What is the best age to purchase life insurance?

The question "What is the 'best age' to look into getting a life insurance policy?" presents some huge issues to the ethical and professional advisor. The amount of factors that are used to determine when risk is large enough, that coverage is needed to mitigate, that would need to be ignored in order to make age the primary consideration should be difficult for a true practitioner in this field. Having said that, we enjoy a challenge!

The only way to attempt to answer such a question would be to in a logically deductive manner. To do this we will consider three key components of a life insurance purchase; What they are insuring from, Who they are insuring for, and How could age affect achieving that coverage.

What age are we insuring the most?

Income and Mortgage protection: The two largest and most common risks people cover for are income replacement and mortgage protection. National Association of Realtors (NAR) says in 2022 the average first time home buyer age was 36. According to the Bureau of Labor Statistics, workers earn the most when they are between the ages of 35 and 54 (avg age of 44.5). So the average age one is expected to have their first mortgage and be making the most money they ever make in life is 36+44.5(/2) = 40 years old (rounded down).

What age do we have the most to insure for?

Family: Those who the coverage would be put in place to protect. According to the New York Times the average age of motherhood is now 27 and for fatherhood 31. As a result it is safe to say that on average by the time an adult is 29 years of age, they will have had at least one child. One half of the relationships producing children will be out of marriages, common law and legal, creating a minimum of two financially dependent beings upon the shoulders of the average 29 year old.

Business: A well-designed and funded life insurance plan is the pillar of a sound business plan. This would include buy-sell agreements, key-employee contracts, and family buy-out agreements. The U.S. Census Bureau found that the average age of entrepreneurs at the time of their company's founding is 42 year old.

How does age affect life insurance?

Age: Life insurance pricing is most affected by two factors, age and present/past health. The younger and healthier an applicant is, the better premium offer they will be awarded from the insurer. According to Web MD in a article Medically Reviewed by Sabrina Felson, MD on November 29, 2022, (https://www.webmd.com/healthy-aging/ss/slideshow-health-problems-after-50) 50 years is that age in which on average Americans see the highest rate of beginning and worsening chronic medical conditions. Obesity, Heart disease, Chronic respiratory issues, and incidents of cancer all seem to be diagnosed at a exponentially higher rate than the younger populations. Height and weight ratios tend to also see wider margins. These are all conditions that can make a policy application heavily rated and too expensive for adequate coverage. If conditions are deemed too unfavorable, outright decline of any coverage can exclude applicants altogether.

The best age to purchase life insurance

Here we have our final thesis. Ages 42+40+29+50(/4)= 40. Age 40 is the age at which you are statistically most likely to have developed the most assets at risk, created substantial financially dependent relationships, and are young and healthy enough to have not had any chronic or critical diagnosis that would preclude you from affordable coverage.

As a general rule of thumb, we often encourage those who have aspirations for any or all of the factors listed in this article to purchase coverage as soon as possible. This forward thinking can save you thousands in premiums and, in a cash accruing plan, can net you thousands in compounding interest on cash values. Doing this also eliminates the unforeseen health events that could disrupt achieving coverage later in life.