Why Do Life Insurance Companies Care About Your Birthday?

You may be ageing better than a fine wine but as you get older your birthday doesn’t just come with cake, candles and presents. If you don’t already have life insurance in place, with each birthday you will end up paying much more when you do finally decide to take out this essential cover.

This is according to Steph Bester, the CEO of AllLife, an authorised financial services provider. He says that the reason you face higher premiums with each year you delay life insurance, is a case of simple maths.

“As you get older, the chances of you dying increases and as a result, you are more expensive to insure. In other words, the risk of you getting ill, developing diseases or dying increases with each birthday and the cost of your life cover will reflect this,” Steph explains. 

He gives an example: “Someone who is about to turn 43 takes out life insurance. By signing up before their big celebration, their life cover premium is R280 less per month, which over their lifetime can result in a total saving of R58 000!” 

Steph says that age is the most important contributor used to determine life insurance premiums, which are usually paid on a monthly basis. These are calculated using a complex mathematical equation called ‘actuarial tables’. 

“Everyone’s premiums are different as there are a wide number of factors that are used to determine what you will pay. In addition to age, these calculations take into account your gender, your overall health including your weight, any pre-existing conditions, whether you are a smoker, your family history and even your occupation,” Steph explains.

So, at what age should you take out a life insurance policy? There is no right or wrong age says Steph but the longer you wait, the more you will pay and the higher the risk, especially if you have a family that depends on your income. 

“Most of us go through life assuming we’ll reach a ripe old age – and that’s fair, because most of us do,” says Steph. “The reason why life insurance is so important though is that it’s a gift that you leave to your loved ones that will protect them from financial fallout in the event of your death.”

Steph says that your life insurance is an investment in your family’s financial security and it should be as important as paying your bond or putting food on the table. “There are so many life insurance options available that almost everyone can find a policy that matches their needs and budget. The important thing is that you have the cover in place so that you have the peace-of-mind that comes with knowing your family will be financially secure in the event that you can no longer provide for them.” 

So, if your birthday is coming up, reflect and take stock of the gift that you want to leave for your loved ones. The sooner you put a plan in place, the more cost effective it will be.  

Products are underwritten by Old Mutual Alternative Risk Transfer Limited a Licensed Life Insurer.