With an applicant’s age one of the most important factors in calculating the cost of their premiums, simply buying life cover before the age of 35, rather than waiting until your 36, can save you as much as €5 per month. With age a factor which has considerable influence on the amount you can except to pay, backdating life cover has become a popular method of reducing the cost of premiums.
What factors determine the cost of life insurance premiums?
When an insurance company receives an application for coverage from an individual, there are a number of factors which are used to calculate the cost of their premiums. Typically however, the younger the individual applying for a policy, the less their premiums will be.
Other factors which impact heavily on the cost of premiums are an individual’s current health and medical history. The worse an individual’s health, a factor commonly associated with an increase in age, the higher the premiums will be. Gender also plays a factor in price, as does lifestyle i.e. smoker or non-smoker.
Backdating life insurance
When applying for life cover, the majority of insurers will take a ‘nearest age’ approach to calculating the cost of your coverage; however, it is also possible to backdate your life insurance premiums to save on the cost of your cover. Backdated premiums reduce the applicant’s age by one year, a change that could reduce premium prices by €5 a month.
The only disadvantage associated with backdated premiums is that the policyholder will have to pay several weeks’ or months’ of premiums without any benefit whatsoever. However, in the long-term this additional cost will soon be cancelled out by the savings they make on their monthly premiums.
When you’re shopping around for life insurance, it is always a good idea to ask prospective insurers whether they offer the option to backdate your policy, and if so, just how much you could save.