While most of us acknowledge the importance of life insurance, many clients can take a long time before taking up the cover they know they should have.  There seems to be a logic that that any month that has gone by without the cover in place is another month saved on their premiums.   But life insurance is one of the few things in life that when you really need it it’s probably too late to get it.  A bit like jumping out of an airplane without a parachute.  By the time you realise it’s true value and the impact of not having it in place first – it’s bit too late. 

Life insurance should not be taken out in response to health scares.  They should be taken out when your financial and personal situation means that if something happened to you money would be available to assist the family and prevent them from getting in to financial difficulty.  Times to review your insurance requirements could include – the arrival of a new baby, taking on a debt eg purchasing a new home or business.  More financial dependence on individuals eg only one breadwinner in the family. 

There are very good reasons why getting life cover when your financial and personal situation requires it at the earliest possible opportunity is a good idea:

1. Your health may deteriorate while you are waiting.  This could result in more expensive premiums or having exclusions on your policy-   or worst of all – not being able to get it at all.  Many times we have heard of people thinking that they have enjoyed a good level of health and perceive the risk of requiring such insurance as minimal to nil.  Yet how many times have we heard of such fit and young people diagnosed with terrible life threatening conditions.

2. There are stand down periods for many types of insurance which can include:

   1. 13 month stand down on Life insurance for suicide – this means that for new life policies taken up if someone committed suicide within that 13 months the policy would not be paid out.

   2. 3 month stand down from the time of the policy been issued to being able to claim on some critical illnesses – the rationale behind this is that some clients may experience some symptoms and race off to get some life insurance in place before going to the Drs to have their worst fears confirmed.  It is for this reason that most agencies insist on stand down periods for some critical illnesses

3. If you opt for “Level” premiums (ie premiums that do not increase as you age) the earlier you start the cover (ie the younger you are) the cheaper the premiums will be. 

Life insurance is like Lotto in reverse.  You can play the odds but you have to accept that if you get it wrong then the financial result may be catastrophic and the cost of delaying in getting the right cover in place can be unquantifiable.  

This post was written by

Trish Marsden - who has written 5 posts