Are you a procrastinator? I think most of us have a little bit of that in us anyway, but it can be a real issue when it comes to applying for life insurance. The time to apply for life insurance is now, while you are healthy. Though there is always a tendency to put off applying until “later”, it is a fact that sometimes later never comes – or at least not in the manner that we expect it to.
If you delay applying for life insurance and you have a major health event along the way, that can have a negative impact on the policy that you’ll select.
Your health will affect your premiums
One of the major objectives in purchasing life insurance is to get the lowest premium possible. This is fairly easy to do if you’re healthy, especially if you are also young (yet another reason to apply as soon as possible!).
Sometimes people don’t even concern themselves with life insurance until they have a medical event. At that time, they begin to realize their mortality, and the need to provide for their loved ones in the event of their death. But the onset of a chronic illness will result in higher premiums. And depending on the type of illness, the increase in premiums could be substantial.
A bout of cancer, a heart attack or stroke, or the onset of diabetes could cause your premiums to explode. You’ll want to make sure that you have your life insurance in place before any of those unfortunate events takes place.
One of the advantages of buying life insurance when you’re healthy is that you will lock in your premiums based on the state of your health at the time of application. A deterioration in your health later will not cause your premiums to rise.
Your health could be the difference between approval and denial
It is ironic that the time at which you would most need life insurance – on the heels of a major health disaster – would be the time that you would be least likely to get it. Once again, a major change in your health condition, such as cancer, a heart related event, or diabetes could cause you to be declined for a life insurance policy entirely.
If the insurance company believes that the threat to your health is sufficiently immediate that the company is likely to have to pay a claim within a reasonable time of application, they will decline the policy, rather than take on the increased liability that would result.
Applying for life insurance when you are healthy is not just about getting the lowest premium – it could affect whether or not you get a policy at all.
Good health means having the largest number of potential providers
Having good health also gives you access to the largest number of life insurance providers. This will also ensure that you will be able to take advantage of the lowest premiums available.
Life insurance companies will raise or lower premiums based on their need for business at any given point in time. If you’re healthy, you’ll be able to obtain a policy from virtually any insurance company that offers it. But if you have already experienced a health crisis, the number of companies that might extend a policy to you may be limited. That alone is likely to mean that you will pay more for your policy than you might otherwise.
Failing to disclose a health condition is not an option
Life insurance applicants sometimes entertain the idea of not disclosing certain negative health information to the company. They might believe that by not disclosing the information the insurance company will extend less expensive premiums. But they’re usually wrong.
There are two possible outcomes for failing to disclose a negative health condition:
- The insurance company will investigate your medical records, find out the truth, and either raise your premiums anyway, or decline your policy outright.
- The company may not learn of your true health condition prior to application, but might find out about it quickly upon your death, and not pay on the policy.
Life insurance policies typically contain a “period of contestability” that usually is in place for up to two years. Any material disclosure errors on your insurance application could result in the company withholding payment of benefits at your death. If this is the case, your premiums will be forfeited and your loved ones will not receive the hoped-for death benefit.
The cause of death could be a tip to the insurance company that fraud was committed on the insurance application. Certain diseases, such as heart disease and cancer, are often ongoing in nature, causing the insurance company to doubt that a “sudden illness” is actually so sudden. If they determine that it isn’t, that there is in fact a prior history, they can refuse to pay the death benefit, and do so legally.
If you are thinking about applying for life insurance – and you’re healthy – there’s no time like the present to get it going.
