Can My Life Insurance Rates Go Up?

It depends on the type of life insurance. With traditional level term insurance, your scheduled premium stays the same during the guaranteed term period. With true whole life insurance, the scheduled premium does not increase as you get older or if your health changes. Universal life policies, including IULs, are more complicated because keeping the policy in force can depend on funding, policy charges, and policy performance.

This is one of the most important questions to ask before buying life insurance:

"Can this price ever go up?"

Sometimes the answer is a very simple no.

Sometimes the answer is:

"Not during the period you're buying it for."

And sometimes the honest answer requires a much longer explanation.

It depends on what kind of life insurance you're purchasing.

That's why we don't want you to choose a policy based only on the number you see on a quote.

You need to understand what that number means 10, 20, or even 30 years from now.

In Short

• Traditional level term insurance has a guaranteed premium during its stated term period.
• If you keep many term policies beyond that guaranteed period, the cost can increase dramatically as you get older.
• True whole life insurance has a scheduled premium that does not increase because of age or changes in health.
• An Indexed Universal Life policy, or IUL, works very differently and requires more explanation.
• With an IUL, paying only a minimum illustrated amount can create problems later if the policy does not perform as illustrated or isn't funded appropriately.
• With permanent universal life coverage, we generally prefer to begin with what someone can comfortably afford long term and structure the policy accordingly rather than simply maximizing the death benefit around the smallest possible payment.

Do Term Life Insurance Rates Increase?

With the traditional level term life insurance most people are talking about when they say "term insurance," your scheduled premium is guaranteed for a specific period.

Common periods include:

• 10 years
• 15 years
• 20 years
• 25 years
• 30 years

Suppose you're approved for a 20-year level term policy at $50 per month.

You don't turn 10 years older and suddenly receive a bill for $85.

Your health doesn't deteriorate and cause the insurance company to recalculate your premium.

If you develop cancer five years later, that doesn't cause the scheduled premium on your existing level term policy to increase.

The company agreed to insure you at the beginning of the contract, and the premium is guaranteed for the level term period according to the policy.

That's one of the great advantages of life insurance.

Once you're insured, a later change in your health generally doesn't cause the company to re-underwrite your existing policy.

What Happens When My Term Ends?

This is where term insurance can surprise people.

The end of a 20-year term doesn't necessarily mean the insurance company simply cancels your policy on the anniversary date.

Many policies give you an option to continue coverage beyond the initial level-premium period, subject to the policy's maximum age and provisions.

But the price can change dramatically.

And then it may increase again the following year.

And again the year after that.

Why?

Because you're no longer paying a premium calculated to cover you at the same level price over the original 20-year period.

You're now much older, and the cost of providing life insurance for one additional year at a time can be substantially higher.

A policy that was very affordable during its original term can become extremely expensive later in life.

That's not necessarily a flaw in term insurance.

That's what term insurance was designed to do.

It provides a large amount of protection for a particular period of your life.

If you're 35 with children, a mortgage, and a family depending on your income, a 20- or 30-year term policy can provide hundreds of thousands of dollars of protection during exactly the years when your family needs it most.

But it was never designed primarily to provide inexpensive coverage until age 90.

If you want to understand that distinction better, Should I Pick Whole Life or Term?

Does Whole Life Insurance Ever Increase in Price?

With traditional whole life insurance, this is much simpler.

The scheduled premium is guaranteed and does not increase because you get older or your health changes.

If you purchase a whole life policy at 65 and your scheduled premium is $80 per month, you don't reach age 75 and suddenly get charged more because you're older.

If you develop a serious health condition after the policy is issued, the insurance company doesn't get to reprice the policy because you're now more expensive to insure.

That's one of the primary reasons people choose whole life insurance for final expenses.

Learn more: What Is Final Expense Insurance and How Does It Work?

They want something predictable.

They want to know:

"This is what I'm paying. This is the coverage I have. And as long as I keep the policy properly in force, it's designed to be there for the rest of my life."

Can My Whole Life Insurance Company Raise My Rate Because My Health Gets Worse?

No, not on a traditional whole life policy simply because your health deteriorates after issue.

Your health matters when you're applying.

Once the company has approved you and issued the policy, a later diagnosis doesn't cause them to go back and re-underwrite you.

Suppose you buy a whole life policy today.

Five years later, you're diagnosed with cancer.

You don't have to reapply.

You don't have to answer another set of health questions to keep the existing coverage.

Your scheduled premium doesn't increase because of that diagnosis.

That's one of the reasons getting life insurance while you're able to qualify for it can be so valuable.

You're locking in coverage based on the situation you have today.

If your health improves later and you qualify for something better, we can always look at your options again.

If your health gets worse, you already have the coverage.

When Does Life Insurance Coverage Begin?

What About Guaranteed Issue Whole Life?

Guaranteed Issue whole life has the same important permanent-coverage advantage.

The policy is designed to last for life as long as its required premiums are paid and the policy remains in force.

And the scheduled premium doesn't suddenly increase because your health gets worse.

In fact, Guaranteed Issue doesn't use your health to determine whether you qualify in the first place.

There are no health questions and no medical exam.

That's why we view Guaranteed Issue so positively.

It allows people with serious health conditions to obtain permanent life insurance with a predictable premium.

There is commonly an initial waiting period for natural death, often two years. Accidental death is commonly covered for the full stated benefit immediately, and many policies return premiums plus an additional amount if natural death occurs during the waiting period.

Once that waiting period is completed, the full death benefit is available for covered natural death according to the policy.

You can read more about that here: When Does Life Insurance Coverage Begin?

What About Indexed Universal Life Insurance?

This is where the answer gets more complicated.

An Indexed Universal Life policy, usually called an IUL, is not the same thing as traditional whole life.

An IUL combines life insurance with a cash-value component whose credited interest can be linked to the performance of a market index, subject to the policy's rules, caps, participation rates, floors, charges, and other provisions.

There can be considerable flexibility.

That flexibility can be useful.

But it also means you need to understand how the policy is being funded.

Can an IUL Require More Money Later?

Potentially, yes.

This doesn't necessarily happen because the insurance company simply decides to "raise your premium."

That's an important distinction.

An IUL has insurance costs and other policy charges. It also has cash value that can help support those costs.

If the policy accumulates enough value and performs sufficiently, everything may work very well.

But illustrations are not guarantees of future indexed interest crediting.

If actual policy performance is lower than illustrated, if policy charges are higher within the limits allowed by the contract, or if the policy was funded too lightly from the beginning, the policy may eventually need additional premium to remain in force.

This becomes particularly important later in life because the cost of providing life insurance at older ages can be much greater.

That's why we don't think someone should buy an IUL without understanding how it works.

The Minimum Payment Isn't Always the Number We Want to Focus On

This is where the way an IUL is structured becomes extremely important.

Imagine someone tells us:

"I can comfortably put $200 a month toward this for the long term."

There are different ways a policy might be designed around that budget.

One approach is to ask:

"What's the largest death benefit we can illustrate while putting as little money as possible into the policy?"

That can produce an impressive-looking death benefit.

But it may not be the most durable way to build the policy.

We generally think a better question is:

"If $200 is what you're comfortable paying every month, how should we structure the policy around that $200?"

In other words, start with a sustainable long-term contribution and design the coverage around it.

That shifts the conversation from "How much insurance can I possibly get for the minimum payment?" to "How can we build this policy so the amount I'm comfortable paying properly supports what I want it to accomplish?"

That's a much healthier way to think about permanent universal life insurance.

Why Does This Matter So Much Later in Life?

Because an IUL is intended to be a long-term financial product.

A policy can look perfectly healthy when someone is 45.

The real question is what it looks like when that person is 65, 75, or 85.

That's why illustrations matter, but so do the assumptions behind them.

When evaluating an IUL, don't look only at "What's my death benefit?" and "What's the minimum premium shown?"

Ask:

• What assumptions are being made?
• Which values are guaranteed and which aren't?
• What happens if credited interest is lower than illustrated?
• What happens if I pay exactly this amount every month?
• How long is the policy projected to remain in force under different scenarios?
• How much flexibility do I have if things don't perform as expected?

Those are much better questions.

Does That Mean IULs Are Bad?

No.

An IUL can be an excellent tool for the right person and the right objective.

The problem isn't that IULs exist.

The problem is treating them as though they're simply whole life with better returns.

They're not.

They're a different kind of insurance product with different moving parts.

For someone who wants a simple permanent policy primarily to make sure funeral expenses and final bills are covered, traditional whole life may be much easier to understand and predict.

For someone using life insurance as part of a broader long-term financial strategy, an appropriately designed and adequately funded IUL may be worth considering.

The important thing is understanding what you're buying.

Can the Insurance Company Raise My Rate Because I Get Older?

This is really three different answers:

Level term

Not during the guaranteed level-premium period. After that period ends, continuing coverage can become dramatically more expensive.

Whole life

The scheduled premium does not increase because you get older.

IUL

It doesn't work like either of those. The policy has ongoing charges and cash value, and the amount necessary to keep it healthy over time depends on the contract, funding, and performance.

That's why simply asking "Can my premium go up?" isn't always enough.

The better question is:

"What does this policy require from me over the rest of my life?"

What Happens If I Can't Make a Payment?

This is another question worth asking before you buy.

Policies can have grace periods and other provisions that may prevent coverage from disappearing the instant a payment is missed.

Permanent policies with cash value may have additional options depending on the type of policy and the value available.

But you shouldn't rely on those provisions as a substitute for choosing a premium you can comfortably afford.

That's why we talk so much about budget.

The best life insurance policy isn't necessarily the largest one you can qualify for.

It's the policy that accomplishes what you need and that you can comfortably keep.

A $50,000 policy that becomes unaffordable and lapses doesn't protect your family.

A $25,000 policy that comfortably fits your budget and stays in force can.

What Should I Ask Before Buying Life Insurance?

Before choosing a policy, ask:

• Is this premium guaranteed?
• If so, for how long?
• Can my health ever cause the price of my existing policy to increase?
• What happens when the guaranteed term ends?
• If this is permanent insurance, what do I need to do to keep it in force for life?
• If this is an IUL, which numbers are guaranteed and which are illustrations?

Those questions tell you much more than simply comparing today's monthly prices.

The Bottom Line

Whether your life insurance rate can increase depends on what type of policy you buy.

With traditional level term insurance, the scheduled premium remains level during the guaranteed term period. If you continue coverage beyond that period, the price can increase substantially.

With traditional whole life insurance, the scheduled premium doesn't increase because you get older or because your health deteriorates.

That's one of its greatest advantages for people who want permanent, predictable final-expense protection.

IULs are different.

They offer flexibility and potential cash-value growth, but they also require more careful design and monitoring. Paying the minimum amount shown on an illustration doesn't necessarily mean that amount will always be sufficient to support the policy throughout your life.

That's why, when we're looking at permanent insurance, we like to begin with a very practical question:

"What amount can you comfortably afford to keep paying?"

Then we can look for the best policy to fit that budget.

Because life insurance isn't really about getting the biggest number on a piece of paper today.

It's about having the right coverage still there when your family eventually needs it.

You Might Also Be Wondering...

Should I pick whole life or term?

When does life insurance coverage begin?

How much life insurance do I need?

How do life insurance claims work?

Can I get life insurance if I have health problems?

What is final expense insurance and how does it work?

When is it too late to buy life insurance?