The basic law of gravity says "whatever goes up must come down." Unfortunately, insurance policies hold to their own laws, like: "Once your insurance rates start going up, they'll never come back down."
As we get older, insurance rate increases
accelerate on many policies. That's why planning ahead and locking in a
rate while you're young(ish) and mostly healthy is a smart financial
strategy.
Life insurance
rates are on a continuous climb as you age. Whole life insurance allows
you to lock in rates for the rest of your life, with your price based
on your age at the time of the purchase. If you need life insurance
only to cover a specific debt or obligation (like a mortgage or
college-tuition years), term life insurance lets you lock in a rate for
a set period, like 10 or 20 years.
"Some products lock in level premium regardless of
age, and others can be customized to help customers save for
retirement," says Gene Lunman, senior vice president for Metlife.
Lunman says that universal life insurance was popular for many years, but now he's seeing a shift.
"I’m seeing movement back to some other more
traditional products such as whole life," he says. "Most 55-year-olds
today feel they are still young and life insurance products have
evolved over time to fall in line with the needs of that demographic.
They are expecting to live longer and find that they need a policy that
will carry them the duration of their lifetime."
Even if you feel you've missed the boat on the best
rates for life insurance, don't assume a policy is out of reach before
you shop around. Here are 10 ways to save on life insurance.
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When it comes to car insurance, "Your rates
decrease in your 30s, as long as you have a clean driving record," says
Jerry Davies, spokesperson for Farmers Insurance. "If a company offers
a discounts at 50, it's because they have seen that 50+ drivers get in
less accidents, generally because people between the age of 50 and 70
are often retired and drive less."
Davies stresses that fluctuations in car insurance
rates are due not just to age, but also marital status, credit scores,
driving record and other factors.
Many car insurance companies offer lower rates to
people between ages 50 and 65 due to the group's lower accident rates.
After age 65, rates typically begin to increase again. According to the
National Highway Traffic Safety Administration, people older than 70
are involved in more accidents. Therefore, they may find it difficult
to buy insurance at that age.
Some car insurance companies offer "mature-driver"
discounts for older drivers with good driving records or those who
attend an approved driving course. For example, State Farm and
Progressive offer mature-driver discounts for people 50 and older. And
Farmers offers mature-driver discounts of 5 to 10 percent, depending on
the state.
You can also receive discounts, usually around 3 percent, on boat and yacht insurance.
If you’re older than 50, being at home can save you money on home insurance premiums as well.
"The general reason is because people in those age
brackets are often home more than other age groups and they have more
time to maintain their homes," says Davies.
Long-time homeowners are also considered more
responsible, their homes are generally paid off and they take good care
of their property, Davies adds. Plus, they may get a discount if they
own and insure a second home with the same company.
Allstate and Nationwide offer discount of 10 to 15
percent. Farmers offers a home insurance discount starting at 15
percent, depending on the state.
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People age 50 to 64 may have a difficult time
affording adequate individual health insurance, especially when
policies exclude their pre-existing medical conditions. According to a
2006 report by The Commonwealth Fund, more than 55 percent of workers
in that age group who have individual health coverage spent more than
$36,000 annually on premiums — compared to only 16 percent of workers
with employer-sponsored health insurance. Amy Powers of HumanaOne says
you can hold down your costs by taking a higher deductible, like
$5,000, which is the amount you pay before the insurance kicks in.
Powers recommends starting a health savings account (HSA).
"I believe a health savings account provides an
opportunity for the person to budget effectively," she says. "It allows
them to put tax-deductible money into an account to pay for medical
expenses. When 35 percent of taxes are taken away from the total cost,
your dollars go 35 percent further."
Long-term care insurance helps pay for your care if
you need assistance with "activities of daily living" such as bathing,
toileting and transferring from a bed. According to the U.S. Department
of Health and Human Services, 9 million Americans over the age of 65
will need long-term care services in the next five years. By 2020, the
number is expected to increase to 12 million.
Some believe that long-term care is only for people
ages 65 and older, but statistics show that 40 percent of people
receiving long-term care are 18 to 64 years old.
As with health and life insurance, long-term care
premiums are always on the rise along with your age. Michael Cline,
director of long-term care at Prudential, says, "Studies show that
those surviving to age 65 can expect to live an average of 19 more
years. This projection indicates that there will be more of a need for
long-term care insurance since we have a population that is living
longer. It’s very important to purchase long-term care insurance when
you are fairly young to get the best rates.”
Some consumer groups do not recommend purchasing a
long-term care policy before age 60. They reason that average people
won't go into a nursing home until their 80s — meaning you’d be paying
premiums for 40 years before you tap into the benefits. Also, if your
policy doesn’t adjust for inflation, the benefit may not be enough to
cover your expenses in the future. (You can buy an "inflation rider" to help close that gap.)
However, insurance agents recommend that you buy a
long-term care policy in your 40s because you'll get a lower rate. Your
age and coverage selections determine how much you will pay. For
example, a man in his 50s could pay $1,625 in annual premiums while a
60-year-old could pay $3,100, according to the National Clearing House
for Long-Term Care Information. The price could escalate to $7,575 for
a man in his 70s.
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Even Sparky is not impervious to age-adjusted
insurance rates. Pet insurers know that health care for an older animal
can be pricey and they charge accordingly, or might refuse to sell you
a policy. For example, VPI, the largest provider of pet insurance, will
not cover a pet that is more than 10 years old. Pets Best Insurance
offers some types of coverage for mature pets that do not have
pre-existing medical conditions. The best rates are reserved for pets
under 5 years old.
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Your age can factor into how much you pay for
travel insurance — especially if you want medical coverage included in
your travel insurance policy. Your age and pre-existing conditions are
taken into account.
According to InsureMyTrip.com, the cost for
insuring a seven-day trip to Hawaii for two travelers age 23 and 30 who
want medical coverage for $500,000 would be $358. To insure that same
trip, a couple age 65 and 70 would pay $556 — almost $200 more.
Judy Sutton, director of product development for
Travel Insured International, says that travel insurance for seniors
has become more affordable over the years because they tend to be more
responsible and they are less likely to travel when ill, she says.
"Older people are more meticulous when planning out
their trip and are typically more organized than younger people," says
Sutton. "They are going to be more cautious when it comes to losing
baggage, and they do not put their well-being at risk by taking part in
adventure sports."
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