You may be asking, “How much life insurance do I need?”, but there may be other important factors you should consider too. If you become medically uninsurable, you will most likely, want to keep any insurance that you have acquired prior to your change in health.
POLICY CONVERTIBILITY OPTIONS ARE SO VALUABLE
It is very important to consider, at the time you apply for and can qualify for life insurance, whether your policy is a type of policy that can later be converted to a “Permanent” plan of some type. Most “Term” life insurance policies will increase significantly in prices as you get older (even with excellent health!).
So if your health changes and you determine that you will absolutely want to maintain the maximum life insurance possible, then you will need to determine how to best pay for such insurance.
IMPORTANT TOPICS:
- Your ability to medically qualify for a life insurance policy, BEFORE your health changes, is a valuable asset.
- Life insurance provided through your employer may require medical qualification to keep the coverage when your employment ends. Could you qualify at that time???
- The ability to convert your “Term” or “Employer Provided” insurance to a “Permanent” plan if your health changes. You may want to convert to a plan that will limit premium increases when you most need the coverage.
What is the one topic that far too many insurance agents NEGLECT to inform you about regarding your life insurance? Your Insurability! Your ability to qualify for a life insurance policy is one of your most valuable assets, and far too many individuals fail to consider this until it is too late.
HOW LIFE INSURANCE COMPANIES DECIDE TO ISSUE A POLICY
Life insurance is underwritten (or approved) based on several variables, but one of the most important is your health. After all, the life insurance companies are accepting risk (the chance you will die prematurely) for a given level of compensation (the premium you pay for the life insurance). The premiums charged by life insurance companies are based on statistics and historical experience to determine how may people will typically die each year, for given age groups.
It makes sense that any company agreeing to insure your life will want to know that you are healthy at the time of your application and have the same life-expectancy as an “average” policyholder at your age. If you are extremely unhealthy you may be totally denied the opportunity to purchase any life insurance.
If you are even moderately unhealthy, overweight or taking certain medications, you may have to pay a significantly higher premium than a healthy policyholder with the same death benefit. So your health and medical history influence your ability to qualify for this valuable asset – Life Insurance.
LIFE INSURANCE PORTABILITY
Many Americans take advantage of life insurance coverage sponsored through their employers. Often, life insurance companies will negotiate and offer life insurance policies to employees of a company based on “reduced underwriting”.
One reason life insurance companies are willing to do this is that they don’t expect many of the employees to die while they are in their “working years” and employed with the company. Statistically speaking, most people die later in life, when they are beyond their “working years”.
How much life insurance do you need?
How much is your life insurance worth?
How valuable would life insurance be to you and your loved ones if you knew you were sick or dying?
How much is something worth when you can’t get it?
For many of us, appreciation of our own mortality appears about the same time in life that we begin to experience a decline in our health.
Most such plans will provide the employee with the ability to convert their “group” or “employer sponsored” life insurance to a “private” or “individual” policy if the employee leaves the employment of the sponsor company.
However, at this point, many life insurance companies will require some level of medical underwriting to allow the employee to keep the insurance on their own! If you are medically healthy, this may not present any problems, but if you have been with the company for several years, and both you and your health have aged during this period, you might find that you cannot medically qualify to keep the same coverage that was previously offered through your employer. How valuable would that lost coverage become under this scenario?
THE TAKEAWAY
IMPORTANT TOPICS (Review):
- Your ability to medically qualify for a life insurance policy, BEFORE your health changes, is a valuable asset.
- Life insurance provided through your employer may require medical qualification to keep the coverage when your employment ends. Could you qualify at that time???
- The ability to convert your “Term” or “Employer Provided” insurance to a “Permanent” plan if your health changes. You may want to convert to a plan that will limit premium increases when you most need the coverage.
Consider and appreciate your good health while you have it. Contemplate your need for life insurance at your current age and well into your retirement years. The amount you need at older ages may, or may not, decline according to your personal needs.
Decide whether it is in your best LONG TERM interest to elect employer provided life insurance coverage or apply for an individual policy independent of your employer. Applying for an individual policy may “lock in” your insurability, allow you to keep the coverage regardless of your employment status and provide for an easy conversion to a permanent policy if you decide you need one.