What is Age Nearest Birthday?
Age nearest birthday is a measurement some life insurance companies use that says that if you’re within six months of your next birthday, the issue age for your life insurance policy is the age you’ll turn on that birthday.
Why some companies don’t use your actual age
Some life insurance companies keep it simple and use your current age, also called your age last birthday, when setting the issue age for your policy.
But other companies want to be more accurate than that. While the difference between a 39 and a 40-year-old might not seem significant to most people, life insurance actuaries can directly tie that uptick in one year to an increased risk for the life insurance company.
Age is one of the main factors life insurers consider when determining how risky an individual is. That’s because the older we all get, the more likely we are to pass away. Because age is such a critical measure, many companies want more precision than your actual age can offer. So they turn to your age nearest birthday.
Figuring out your age nearest birthday
Age nearest birthday is just an awkward way of saying that you’re closer to your last birthday or your next one. Say you were born in June. If it’s August, your age nearest birthday is your actual age because you’re so close to your last birthday.
But if you were born in June and it’s May, you’re a whole lot closer to the age that you’re about to turn. Using age nearest birthday allows the life insurer to set your policy’s issue age at the age you’ll be at that upcoming birthday.
To figure out your age nearest birthday, determine if you’re past your half birthday. If you’re six months or fewer from your next birthday, the insurance company will consider you a year older if they use age nearest birthday.