50 per month.
In this scenario, she can use Save Age to lock in 38-year-old prices. This action would save this client $2 every month for the rest of her policy, in exchange for $36.50 for every month she moves her policy date back.
If she decides to use Save Age, the applicant will recover the money in 19 months because the $2 saved per month would equal the additional $38 that would have to be paid in advance in case of opting for this option. For this reason, we recommend Save Age when it comes to long-term coverage. Otherwise, there is no point in using it.
On the other hand, we must consider other factors that affect the cost of a policy, such as the type of coverage and health of the applicant, which may cause the current age rate to be more convenient. Although all these concepts can be complicated, do not worry, our agents will explain all your options and help you know if Save age will benefit you.
Insurance companies generally use two ways to keep track of the customer’s age applying for Life Insurance.
The first is the so-called Actual Age and is the one that most people use to determine how old you are. For example, when you turn 42, you are 42 years old for the entire year until the day of your 43rd birthday.
The second is known as Nearest Age, and this concept is a little different. Your age will be determined by the closest birthday date, even if it hasn't happened yet.
To understand it better, imagine that you are 42 years old, with only three months left to turn 43. In this scenario, you are closer to being 43 years old than 42. Therefore, the insurance company will give you a rate using your Nearest Age, in this case, 43 years old.
Now that we understand how insurance companies see our age, we understand why some operators use the Actual Age and others the Nearest Age to carry out their quotes.
On the other hand, when you apply for your Life Insurance, do not hesitate to request both options to verify which one offers you a better rate.
When talking about Life Insurance, age plays a fundamental factor in the final price of your policy. Also, if you carry out the application on your own, you are likely to lose a considerable amount of money in the long run.
That is why at Termlite, we have a group of expert advisors who will work with you to get the policy that meets your budget and coverage needs.
To start your application process, you only need to fill out our application form, which will put you in contact with one of our friendly advisors.
Don’t think twice and guarantee the financial future of your loved ones. And remember, our plans do not require medical exams, face-to-face meetings, or filling out thousands of documents to achieve coverage.
Written by: Enrique Rosales