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Why it is cheaper for an 18 year old to buy life insurance than it is for a 40 year old?

why it is cheaper for 40 year old to buy automobile insurance than it is for an 18 year old? why some people prefer term insurance even though it does not have any cash in value? why other people prefer straight life insurance even though it is more expensive than term? why it pay to buy fire insurance for your home or apartment even though you may never have a fire? why a healthy person still needs health insurance?

Public Comments

1. So, you don't like insurance. Is that the general idea you're getting at?
2. It's all about risk. At 18, life is ahead of you. The slings and arrows of outrageous fortune that will one day blow you out of the water are still in the quiver, as it were. At 40, if you've lived somewhat largely, your longevity is diminished. You've become more of a risk (to insurer of beneficiaries making a claim). To compensate for hard livin', insurer ups the premium accordingly. You don't need insurance if you're willing and able to self-insure (basically suck up whatever meltdowns life hands you). It costs money because there is no free lunch. Insurer risks that you will make a claim in excess of your premiums (payments). The odds of that happening are how insurers calculate premiums.
3. Home insurance covers lots of different things. I'm not familiar with all the details of my homeowners policy, but my home insurance agent is always helpful. Try contacting your agent or a agent in your city. http://www.easyhomeinsuranceguide.com They should be able to assist you.
4. statistically a 18 year old person would be more likely to get into automobile accidents, thus it is more expensive for them. term insurance is the cheapest life insurance there is for the most coverage. what most people don't realize is that cash value 1) the savings accrued DO NOT go the family/beneficieries when the policy owner dies, 2) the interest rate in the savings portion is often lower inflation (4%) so you are losing money/ buying power as it stays there, 3) if you need to take money out of the savings for an emergency and the policy owner is still alive you have to BORROW your own money, as in pay a high rate of interest on the amount you borrowed. advocates of term say buy term because it is the cheapest and invest the difference between what you pay for in the term policy versus the cash value in mutual funds which average 12% in the last 30 years. so less than 4% interest or averaging 12%, which one sounds better for you and your family?
5. 1) cheaper for an 18 yr old to buy life insurance because he has a longer life expectancy. 2) cheaper for a 40 year old to buy car insurance because they have a lower crash expectancy. 3) they buy term because it's cheaper and fits the current need 4) the buy whole life because the term insurance their neighbor bought 20 years ago is now more expensive than the whole life policy they bought 20 years ago. So, they keep insurance and their neighbor drops it (you have to buy for the length of time you need it up front) 5) you buy fire insurance because the bank requires it and if you don't have a mortgage you buy it so you don't lose your most valuable asset to a disaster. 6) healthy people buy health insurance because they're the only ones who can. If you're not healthy then you can't buy it. AND MOST IMPORTANTLY OF ALL....a drunk driver doesn't just wreck into the sickly...the crash into healthy people too. So, you need health insurance. INSURANCE is for unexpected items...so if you expected to have a baby, or expected a hurricane to hit your home, or expected the winds to change and the wild fires burn all of your belongings, etc...you wouldn't be able to insure them.
6. Because more 40 year olds have heart attacks, than 18 year olds. The older you are, the more likely it is that you will die. Cash value is a RIPOFF. People who do math, like me, prefer term. More people get "sold" on whole life, then after a few years, realize how bad a deal it is, and cancel the policy. Fire insurance covers a lot more than fires - but most people buy it, because they HAVE to - either their lease requires it, or their mortgage company requires it. Healthy people need health insurance, because once they get sick, no one will sell it to them. Kinda like, you can't buy your lottery ticket AFTER the drawing. You play your numbers BEFORE they come up - not after.
7. The more likely an insured event is to occur, the more expensive it will tend to be to cover. The less likely an insured even is to occur, the less expensive it will tend to be to cover. There are other factors too like how well known the risk is and how large any potential payment might be, but the sentences above will get you to the answer you need most of the time in terms of insurance pricing.