This is not a topic that most people want to address, however it could be the most important decision of your life.  Generally the reason you buy life insurance is because you love someone or something. Without love there is little motivation to take action.

The essential ingredient of life insurance is not how much to buy or how much does it cost but rather what impact on your loved ones would your premature death have? If that question is a concern to you then doing something about it now should be your priority. There is no better time to buy life insurance than right now. You can never buy it cheaper than right now and if you are healthy you can get it at standard rates.

Insurance companies make decisions to accept an application based on the individual applicants health at the time of the application. The company’s actuaries develop fair pricing based on mortality, interest and expense for standard smoker and non-smoker rates for each age.  To qualify for the standard rate the applicant has to be healthy. The applicant must supply medical evidence, usually a para-medical done by a nurse and if necessary an attending physicians statement from the applicant’s doctor.

The underwriter will examine all the evidence and makes the decision on whether to insure or decline. Discounts for better than standard health can be as much as 20% and additional premium for worse than standard health can range from 50% to as high as 350%.  It stands to reason that we are all healthier when we are young than when we are old, which is why it is cheaper to buy life insurance at age 20 or 25 than it is at 60 or 65.

Here’s an example of what can happen if you wait too long, it is an extreme case but clearly demonstrates the value of buying insurance sooner than later. This individual called to see if it was possible to buy insurance for his wife, age 79, a non-smoker. She had a heart attack in 2012 and has a pacemaker and she also had a stroke in January 2013.  Ironically, because of the advent of guaranteed issue insurance, she could buy life insurance. A guaranteed issue product just like you see advertised on TV, with no medical questions.  The premium at age 79 is $267.00 per thousand per year! That’s 26.7% of the face value per year in premium.  Needless to say they decided they didn’t need coverage.

This couple have been married for 59 years, if they had bought insurance for her when they were first married at age 20 the cost would have been $16.50 per thousand or about 1.65% of the face amount and the policy would have been paid for in 20 years.  That’s a pretty dramatic difference in premium, the cost of waiting was significant.  Waiting is not an option, it’s time to take action no matter how old you are.

Life insurance is like a parachute, you don’t need it until you need it.  Like a parachute you want to know it will be there when you do need it and you want to know that it will work.  Like trying to buy a parachute when you need it trying to buy insurance when you need it, is too late.

Don’t delay, stop procrastinating call an advisor today and take action. You may be able to find DIY coverage on line but remember the rule “Buyer Beware”.  Financial Advisors are trained to help you make the right choice and to make sure that the underwriting process goes properly so that you can have no doubt that when you need it the insurance will be there. By all means, pack your own parachute but get some expert advice before you do, that way you can be assured that it will work when you need it.

– Colin J. Campbell, CFP, CLU, Ch.F.C. – Guidance Planning Strategies

A insurance agent and financial advisor since 1975, Colin has been managing partner of Guidance Planning Strategies in Cranbrook since 1995.  He is active in the community through Rotary and other community projects. “I’m a big fan of the Kootenays, it’s in my blood and even though I was away for 25 years coming home was the best thing we ever did.”

Colin is married to Jane they have one son. He adds, “my goal is to help people, make smart choices about money, and accumulate wealth that will last for generations. “

Article Share