Is Life Insurance Harder to Qualify For When You Get Older?
Insurance Q&A: “Is life insurance harder to qualify for when you get older?”
This is a common misconception regarding life insurance. While it is entirely accurate that life insurance companies charge a higher policy premium as we get older, there is no truth to the rumor that coverage is harder to obtain.
Life insurance companies make money by essentially gambling on how long you will live. The longer you live (and pay premium) the more money they collect and invest to earn money for their company.
If you purchase a policy and suddenly die, the insurance company loses big, as they have to pay out your policy limit to your beneficiary. If this is the case, they may not have collected enough premiums from you to invest it.
These facts regarding life insurance only reveal that coverage is more expensive as we age, not harder to qualify for. If you are willing to pay more money, you can usually obtain coverage in the open market.
This doesn’t necessarily include pre-existing conditions, which can make coverage harder to come by.
Of course, at some point it doesn’t make sense for an insurance company to offer coverage.
In the event you have a statistically overwhelming chance of dying before a policy term ends, an insurance company would not be able to charge you a rate that makes sense for them or you.
For example, purchasing a policy on you 97th birthday isn’t a good idea. The insurance company would have to charge you an astronomical amount of money (near the exact cost of the death benefit) in order to ensure they make out.
You’d pay $50,000 (in one lump payment) for $50,000 in coverage.
Remember, the higher the odds the insurer has to pay out money, the greater the cost.
Taking this information into account, you should purchase life insurance if you need it.
Any reasonable professional would not recommend purchasing a life insurance policy simply to make sure you qualify for coverage in the future.
