June 6, 2007 As most people know, your age has a lot to do with how much you pay for life insurance.But you CAN use your age to your advantage in getting a better rate. For purposes of pricing their policies, term life insurance companies use one of two methods for calculating an Insured’s age.But because of how insurers determine age, there can be up to a window when the insurer considers you 35 even though you’re still 34. When you’re deciding whether it’s worth it to backdate or not, be sure to factor the extra premiums into your calculations.
The insurer will either use your actual age or the age you are nearest to based on the birthday you’re closest to.
Take auto insurance, for example: if you backdate your car insurance policy so that it says you were covered for an accident you had the month Life insurance is different because by making your policy retroactive by a short period, the insurer isn’t taking on any more risk.
It’s unlikely that you actually died last month and are faking being alive today so you can cash in on a death benefit. The reason has to do with your age and how it affects the price of your new policy. Your insurance company may use something called your “insurance age” or “insurance birthday” when processing your application.
Before long, there would be no car insurance industry and we’d all be paying for damages and injuries out of pocket.
Lawsuits would inevitably skyrocket, clogging our already over-burdened court system.