It has been said that the definition of a
banker is “One who gives you an umbrella on a sunny day, and takes it away when
it rains”. In other words, when things
are going well, you can get what you want, but when the problems in life begin,
you are left to fend for yourself.
Buying life, disability or critical illness
insurance is another one of life’s pillar’s where you need to solve the problems
before the problems happen. Underwriting
is a key factor in the insurance world; both financial as well as physical
underwriting is important at the time of application. You must be able to show
that you have the financial means to pay the premiums and that you also have
the need. Furthermore, you must prove that you are physically healthy, and in
some cases your relative’s health is also considered.
Here
is the problem: A younger person may not see the
need for insurance because the traditional “needs” have not appeared yet. You
are not married, have no kids, don’t have a mortgage and don’t own a business.
This is the time in your life when you are healthy and the underwriting obstacles
are easily overcome. Yet, the first thought of many younger people is to wait
until the need arises in the future.
The
Risk: Maybe
your decision is to wait for 5 years to buy insurance (when the need is
anticipated). On the surface you think there is no problem, because the chance
of becoming uninsurable at your age is low, so why not wait until a perfect
time to buy?
However,
there are more issues than one thinks…
- 1 The cost of new polices will increase with age at the time of application.
- 2 The amount of insurance that can be purchased for the same dollars will be less as you age.
- 3 Your personal health history has the potential to make you uninsurable, or rated.
- 4 If your parents have a major illness it can affect your personal premium. I.e. for Critical Illness coverage.
- 5 A major illness among your siblings can affect your ability to purchase. I.e. critical illness coverage.
The
answer: No one purchases all of their insurance all
at once. Anticipate what your needs will be, and think about the future. Insurance
is all about solving tomorrow’s need today.
Waiting to open a good bottle of wine might
be a great decision, however waiting to buy insurance is not always a wise move.
If you are in Nova Scotia and would like
some insurance advice, please contact Corry Collins:
902-444-7000
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