There's nothing sexy about insurance
I’m going to be perfectly honest. There’s nothing sexy about insurance. Which is perfect because I’m a boring accountant licensed to sell life insurance. Buying life insurance is like admitting you’re a responsible adult. For a younger demographic it's like the definition of "Adulting". But the truth is often, insurance should NOT really be an option;it's more of a necessity. It’s just one of those things you need “to get done”.
While life insurance should be considered like a staple, especially if you have a family that depends on you, many will struggle at the mere mention of it. I’ve seen the squirming. It can be uncomfortable. It’s a lot more fun thinking about the purchase of your new iPhone or next vacation to somewhere exotic like Costa Rica. Insurance by contrast seems like a real “intangible”. Who likes thinking about death? Ironically, when death is the furthest thing from your mind it's often because you are in good health; so that makes it the perfect time to think about insurance. It might be as affordable as that latte you get every morning
An estimated 45% of Canadians don’t have insurance because of the cost or more accurately, the perceived cost.
The majority think that insurance premiums aren’t affordable and so they just put it off which is yet another irony in this tale because insurance only gets more expensive with procrastination. Like daily. The reality is that depending on age, health and needs, life insurance can be very affordable.
But really, what are the options for your family?
A quick and painful search on GoFundMe using the search term “funeral” delivers 1,749,823 results as of today. All terrible tales of a sudden loss of a loved one whose family needs financial assistance . That’s the real cost of putting off buying life insurance. It makes financial sense to be responsible. It can also be worthwhile to spend some time and effort in making an insurance purchase in order to make it more affordable. Here are some tips for that.
12 ways to make life insurance more affordable:
- Get it when you’re young. It’s a real bargain in your 20’s. Not so much in your 50's. Age is the most important contributor to insurance rates.
- Get it when you’re young and healthy. Lock in your good health NOW. Health is a key indicator of insurance risk and will directly impact your insurability and premium costs. Bad health especially chronic illnesses most often result in higher premiums.
- Don’t buy more than you need. Make sure you work with your insurance advisor or financial planner to determine what you REALLY need based on replacing your income for loved one’s benefit as well as the payout of debt and/or future education of your children.
- Some is better than none. Buy what you can afford. It’s far worse not to buy any insurance or buy more than you can really afford and then stop paying your premiums because they are not affordable.
- Term is less expensive when you need it most; in the early years. Permanent insurance can be a great option for the insurance and savings features that it offers but it is more expensive in the earlier years although it can be less expensive in later years. If cost is a big factor, consider term with an option to convert to permanent coverage in the near future.
- Work with an advisor who can shop the market for you. Generally, term policies are priced fairly competitively. Work with an independent advisor who can shop the market for you. Many of the larger insurers have their own network of agents. Seek out someone else. This is particularly important if you have a pre existing medical condition. There are certain insurers that can provide insurance solutions for such conditions.
- Pay for your premium annually as opposed to monthly. Costs are generally about 8% more when you pay monthly as opposed to annually.
- Avoid unnecessary riders. Adding riders like accidental death benefits or term conversion riders add to your premium cost. Be aware of what you really need.
- Improve your health-lose some weight. Being overweight or obese or a smoker can put you in a higher risk category since they have a shorter lifespan. Being overweight can add as much as 25% more cost to your premiums.
- Improve your health-stop smoking. Most insurers will require that you have quit for a period of at least 12 months. Even if you have an existing policy, you may be able to provide your insurer with your updated status as a non smoker and they may decrease your premiums. Being a smoker can add as much as 50% more to your insurance premiums. At the moment, e-cigarette smokers are considered smokers for the purpose of life insurance since e-cigarettes are still up to debate in terms of being any less damaging to your health. On the other hand, most Canadian insurers have now updated their underwriting protocols to stop considering marijuana use the same as tobacco,
- Improve your health-Drink less. Alcohol consumption is another risk factor to health. That’s why heavy drinkers are likely to pay higher insurance rates. Anything more than social drinking or drinking more than 2 drinks a day will generally result in higher rates.
- Take less risks. The destination, duration and frequency of your foreign travel can also impact your premiums. Certain countries in particular are considered dangerous and may result in higher rates or an exclusion to coverage.
You can't control everything that happens to you in life but it's better to be prepared for whatever does happen. According to a 2016 LIMRA Insurance Barometer study, The most common reason that Canadians don't have any or have enough life insurance is the belief that it's too expensive. But the same LIMRA study determined that people over estimated the cost of insurance by nearly 400%. I'd be happy to provide you with the facts and a no obligation needs analysis to determine how much insurance is right for you and your family. So let's chat.
