What is an Issue Age Policy?
Issue age in life insurance
Before life insurance companies offer coverage, they evaluate the risk they will take on in insuring any individual. In many cases, that means an involved underwriting process that includes a medical exam and an extensive questionnaire for the applicant. All of this is aimed at estimating the individual’s life expectancy.
For most life insurance policies, issue age is one factor the life insurance provider considers among many when determining the risk level for an individual. But some types of life insurance, like simplified issue or guaranteed issue life insurance, skip a lot of the underwriting process, focusing almost solely on the applicant’s age.
Either way, your age plays a big role in the amount you’ll pay for life insurance. The lower your issue age, the less your premiums will cost.
That’s because the longer that individual lives, the more time the life insurance company has to receive their policy premiums. More money coming in means less risk, helping to balance the fact that the life insurance company will eventually need to pay out the policy’s death benefit when the insured dies.
Issue age vs. attained age
Most life insurance policies are issue age policies, which means that the premium needed to keep the policy active gets set — and often, fixed — based on the age of the insured at the time the policy is issued. This contrasts with attained age policies, which continually recalculate premiums over the years. Health insurance might be attained age insurance, meaning you’ll pay more for it as you get older.