Attained age is a crucial term in the life insurance industry that refers to the policyholder’s current age. It is used to determine the premium amount of life insurance policies, particularly for permanent life insurance policies, such as whole life and universal life insurance.
Definition
Attained age is the age of the policyholder at the time of applying for a life insurance policy or at the time of policy renewal. It is also the age at which the policyholder is expected to receive benefits from the life insurance policy. Attained age is a key factor in determining the cost of life insurance policies since it directly influences the risk of mortality. As the policyholder’s age increases, the risk of death or illness also increases, and the cost of premiums rises accordingly.
Use in Life Insurance
Attained age plays a vital role in the life insurance industry as it is one of the factors used to determine the premium amount. The premium amount for a life insurance policy is calculated based on various factors, including age, gender, health status, and lifestyle habits. The attained age of the policyholder is particularly significant for permanent life insurance policies, as these policies provide coverage for the entire life of the policyholder, rather than for a specific term.
For instance, in a whole life insurance policy, the premium amount is calculated based on the policyholder’s age at the time of application. The premium amount remains fixed throughout the policyholder’s lifetime, irrespective of any changes in the policyholder’s age or health status. Similarly, in a universal life insurance policy, the premium amount is calculated based on the policyholder’s attained age and the policy’s face value. The premium amount for the policy increases as the policyholder ages.
Conclusion
Attained age is a critical factor in determining the premium amount of life insurance policies. It reflects the policyholder’s current age and is used to assess the risk of mortality associated with the policy. The life insurance industry uses attained age to calculate the premium amount for permanent life insurance policies, such as whole life and universal life insurance. Understanding the significance of attained age in life insurance policies is crucial for policyholders who want to secure their financial future and provide protection for their loved ones.
