Life Insurance Pricing Study
Published August 15th, 2019Tweet
In honor of life insurance awareness month, we've analyzed over 80,000 (yes, really) life insurance quotes to show you why you should consider buying life insurance sooner rather than later.
Life Insurance Price Increase By Age
- The average cost of life insurance increases by 29% from age 20 to age 30
- The average cost of life insurance increases by 63% from age 30 to age 40
- The average cost of life insurance increases by 100% from age 40 to age 50
- The average cost of life insurance increases by 95% from age 50 to age 60
- The average cost of life insurance increases by 225% from age 30 to age 50
The data shows that the price increases with age.
Overall Price Increases Ages 20 -70
Here is the same data broken up into more granular ages. The same trend continues. The older the person is, the more expensive it gets.
Overall Prices by Generations
Life insurance needs tend to go decrease over time, but the price still increases.
Coverage amount selected vs age. Ages 20 -70
Older shoppers are getting quotes for shorter term lengths.
Term length selected vs age. Ages 20 -70
Here is how shoppers rated their own health. Note at age 55 the increase in people reporting less than perfect health.
Health rating vs age. Ages 20 -70
Lastly, we asked a random segment of shoppers to take a guess at the price. This result goes against previous studies where they determined that most people thought life insurance was more expensive than it actually was. The data shows that most people think life insurance is cheaper than it actually is.
What does all of this data mean?
The main takeaway
Pricing data shows that the best time to buy life insurance is in your 30's.
Not taking advantage of this buying window will result in paying higher premiums for less coverage.
People understand that life insurance is needed once you have a mortgage and financial dependents. Yet, many people that need it don’t have it.
When I meet people and tell them that I work in life insurance, the next words out of their mouth are, “Oh nice, yea I need to get some life insurance."
Studies in recent years have tried to explain this phenomenon by saying that most people don’t have life insurance because they think they can’t afford it. We were skeptical of this, so we asked over 1,000 shoppers to take a guess at their price. We found 65% of people thought it would be cheaper than it actually was.
Hmm. Could it be that it doesn’t matter if people don’t know how much a product costs? The only stat that we thought was interesting from our guessing game was that 96% of people have no idea what life insurance costs. But 100% of people shopping for it know that they need it.
Why do people not buy a product that they know they need? Because no one plans on dying in their 30’s, and there is always more time.
It boils down to a lack of financial discipline.
The thought process goes like this.
Yes, I need life insurance. But that costs money every month. Things are tight. I’m not gonna die anytime soon. I’m in great health. I had to buy the kids back to school clothes, and the braves are playing the dodgers this weekend. Let’s worry about this later.
Later goes from a few days to a few weeks to a few years then all of the sudden you are 50 years old with high cholesterol. You realize you are in fact mortal, and you really need some life insurance.
Poor Nance would be in a real pickle if you were to suddenly pass away.
Now that 30 year term policy you considered buying in your 30’s is twice the price for 15 years of coverage with a smaller death benefit. Oops.
So what is the solution?
I’d like to think that these pretty charts showing how much better of a deal buying life insurance in your 30’s is than in your 50’s is enough.
But the real solution is to just be an adult. Suck it up and pay the $30 a month for life insurance. That is what I am doing. Buy it in your 30’s when you buy your first house or have a child. Doing so is essentially "sticking it to the man". Who doesn't like doing that?
It sucks. As a millennial, the early 30’s are rough. Our fun carefree lives are fading over the horizon as a mountainous path to sacrifice and adult responsibility lies ahead. Don't play yourself. Get some coverage now.
This is your life insurance awareness notice.
You have hereby been made aware that not buying life insurance in your 30's will result in you paying over 2X the price for nearly half the coverage at age 50.