Backdating (Saving Age) Life Insurance: How It Can Save You Money [2023]

Saving money on term life insurance isn’t always easy. Even if you qualify for the best rating class and lowest premiums, there aren’t any discounts, coupons or specials to be had on term life insurance. See our blog post from earlier this month: Why Life Insurance Sales Don’t Exist.

But there is one way you may be able to save on your coverage. Using a simple policy dating trick known as backdating, you could lower your policy issue age, thus reducing the premiums you pay for your policy. Here’s how it works.

Six-Month Birthday

While a few life insurance companies use your actual age to determine the issue age on your policy, most life insurance companies use your ‘six-month birthday.’ Your six-month birthday is simply your date of birth plus six months.

Let’s take a look at an example:

• John’s date of birth is 1/1/1950. Therefore, his six-month birthday is 7/1 of any given year.

• John turned 61 on 1/12011. But once his six-month birthday passes on July 1, most life insurance companies will consider him to be age 62.

Age Nearest Birthday

Another way to think of it is to find the age you are nearest to on any given date. Again, let’s look at our example from above:

• 1/1 John’s 61^st birthday

• 7/1 John’s six-month birthday

• 6/1 John is still considered 61 as he is closer to his 61^st birthday.

• 8/1 John is now considered 62 as he is closer to his 62^nd birthday.

Backdating

Backdating, or ‘saving age’ in industry speak, means the life insurance company will assign your policy a date that is right before your six-month birthday. In our example, John’s policy would be issued with a policy date of June 30^th or prior. This will ‘save his age’ at 61 and keep his premium lower. The alternative would be to issue the policy with a current date (after July 1^st), thus resulting in a policy issue age of 62 and higher premiums.

If the life insurance company uses your actual age for the policy age, the company can still backdate the policy by making the policy date before your actual birthday.

The Disadvantage of Backdating

The primary disadvantage of backdating is you must pay for the policy starting from your policy date. If your policy date is backdated three months, you will have to pay for those three months even if you were not considered covered under the policy during that time. Also, if you choose to backdate your policy, the term length you selected (e.g. 10-yr, 15-yr, etc.) will start from your backdated policy date as well.

The Advantage of Backdating

Backdating can save you a considerable amount of money over the life of your term life insurance policy. Make sure you calculate just how much money you will save, or ask your agent to calculate it for you.

One last time, using our example:

• John’s date of birth is 1/1/1950.

• He was approved at a Preferred Best rating class for a $100,000 policy with a 10-year term.

• If the policy is issued with a current policy date of age 62, he will pay a premium of $406.00 per year.

• If the policy is backdated to 6/28/2011 (a few days before his six month birthday), he will pay $358.00 per year for the same policy.

The difference of $48.00 annually adds up to $480.00 over the life of his policy. Even though John’s backdated policy requires him to pay premiums from the policy date of 6/28/2011, the savings make it worthwhile to backdate the policy.

Company Rules

Most life insurance companies will allow backdating up to six months. You may need to sign a statement acknowledging the process of backdating when your policy is issued. Some companies will automatically backdate to save age if only a very short time has gone by since your actual birthday or six-month birthday.

Check with Your Agent

Backdating may not always save you money, and may not even be necessary depending on your date of birth, six-month birthday and the policy issue date. Make sure to ask your agent if it makes sense in the long run for you to backdate your policy.

Case Studies: Backdating (Saving Age) Life Insurance

Case Study 1: John’s Policy Backdating

John, a 61-year-old individual, wanted to save money on his term life insurance premiums. By using the backdating technique, his life insurance policy was issued with a date right before his six-month birthday.

This backdated policy allowed John to “save his age” at 61, resulting in lower premiums compared to a policy issued with his actual age of 62.

Case Study 2: Sarah’s Policy Backdating

Sarah, a 45-year-old woman, sought to reduce her term life insurance premiums. Through backdating, her policy was assigned a date right before her six-month birthday, effectively lowering her policy issue age. By doing so, Sarah secured a lower premium and enjoyed long-term cost savings on her life insurance coverage.

Case Study 3: Michael’s Backdated Policy

Michael, a 53-year-old individual, explored the option of backdating his life insurance policy. By choosing to backdate, his policy was issued with a date before his actual birthday.

This decision resulted in a policy issue age of 52, which qualified him for more favorable premium rates. Michael calculated that over the life of his policy, the savings achieved through backdating amounted to $480.

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