What is Your Insurance Age?


09/14/2006 By: in Life Insurance


Life insurance companies use several factors when determining the premium for a policy.  These include, but are not limited to, health status, health history, tobacco/nicotine use, gender and age.  The last one seems fairly simple to determine.  After all, your age is what the calendar says it is.  Unfortunately, many life insurance companies see it a different way.

 

Life insurance companies generally use one of two methods for determining an applicant's insurance age for the purpose of issuing a life insurance policy.

 

1.      Actual Age

 

The first method of age calculation is called Actual Age (sometimes referred to as Age Last Birthday).  This method calculates your insurance age based on your last birthday.  Let's look at a couple of examples:

 

 

  • Example 1

 Your Date of Birth  May 1, 1950
 Today's Date  April 30, 2006
 Your Insurance Age Today  55

 

 

  • Example 2

 Your Date of Birth  May 1, 1950
 Today's Date  May 2, 2006
 Your Insurance Age Today  56

 

 

The Actual Age calculation method is very straightforward as it is simply a measure of an applicant's calendar age on any given date.

 

2.      Age Nearest Birthday

 

The second method of age calculation is called Age Nearest Birthday.  This method calculates your insurance age based on your nearest birthday, which could be either your last birthday or your next.  Here's how it works:

 

 

  • Example 1

 Your Date of Birth  May 1, 1950
 Today's Date  May 2, 2006
 Your Insurance Age Today  56

 

 

  • Example 2

 Your Date of Birth  May 1, 1950
 Today's Date  November 2, 2006
 Your Insurance Age Today  57

 

 

Example 2 shows us the significance of the Age Nearest Birthday calculation method.  Your insurance age in Example 2 is 57 because on November 2nd, you are actually closer to your next birthday (your 57th) than you are to your last birthday (your 56th).  So even though you have not yet turned 57 by the calendar, this method of calculation determines your insurance age to be 57.  This will happen every year on the day you move to within six months of your next birthday.

 

Most life insurance companies use the Age Nearest Birthday method for age determination.  QuickQuote's quoting system is designed to provide an accurate quote based on your date of birth, taking into account each individual company's quoting method.

 

However, by the time your policy is issued, your insurance age may be different than it was when you received your original quote.  This will depend on whether you had a birthday or moved to within six months of your next birthday during the underwriting process.  In either case, it may be possible to have your policy backdated to keep your Insurance Age down.



This entry's tags: age birthday method date nearest calculation birthmay todays policy companies

3 User Comment(s)



1. anonymous on 03/02/2009 said:

Carriers will use either the age nearest meaning you'd round the decimal point or they'll use the actual age meaning you'd truncate the number.

2. anonymous on 02/27/2009 said:

does anyone use the following method to calculate age?

today - birthdate / 365

yields a decimal not an integer age

3. anonymous on 03/04/2010 said:

Thanks for letting me know how to calculate the Insurance age

[edit url removed]