Although the COVID 19 pandemic produced a slight decline in life expectancy predictions, this is expected to be a temporary shift. Life expectancy is and will remain on the rise. Since 1960, the average life expectancy has risen by ten years and now sits at 81 years old.
People are living longer due to advancements in the standard of living, public health, and medical technologies. This is great news, right? Yes, but as you plan for longer life, more factors need to be considered.
As the population ages, there will need to be a greater focus on financial planning as social entitlement programs will be taxed with providing. Here is a look at factors that affect life expectancy and what that means for ensuring your financial future.
Predicted Life Expectancy Factors
Although based on complex statistical facts and measured with accurate analysis, a life expectancy is simply the best guess. For a given population, life expectancy describes an average. Some people will live drastically shorter lives, while others will outlive the predicted age by 30-40.
An actuary assists life insurance companies by using mathematical facts and financial theory to determine the insured’s risk. Generally, the greater risk an individual carries, the more they can expect to pay in insurance premiums. Here are a few important factors that are considered during risk calculation:
- Current Medical Standing
- Lifestyle Choices
- Personal and Family Medical History
- Access to Healthcare
- Socioeconomic Status
What Your Risks Mean for Insurability
You don’t buy an insurance policy to use today, but the here and now is when you should buy one. Because premiums are determined by risk, the longer you wait to purchase life insurance, the more you can expect to pay in premiums.
Keeping this in mind, if you’re between the ages of 20-40, it’s likely an ideal time to consider life insurance, even with retirement and mortality far away. Knowing which type of policy to consider will help you make a smart decision.
- Term-Life Insurance: A term policy is an agreed and guaranteed payout for a specific number of years. The premiums associated with a term-life policy are generally cheaper. Still, once the contract is over, there is no payout or extended benefits.
- Permanent Life Insurance: Also referred to as whole life insurance, this type of policy does not expire and protects the insured for their lifetime. There are also associated benefits with these policies, including savings aspects that allow you to withdraw from the policy while alive. Purchasing a permanent life insurance policy while you’re young and healthy is a sound decision.
Wrapping Up Life Expectancy and Insurance
Advancements in technology and healthcare have led to an increase in life expectancy. As the age of mortality increases, you’ll need to make informed decisions regarding financial planning. Using life insurance to protect yourself and your loved ones will decrease the costs associated with aging. Knowing that risks increase as you age, which causes higher insurance premiums, buying a policy now is a sound financial investment. Contact PHP Agency to get the coverage that you need today.