21 May The Cost of Waiting to Purchase Insurance
Insurance to take care of ourselves or our loved ones is an important part of our financial plan, but it has a way of slipping down our “to do” list until years go by. Often, when clients call after a period of time has passed, a health event or death has occurred to someone they know or love. Suddenly, that conversation becomes that burning platform that needs to be addressed today.
But the cost of waiting factors in a number of issues that we all need to consider.
First, waiting purchase coverage can lead to higher premiums or less coverage. How much more in premium?
Well, a 35-year old non-smoker could pay $84 per month for a critical illness policy with guaranteed level premiums to age 75. If she waits until she’s 40, that premium jumps by 23%. Another way to look at it is that the client would be able to purchase 28% less coverage for the same out-of-pocket cost.
The shift is even greater when it comes to disability insurance. A 35-year-old making $80,000 per year, and assuming a 2% raise each year, has the potential of earning over $3.2 million by the age of 65. Arguably, our ability to earn an income is our greatest asset.
If that 35-year-old purchased a disability insurance policy that would pay $3,500 per month until age 65, the premium would be approximately $75/m. If that individual waits 5 years, until he’s 40, the premiums will have increased to $95.
But the biggest risk of waiting is the potential of becoming critically ill before coverage is in place. Moreover, since many critical illnesses are hereditary, underwriting can be impacted by changes in health by your immediate family members in addition to changes in your own health.
Don’t wait! Contact us today to chat about affordable solutions for you and your family. We would love to hear from you.