Why Younger Is Better When it Comes to Life Insurance
It may have seemed unfair of George Bernard Shaw to coin the saying, “youth is wasted on the young,” but just ask any person over 50 years old, and they may be able to convincingly argue that there is a modicum of truth to that saying. Your average 20 year old doesn’t know what he doesn’t know, but in 30 years his 50-year-old self might have some words wisdom to share. Now if only that 50-year-old-self had a time machine! Of course, going back in time to convince one’s self to be better to his body, to take less personal risks and to purchase life insurance earlier could be hard sell.
Of all of the knowledge that could be bestowed upon the youth of today, perhaps the importance of purchasing life insurance when young and healthy is the most invaluable. According to a February 2013 article in the Financial Post, most young people give very little consideration to the purchase of life insurance. In fact, most young people today don’t consider purchasing life insurance until they have a life-changing event such as their marriage, birth of their first child or the purchase of their first home. Many times this lackadaisical attitude towards the early purchase of life insurance works out just fine. However, there are also several occasions when waiting for the perfect moment to purchase life insurance can backfire.
Benefit of Buying Young
The biggest benefit to purchasing life insurance at a young age is that there is a greater likelihood for a lower premium because of age and good health. In fact, being young offers some distinct advantages especially in the premium costs for permanent policies like the Term 100, the Whole Life 20 Pay, and the Whole Life 10 Pay life insurance policies.
The Term 100 policy, despite its misleading name, is not actually a typical term policy offering life insurance to cover a specific period of time (like 5, 10 or 20 years.) Instead, the term 100 plan is a permanent policy that offers lifetime coverage with level premiums being paid to age 100. The whole life 20 pay policy offers lifetime coverage with level premiums being paid for 20 years, and along those same lines, the whole life 10 pay policy offers lifetime coverage with level premiums being paid for 10 years. Each of these permanent life insurance policies offers its own benefits when considered in a cost comparison for male non-smokers aged 25 years and 45 years old. The difference in premiums for any of these policies can differ by hundreds of dollars a month just based on the 20-year difference in age.
Is Clarity Enough?
So it is plainly clear – by purchasing life insurance earlier a person can save themselves hundreds of dollars a month. Plus he or she can avoid the disaster that an unexpected illness or medical situation can cause for someone who has waited to purchase life insurance. However, despite the obvious benefits to purchasing life insurance earlier, insurance brokers still find this consumer market the hardest one to break in to. This puts a twist on George Bernard Shaw’s well-known saying. Perhaps it is not youth that is wasted on the young, but instead it is insurance savvy that is wasted on the old.
NoMedicalLifeInsurance.ca is an initiative of independent insurance expert Tamara Humphries and LSM Insurance.