Attained age is the age at which the beneficiary of an insurance policy, retirement plan, or another age-dependent plan, can receive benefits or withdraw funds. Attained age can be any age at which benefits are received. In some cases, the person may have to take action when he reaches the attained age, such as retiring from a company. Attained age can also be an individual policyholder's age at a specific point in time. Attained age can be used to calculate pricing in policies that set payments according to the policy holder's age. Typically, the pricing increases as the policyholder ages.
Breaking Down Attained Age
Attained age pricing adjusts pricing according to age. The older the policyholder, the more that policyholder pays to remain covered. This type of policy may have lower initial expenses but may become more expensive than issue-age pricing or community-rated pricing as the policyholder ages.
An attained-age policy is a policy in which premiums are based on your age at enrollment. The prices will be lower when you first enroll, but prices may increase as you get older. Attained-age rating is among the most common pricing methods in the United States.
Attained Age and Medigap Insurance
All Medigap policies have rate increases to keep up with inflation. For the most part, they are generally conservative increases since the state insurance department must first approve any increase. Also, because attained-age rated policies are so common, they represent the biggest group of insured policyholders. This helps to minimize and spread the insurance risk out over many people, thereby keeping pricing on these policies competitive.
Attained age is one of three ways insurance companies use to price their Medigap plans. The others are issue-age ratings and community ratings. These other two methods of pricing are less common. Community-rated policies consider other factors, such as which zip code where the insured lives or whether they use tobacco.
Issue-age rated policies are somewhat less common. In theory, when you buy an issue-age rated policy, the carrier will always price you at the age at which you bought the policy. While this may seem attractive, these policies (depending on your state) often have much higher starting premiums. However, no matter how they're initially priced, such policies are still subject to annual rate increases to keep up with inflation.
If you are considering an issue-age policy, give us a call. We can check how your state typically rate its policies. We’ll also tell you whether these are a good buy where you live, or if you should pursue another alternative that’s a better bet for long-term rate stability.