Why Term Life Insurance Rates Go Up with Age (and What Federal Employees Should Know)

You've secured life insurance at a premium rate that works for you. Then one day, you’re notified that your premium will be increasing — and you’re not sure why. If you've ever been surprised by a rising life insurance premium, you’re not alone.

Understanding why term life insurance rates increase with age and how life insurance age bands work can help you make more informed decisions about your coverage. This blog post explains why certain life insurance types have changing rates, how group term life insurance functions, and what Federal employees should know when comparing FEGLI rates and WAEPA rates.

What Is Term Life Insurance? (And How It Differs from Whole Life Insurance)

Term life insurance is one of the most common types of protection, especially for people searching for affordable life insurance options. But unlike whole life insurance, term life premiums don’t stay the same forever.

Term life insurance provides coverage for a specific number of years — often 10, 15, 20, or 30. During your chosen term, your premiums are typically locked in, meaning they will not change until the term expires. At renewal, rates increase because insurers recalculate premiums based on your current age and updated risk level.

Key features of term life insurance

·      Coverage lasts for a set number of years

·      Premiums stay level during that term

·      Rates increase when you renew at an older age

·      Designed to be simple and affordable

How whole life insurance differs

Whole life insurance offers:

·      Level premiums for life

·      Lifelong coverage

·      A cash value component

Because of these additional features, whole life insurance premiums are higher and appeal to individuals looking for permanent coverage rather than the lower initial cost of term insurance.

In short, term life insurance offers more affordable premiums upfront, but those rates typically increase as you age or when the term expires.

Why Do Term Premiums Increase When the Term Ends?

People often wonder if term life insurance rates always go up over time and why.  The answer: it’s built into how term life coverage is priced.

Let’s say you purchase a 20-year term policy at age 35. Your premium stays the same for 20 years. But when the term ends and you renew at age 55, your premium is recalculated based on life insurance rates for age 55, which naturally reflect higher risk.

In this example:

·      At age 35, your premium matches the lower risk associated with that age group.

·      At age 55, renewal rates match the higher risk associated with being older.

This is the standard pricing structure used for term life insurance renewal rates across the industry.

How Group Term Life Insurance Works for Federal Employees

When it comes to life insurance options for Federal employees, two common providers are FEGLI (Federal Employees’ Group Life Insurance) and WAEPA (Worldwide Assurance for Employees of Public Agencies). Both WAEPA and FEGLI offer group term life insurance exclusively for Feds, with rates set in five-year age bands.

How age-band pricing works

With age-band pricing, insureds don’t have a set premium for a specific term, such as 20 years. Rather, premiums are set for the entire group based solely on age.

With this type of coverage, the rate you have from ages 35-39 will change once you turn 40, where you will be in a 40-44 age band.

This age-based pricing model is common to all group term life insurance plans, including FEGLI and WAEPA. The pricing reflects the increased risk associated with aging.

Related resource: WAEPA vs. FEGLI Guide >

Why Do Life Insurance Rates Increase Over Time?

Whether you’re evaluating term life insurance rates by age or comparing life insurance costs, the reason behind rising rates is the same.

As we age, the likelihood of passing away from natural causes increases. From an insurer’s perspective, this means:

·      Higher probability of paying a benefit

·      Higher cost to insure the individual

·      Premiums must increase to reflect rising risk

This applies to private term life policies, FEGLI, WAEPA, and virtually all forms of age-based life insurance.

Do WAEPA’s Rates Increase As I Get Older?

Yes. WAEPA offers Group Term Life Insurance with premiums based on five-year age bands, meaning your rate increases when you move into the next band — the same structure used by FEGLI and other group policies.

WAEPA is proud to offer exclusive rates to current and former Civilian Federal Employees. Federal employees, who are known as a lower-risk group than other populations. This often allows WAEPA’s rates for Feds to be lower than other life insurance options.

While WAEPA's premiums will still increase with age, as all age-banded life insurance does, many Federal employees find WAEPA’s rates and additional member benefits to be a financially advantageous alternative to FEGLI and other coverage options.

Compare your current rate with WAEPA’s affordable premiums for Civilian Federal Employees. Use our free life insurance rate calculator to estimate your cost by age band.

Join WAEPA

Founded in 1943, WAEPA provides current and former Civilian Federal Employees with exclusive Group Term Life Insurance and Short-Term Disability Insurance. WAEPA members have access to resources, tailored specifically to the needs of Feds and their families. Today, more than 50,000 Feds and their families choose WAEPA to be there for life’s biggest moments.