What Does It Mean to: “Save Age on Life Insurance?”

What Does It Mean to: "Save Age on Life Insurance?"
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    Did you know that you can “Save Age on Life Insurance?” You’re probably thinking, what in the world is that? As you probably already know, the price of your life insurance policy is heavily based on your age. The older you are – the more expensive the policy will be. What you may not be aware of is that the top life insurance companies in the USA will use 2 different ways to rate your age.

    Some carriers use “Actual Age“, but most use something called “Nearest Age.”

    There is a little life insurance secret called Back Dating to Save Age that can save you thousands of dollars over the life of your policy. Let’s see who may want to Save Age before buying a life insurance policy.

    How Companies See Your Age

    When you apply for life insurance, the carrier will look at your age in two separate ways.

    1. Actual Age
    2. Nearest Age

    Actual Age

    Let’s first look at your Actual Age. This is exactly how it sounds and the way everyone sees their age. Here’s an example: Let’s pretend that today is January 1st and it’s also John Doe’s birthday. This year John turned 45 years old. His actual age will be 45 years old over the next 12 months. Pretty straightforward right?

    Actual Age Life Insurance Rates

    Remember that John Doe turned 45 on January 1st. To celebrate this great day, he starts looking for quotes on Life Insurance Blog…(fun right?).

    John received the quotes below for a $500,000 30-year term life policy. These rates are based on John’s actual age. The lowest rate based on John’s Actual Age is $80.54 per month.

    actual age life insurance

    Nearest Age

    Now let’s look into how a companies look at your Nearest Age. This is where things can get a bit confusing, so let’s break it down in simple terms. Life insurance companies look at your Nearest Age as your “Half Birthday” that comes 6 months before your actual birthday.

    You’re probably still scratching your head, so let’s show an example…

    Nearest Age Life Insurance Rates

    In our example above, John turned 45 on January 1st. He got life insurance quotes on his birthday. The lowest monthly rate was $80.54 on his birthday.

    What if John didn’t actually buy his life insurance policy on his birthday? Let’s say he got busy and put it off.

    John returned to Life Insurance Blog 6 months later and got more quotes in June. John’s actual age is still 45, but his Nearest Age is now 46… His coverage is more expensive now!

    nearest age life insurance rates

    Backdating to Save Age on Life Insurance

    What does save age mean in life insurance? When you save age in life insurance, you’re locking in your premium price of your actual age vs the nearest age. You’ll pay a few more premiums up front in order to get huge savings overall.

    You can see the examples above that John Doe’s rate increased because his Nearest Age in now Age 46. John’s birthday is January 1st, but now he’s shopping for coverage in June. He is now closer to age 46 and his rate will reflect that.

    The good news is that life insurance companies allow you to backdate your life insurance policy to your actual age.

    backdating to save age on life insurance

    John Doe’s agent informed him about Saving Age. This is something that life insurance experts can offer their clients that can save them thousands of dollars overall. John’s agent will have the company backdate the policy to keep his life insurance premium as low as possible.

    What’s the Catch?

    When you backdate a policy, you’ll have to pay life insurance premiums from that day forward before your policy will go in force. This is usually not a big deal if you backdate at your “half birthday.” 

    However, it can be significant if it’s been 8-10 months passed your actual age. 

    Here’s why.

    John’s half birthday is in June. If John Doe doesn’t buy his policy until August, he’s going to have to backdate 2 months. That means he’ll have to pay 2 months of premium to save age ($80.54 x 2).

    life insurance tip

    Depending on the circumstances, this may or may not make sense to do. However, when you look at the thousands of dollars you can save over 20 or 30 years - it might make sense to shell out a few extra monthly premiums to get those savings.

    Life Insurance Save Age Calculator

    We did the work for you and calculated actual age rates vs nearest age rates. Let’s look at the overall savings that occur when you backdate life insurance. We’re going to show how much someone could save over the entire life of their policy if they chose to Save Age and Backdate.

    To make it easy, we’re sticking with a $500,000 term life policy like we did for John Doe above. Quotes are based on excellent health; non-tobacco using male rates. We calculated 30-year term for ages 30-55; for ages 60 & 65, we used a 20-year term because 30-year term is not available for these ages).

    Life Insurance Save Age Calculator

    As you can see, when you’re young – you don’t really see significant savings when backdating. However, backdating starts to show promise in your forties and once you enter our fiftiesyou’re looking at huge savings!

    Should You Backdate Your Life Insurance Policy?

    Backdating your life insurance is something you should seriously look into. If you’re looking to get coverage for the long term – backdating can end up saving you a lot of money.

    What if you’re only going to have coverage for a few years? Backdating probably isn’t worth it. We calculated the saving overall, but you also need to figure out when you’ll break even.

    Your “Break Even” Backdate

    Let’s look at our 55 year old example from above. He will save over $12,000 over the life of his policy and $420 annually. That’s incredible! The tricky part is if he has to backdate more than a couple months. Here is how much our 55 year old will have to pay by backdating:

    • Backdate 1 month: $202
    • Backdate 2 months: $404
    • Backdate 3 months: $606
    • Backdate 4 months: $808

    Our 55 year old will break even after the first year if he only has to backdate 1 or 2 months. If he has to backdate 4 months, it’s going to take a couple years. It’s important to see the value in the short term and long term when it comes to backdating a life insurance policy.

    How we’ll help you save age in life insurance

    The life insurance process can take a long time to complete. It’s not unheard of for applications to take 6 weeks or more to get your policy approved. This happens even with the best life insurance companies. In order to save you money, a good life insurance agent will show you how saving age can save you money.

    At Life Insurance Blog, we’ll only show you this if it can save you money long term. We’ll calculate the costs with & without saving age and let you decide. It’s perfectly fine to backdate a policy for up to 6 months, but it isn’t mandatory. If you have any questions about backdating, your life insurance effective date, or simply want a customized quote – contact Life Insurance Blog today!

    Saving Age on Life Insurance

    Thanks for reading our post on saving age. We hope you’ve learned how this strategy can help you save money over the life of your policy. If you’d like to learn more interesting facts about life insurance – make sure you read our 15 life insurance policy secrets.

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    Michael Quinn

    Michael is a licensed life insurance agent, expert & owner of Life Insurance Blog. LIB has helped thousands of shoppers understand life insurance and secure affordable coverage.

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