It's important to find out the actuarial age of anyone wishing to take out an insurance or life insurance policy, as the final cost of the policy will be dependent on it
Insurance policies are arranged based on a range of concepts that most people either do not understand, or find strange. One of the terms that people are not familiar with is 'actuarial age', which sounds rather pompous, but in reality is much more prosaic.
What is actuarial age?
Actuarial age is the age of the insured person that is used to calculate the premium for life insurance policies. This age is not always the same as the real age of the potential insured person, as it is based on their closest birthday, irrespective of whether this is in the past or the future.
This means that, if someone whose birthday is in April wants to take out a policy in January, their actuarial age will be the age they will turn on their next birthday (even though it hasn't taken place yet), as it is within a six-month period.
The opposite of this would be if the person in question wants to take out a policy in January when their birthday is in October. In this instance, their actuarial age will be the same as their real age.
It is very important to know about this concept, as the price of the policy will be directly determined by it. There are many premium ranges that increase the price of a policy for people with an actuarial age of fifty which, as stated previously, need not necessarily coincide with a person's real age. This means that two people who were born in the same year may be charged different amounts to take out an insurance policy just for being born at different times of the year.
In light of the above, it's important to know how actuarial age affects the insurance policy you wish to take out so you can purchase it at the time that is most beneficial.
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