What is a Life Insurance Issue Age?
Issue age refers to an insurance policy that’s premium rate is dependent on the age of the person who is purchasing it. Insurance policies that are based upon issue age are typically more expensive for an older insured than for a younger one. This is because the life expectancy for an older person is shorter – and thus, the probability of death is more probable in a life insurance situation, and also because it is more likely that an older person will require more medical care than someone who is younger. Therefore, the higher the risk – the higher the premium will be.
However, once the policy has been purchased, the life insurance premiums will not typically increase any further if the premiums are level. Also, as compared to a policy that is based upon a person’s attained age, an issue age life insurance policy will usually be less expensive over the long run.
This is because with a policy that is based on a person’s attained age, the premium price is based upon the current age of the insured person, computed by adding the period that has elapsed since the issuance of the policy to his or her age when the life insurance policy was initially put in force. Therefore, with an attained age life insurance policy, the policy can become more expensive as the insured gets older over time.