It is important to understand in backdating that if you choose to do it, you are agreeing to pay premiums from the backdate, not from the time the policy is issued.In his case the policy was put in force 3 months after the May 28 backdate so he paid for three months worth of life insurance that he didn’t have.For example: a 58 year old can purchase a 30 year term policy, whereas the product is unavailable for ages 59 and over.
The issue age is the age the policy premiums are based upon.
Did you know life insurance companies use two different methods to determine your issue age?
If you don’t do the math that might be the conclusion, but let’s run this out.
He is paying ,000 a year for a backdated permanent policy that he needs for estate tax purposes. The difference in cost is 00 a year so by the fourth year he will be saving 00 a year over a current dated policy.
He paid that three months premium for a lower cost per thousand.
So, that sucks that you have to pay for something you didn’t have, right?If you’re in your 30’s life insurance backdating is not an issue that you probably need to know about or even consider simply because, at your age, the cost of insurance doesn’t change much, if any, from year to year as you get older.Not so when you’re talking about vintage over 50 life insurance and even more so when it’s over 60 or 70 life insurance.In addition to potentially paying higher premiums due to older issue ages, there are other considerations that may be impacted by the issue age.Term life product availability is based on the issue age of the insured.The 59 year old insured would have to consider purchasing a 25 year term product or perhaps a permanent life insurance product instead.