Applying for life insurance is one of those events like going to the dentist or filing your income tax return – you know you need to do it, but just don’t feel like doing it today. But just as is the case with going to the dentist and filing your income tax return, delays can cost money – and sometimes even result in missed opportunities.
Here are some examples of what can happen when you delay applying for life insurance.
Rates Increase With Age
This is probably the least costly reason that results from a delay, but it’s worth mentioning nonetheless.
The older that you are, the more expensive your life insurance premium will be. Generally speaking, your premium will increase incrementally with each year older that you are. And if that isn’t splitting hairs, consider that insurance companies typically round your age up. That is, if you’re 34 and 7 months, they consider you to be 35. This is an example where even months – not years – can make a difference.
Now let’s say that a delay caused you to be considered just one year older – how much of a difference can that make? Not much to be sure, but it can add up over the term of life insurance policy.
If the difference between age 34 and age 35 is $25 per year, then you will pay an extra $500 for a 20 year term life insurance policy.
That may not be a deal breaker, but it’s extra money that you don’t need to spend. And it’s an extra expense that you won’t have to pay, simply by avoiding a delay.
You Could Contract a Disease That Makes You Un-insurable
Even people who are not employed in the insurance industry can appreciate that the condition of your health has a material effect on both your ability to get life insurance, and the premium that you will pay for that policy. This is an example of where a delay can be a serious game changer.
If you’re in excellent health right now, then now is the best time to apply for a life insurance policy. The condition of your health is never guaranteed, and by delaying applying for life insurance by a few months, or a year or two, could find you dealing with a serious health condition.
A heart attack, a bout with cancer, or the discovery that you have type II diabetes, could not only make the cost of a life insurance prohibitive, but it can also force you to delay your application even further. This is because life insurance companies typically don’t issue policies on people who have recent episodes of series medical events.
Conversely, were you to contract a serious health condition after obtaining your life insurance policy, not only would your policy continue in force, but the premiums that you pay would be totally uneffected.
Your Financial Circumstances Could Change
It’s not just the condition of your health that affects your ability to get a life insurance, and the cost you’ll pay for it. A serious negative financial situation could have a similar impact.
Let’s say that you were to lose your job, or you have a business that fails, and it forces you the file for bankruptcy. Most life insurance companies will not issue a policy on someone who is either in bankruptcy, or has only recently come out of it.
The insurance company has to be concerned with your ability to pay the premiums. Should your policy lapse after six months or a year – due to your impaired financial condition – the insurance company will have taken a loss on your policy. They will attempt to avoid this outcome by restricting the issuance of policies on people in or recently out of bankruptcy.
Even if you don’t file for bankruptcy, the outcome could be similar if you lose your job or experience a business failure. In either case, you will not be in a position to make the premium payment, and you can very well be declined for coverage.
What complicates financial distress is that it is often accompanied by health conditions that are brought on by the stress of the situation. One or more of those health conditions could by itself become a future obstacle to obtaining a policy.
You Could Make a Life Mistake
This is something that none of us like to think about, but hey, we’re all human right? Let’s say that you’re out celebrating one night with a group of friends, you have a little bit too much to drink. Unfortunately for you, a police cruiser pulls up behind you and you’re pulled over for erratic driving or some other infraction.
But you’re also over the legal blood alcohol content level – it now looks like you’re going to have a DUI charge on your record.
Life insurance companies don’t like DUIs any better than they like bankruptcy. They consider it an additional risk, that will make it difficult to get a policy in the near term, and more expensive when you do.
Again, this isn’t something any of us want to think about, but it’s the kind of thing that can happen when you delay doing something as important as getting a life insurance policy.
The Ultimate Reason to Not Delay Applying For Life Insurance: You Could Die
None of us knows what the future holds, and that includes how long we’ll live. One of the biggest financial tragedies in human existence is a person who dies without any life insurance at all. It’s tragic because it’s fully preventable.
No matter how much you may not feel like applying for life insurance, do it for your loved ones. You don’t want to die and leave them in a financial bind, simply because you didn’t get around to buying even a minimal life insurance policy.
More than any of us ever think, time is of the essence when it comes to buying a life insurance policy. Don’t let this moment pass. Give us a call and let us help you get the coverage you need.
