Many people are familiar with the reasons why to buy life insurance, but fewer know that when to buy is also an important factor. In most cases, we purchase life insurance when we have a specific need like covering a mortgage or providing support to supplement a loss of income. These decisions are driven by something that has happened in our life like purchasing a home, having a child, or possibly losing a loved one. Although a reactive approach to life insurance is most common, a proactive approach is most beneficial.
Here are three reasons why:
1) Buying Life Insurance While You Are Young and Healthy Is Cost Effective
You should buy a life insurance policy while you are young, healthy, and have the cash flow to get started. Start with a base permanent policy (this could be only $100,000). With this policy, you have the option to either pay over the course of your life or quick pay within 10 or 20 years. The cash will eventually be paid to your beneficiaries, unlike with term insurance. You will likely change the beneficiary as you progress through life phases. This is an attractive method for many clients as it is relatively cheap and comes with an option to be paid up in 10 years. A $100,000 permanent policy for a 25 year old male non-smoker in good health is a little over $50 per month. It can be paid up in 20 years for about $90 and 10 years for about $120 per month.
2) You May Not Always Be Insurable – Purchase While You Can
It is crucial to not procrastinate while purchasing your life insurance policy. It is far too common for people to experience a medical issue and find themselves either uninsurable or paying an expensive premium. The average age for a critical illness insurance claim with Manulife Financial is 43 years of age. After a critical illness like a heart attack, cancer, or stroke, life insurance is expensive and difficult to obtain.
3) It Is Wise to Buy Life Insurance – Even if It Is Rated
A rated life insurance policy experiences increased premiums to compensate for a greater probability of a claim. If you have applied for life insurance and get an offer that is rated, it is a good idea to purchase what you can afford. There is a reason the company is rating you. If you choose not to take it, there is a risk that the condition might worsen. Take as much insurance as you can afford, find out the reason for the rating by having the company share it with your doctor. A good broker will see if there are alternatives. If you apply at another company and get a better offer, you can then cancel the original policy. It is not unusual to buy a life insurance policy from another carrier for less.
