I started Insurance Blog by Chris™ because I have a passion for insurance. Here at the blog, our job is to educate and inform people about the best insurance for them. Since then, we have grown into national brands with a large team of researchers helping people understand all forms of insurance.

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Rachael Brennan has been working in the insurance industry since 2006 when she began working as a licensed insurance representative for 21st Century Insurance, during which time she earned her Property and Casualty license in all 50 states. After several years she expanded her insurance expertise, earning her license in Health and AD&D insurance as well. She has worked for small health insu...

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Reviewed by Rachael Brennan
Licensed Insurance Agent

UPDATED: Apr 14, 2020

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Do you know anyone who has been able to save age in life insurance? If so, maybe you wonder what the heck they are talking about.

Well, I am here today to fill you in on this super cool tip which may save you some money on your premiums.

At Huntley Wealth we love a good deal and we sure are good at getting ’em!

So let me fill you in on an industry secret…

Typically the quote issued by a life insurance company is for one year older than your actual age. 

Yep! Let me explain why:

Save Age in Life Insurance

Nearest Age Vs. Actual Age

Most consumers are unaware that life insurance companies use your “nearest age” rather than your actual age to calculate premiums for your policy.

For example, today is 4/18/2017.  Let’s say you turned 60 years old on October 1st 2016.  Your actual age today is 60, so it would be logical for you to expect to receive a quote for that age.

…BUT for the purposes of life insurance companies you are 61 and your premiums will be calculated for that age.

This is because your birthday was over 6 months age and you are closer to 61 than 60.

So why is this important?

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How Age Affects Your Life Insurance Premiums

Simply put, every year you wait to purchase life insurance, your premium increases! Let’s take a closer look at my example above.  This male non smoking client is rated Preferred and looking for a 20 year term with $500,000 in coverage. Here is the difference in dollars and cents from Banner Life:

Actual Age 59 (60 for life insurance purposes): $247.55 per month/$2970.60 per year = $59,412.00 over a 20 year term

Actual Age 60 (61 for life insurance purposes): $287.39 per month/$3448.68 per year = $68973.60 over a 20 year term

The difference is $9,561.60 over your term! 

As you can see, having a birthday can cost you a lot of money in life insurance premiums! Whatever you do, don’t underestimate the power of your age!

Backdating to Save Age in Life Insurance…and Money!

Fortunately, life insurance companies let you backdate your policy to lock in a premium for a specific age.

In the example above, my client turned 60 on October 1st 2016. That means his insurance birthday would be six months later on April 1st 2017.  So I will request that the policy date be changed to March 31st 2017 so he can enjoy the premiums received by a 60 year old as opposed to a 61 year old.

Insurance policy backdating is a very common trick used to keep premiums down. 

The only catch is, if the policy commences March 31st 2017, my client will have to pay premiums from that date onwards before his policy goes into effect. Which means he will have to shell out money for a few weeks worth of insurance that he won’t be technically covered for.

 

Pretty neat trick right?

It’s not uncommon for life insurance agents to backdate two, three, or even four months to save age. When you are looking at saving thousands of dollars over your 20 year term, it makes sense to cough up a few extra months of premiums to offset that loss.

Backdating Life Insurance Means More Cash In Your Pocket – Let’s Look at the #’s

Simply put, every year you wait to purchase life insurance results in a premium increase.  Let’s take a closer look at my example above. This client is a non smoking male, who has recently obtained a Preferred rating. He is looking to obtain $500,000 in coverage for a 20 year term. Check out the difference in rates at 60 and 61 if he opts for Banner Life:

Age 60: $213.27 per month/$2559.24 per year Age 61: $241.67 per month/$2900.04 per year

The Difference over 20 years: $6816.00! 

Let’s say that my client had a birthday that would require him to make up 4 months of payments if he were to backdate his policy to age 60. This would cost him $853.08. Not much when you calculate overall he will save nearly $6,000.00 over the course of his policy.

As you can see, birthdays can cost you a lot of money in life insurance premiums. It’s really worth it to check out backdating your life insurance policy! You can save some serious cash!

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Planning Your Life Insurance Birthday

If you are looking to purchase life insurance, and you just had a birthday within the last couple months, there’s no need for you to be concerned about policy dating.

That being said, if you had a birthday four to five months ago, you need to apply right now for coverage. Hopefully, you can get your policy in force before your insurance birthday to avoid paying higher premiums.

If not, you’ll be forced to backdate the policy and come up with extra cash to put the policy in force.

 

NOTE: This may not be something you have spare cash for so it’s important to think about these details when you are shopping for life insurance. 

Age is the most important contributor to both term and whole life insurance rates.” How old you are plays the biggest role in how much you’ll pay to purchase a new life insurance policy. Chris Hutley, How Age Affects Life Insurance Rates, Investopedia

Who Should Backdate Life Insurance?

This is kind of a no brainer.

It always makes sense to backdate if you are intending to hold your life insurance policy for the full term.

As you can see in the example above – having to pay out 4 premiums in back coverage costs far less money than sustaining the financial blow of another birthday.

….BUT if you are holding a term policy and think you may only need it for a couple of years, this is not a good option at all because you won’t break even.

Let’s take a look at these numbers right now.

 

There Are Exceptions for Backdating Life Insurance

If your circumstances are similar to my 60 year old client above and you have to pay out $853.08 in back premiums but are able to take advantage of the lower monthly payment, in three years you will have more than broken even!

If you have to pay premiums for age 61 you will shell out $8700.12 in three years. If you take advantage of the 60 year old rate, you will have only paid $8530.80 – AFTER the back payment!

Now I am going to get real with you – the older you are the more substantial these savings become. The benefit is reduced when you are younger, because you are far less of a risk to insure. So the people who should really consider using this backing dating strategy to save age in life insurance are usually over 40.

If you are thinking about reapplying for life insurance because you have a health condition that you expect to improve or because you are going to quit smoking this is also probably not the best bet for you. You won’t be holding the policy long enough to break even.

Backdating Life Insurance – Real Life Example

Now let’s take a look at a real life case study:

You are probably wondering how saving age in life insurance works in real life.

I am going to run through an example of a client that was approved for life insurance where we had the opportunity to backdate his premiums.

The client is a 64 year old man with a 65 year insurance birthday.

Just by looking at his age you know there is a lot we can do for him.

Here’s the email I wrote running through the facts:

 

Real People, Real Savings

“Hello Client,

I know we spoke briefly last week about your Banner Life approval.

I just tried calling you again at home, and left a message for you with your daughter.  Congratulations for being approved for a Preferred rating!

Now we need to discuss if you are going to take the full 20 year term, $500,000 policy, or some lesser amount.

Your monthly premium will be $432.25.  However, in order to get this rate, we will need to backdate your policy and pay premiums from an effective date (information redacted for privacy reasons), so we can lock in the 64 year old rate.

I know you are not 65 yet, but for insurance purposes, you actually turned 65 on (information redacted for privacy reasons), since Banner Life uses nearest age rather than actual age.

To avoid paying a higher, 65 year old rate, you’ll need to pay 3 months premium to put the policy in force in year 64, which will be a lump sum of $1296.75 .  If you don’t want to backdate the policy to save age 64, you will have to pay $491.75 per month, which is the age 65 rate.

Let’s talk today so we can iron out the details and get your policy active.”

The End Result  – Cold Hard Numbers

This client happened to have liquid funds and took advantage of backdating his policy. He was able to save age for life insurance purposes.

So what will he save over the next 20 years??

$491.75 per month = $118,020.00 over 20 years

$432.25 per month = $103,740.00over 20 years

$12,983.15 savings after paying the backdated figure. NOW THAT IS IMPRESSIVE! 

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How a Rookie Agent Cost a Client Over $3,000

Now that you know the importance of dating a policy correctly, let me tell you how an inexperienced agent can cost you thousands of dollars if they get this wrong.Unfortunately, I am the inexperienced agent in this story.Eight years ago, when I was a young, rookie agent, I hadn’t learned the secrets of “policy dating.” I’m ashamed to say my inexperience cost one of my first clients over $3,000.

My client, Tim, had just celebrated his 56th birthday when I received the good news that his policy was approved.  However, when I received the policy, I was expecting to see an annual premium of $2259, but the rate was $2462!

Backdating Life Insurance Rookie

Experience Matters

Confused, I called the insurance company and asked why the rate had increased.  They informed me that my client had turned 56 since he first applied, and that since he had a birthday, he would need to pay the 56 year old rate instead of the 55 year old rate, an 8.5% increase!

I explained the situation to Tim and apologized.  He ended up taking the policy anyway, but I felt terrible.  This increase of $203 per year would cost him an additional $3,045 over the life of his 15 year policy.

But then I learned about a rare life insurance loophole.

And with this little known trick, I was able to go back to Tim and REPLACE his policy for the cheaper, $2259 rate.

Tim was ecstatic – Now it felt as though I was SAVING him over $3,000!

… so how did I do it?

Simply put… Even though Tim was now 56, I was able to date his policy back a couple months to when he was 55, so he only had to pay the 55 year old rate.

This is actually a very common practice, but few agents know how or when to use it, and the life insurance companies rarely mention this loophole (unless you ask for it, of course.)

The amazing thing is this hack often works whether you have an upcoming birthday or EVEN if your birthday has already passed.

So if you just had a birthday (or have one upcoming) and thought affordable life insurance was now out of the question, or that you “missed the boat,” we can help!

Please click below to learn how you can take advantage of this little known policy dating trick.

 

Huntley Wealth Can Help You Today!

Are you thinking about buying life insurance? If so, we would love to hear from you. At Huntley Wealth we have over a decade of experience finding the best possible rates for clients just like you.

Are health conditions holding you back? Don’t worry, we have been helping high risk individuals find plans that are more affordable than they ever thought possible.

From bad hearts to missing parts, we’ve got you covered!

Chris Huntley, President of Huntley Wealth

Birthdays are a time for celebration, let us help you today! Backdating may be the perfect way for you to save age in life insurance – and a thousands in the long run. Give us a call today at 888-603-2876 and we’ll run through all of your options – we can help!