Life Insurance: What is the Perfect Age to Have One?
Nobody knows what lies ahead.
Sure, you hope for the best; but are you ready for the worst?
Millennials in their 20s feel invincible. They perceive that they are immune from life’s unknown circumstances since they are young and healthy. They are busy investing in experience and happy memories since they only live once.
Then they age, get married, start a family, and their parents become dependent on them.
Yes, you most probably will only live once. But you are still alive today and you will never know until when.
As Filipinos, we think it is a bad omen when a person talks about his or her own death. Surely (being mortals), we will all die eventually. What if you pass away ahead of the people who depend on you?
How will your spouse support your children’s necessities? How will your children go to college and achieve their dreams? How will your parents afford their monthly medical needs?
If you are gone, how will they survive?
Setting emotional impact aside, your loved ones will surely feel the financial blow caused by untimely loss. Good thing there’s life insurance.
Life insurance will help your dependents adjust to this sudden financial change.
Now that you know the benefits of a life insurance, when should you get it?
When Someone Depends on You
There is no perfect age to purchase a life insurance. But isn’t it rational to get a life insurance as soon as your loved ones start depending on you?
When you get married, you and your spouse will depend on each other on a lot of things—including finances. Plus, your children will have needs.
It is also common for us Filipinos to take care of our parents and older relatives who can’t support themselves. You might also have siblings who are still in college and depending on you because your parents are already retired.
When your loved ones depend on you, it is scary to leave them behind without any assistance. A life insurance will give you the peace of mind.
Even While You are Single
Consider your current finances as a single individual. You have less financial responsibility and paying for a premium will be easier to include in your budget.
By the time you get married, your financial priorities are likely to shift for your growing family.
When you have kids, you will prioritize their health, education, and safety. You will spend on their wants too when you have a chance. That’s because it is a joy of a parent to see their kids happy.
At this stage of your life, you might think that a life insurance is an additional expense you can do without. What you do not realize is that a life insurance can be a great part of a family plan. When you finally have a family, you already have a life insurance to cover them.
Life insurance might seem to be an additional cost for now, but it is actually saving up for your loved ones. You don’t want to burden them with burial costs, do you? Not to mention that it can also pay for their bills.
When You are Still at the Prime of Good Health
It is never too early to be ready. Also, premiums are cheaper for the younger age group since chances of dying is lower. So the younger you are, the lower your life insurance premium will be.
If you wait for your retirement age before getting a life insurance, the premium will be 10 to 20 times higher.
You might think that you are healthy now. If you are a health buff, then it is good for you. However, you become susceptible to illnesses as you age. The chances are higher if your family have history of diabetes, cancer, or stroke.
If you have hereditary illnesses you might not easily get a life insurance by the age of 50 and up. The higher your health risk, the more expensive the offered premium will be. It will be hard to pay it off especially if you need money to spend on doctors’ fees and maintenance medications.
While You Have a Steady Cash Inflow
The amount of life insurance you apply for is related to your household income. While insurance premiums may vary depending on the company, insurance providers are practical. They will not offer a policy that does not make financial sense.
Usually, policies are just designed to replace income during accidents that cause permanent disability. It also serves as a safety financial net for your beneficiaries. Thus, they will not offer very high premiums that does not fit your budget.
How are premiums calculated?
Insurance companies charge premiums depending on statistical data such as age, health, family health history, life history, marital status, vices, and if you are into any extreme sports. The information will be analyzed by a statistician called actuaries.
The actuaries will predict the likelihood a person will make a claim. The less chance of claiming, the lower the premium will be.
However, the insurance company will not offer a premium which you can’t afford. Instead, they will give you options on coverage or terms to find a policy that fits your needs and financial means.
If by chance that you lose your steady cash flow, it will be harder to get a life insurance.
While You are Still Insurable
Not everyone can buy a life insurance. Some individuals are uninsurable. Why? Because the main point of life insurance is getting ready for the worse way ahead of time.
It is not a financial tool which you can easily get when you need to use it. It takes time to purchase which may take 5 to 20 or more years.
Who are uninsurable?
Life insurance companies greatly depend on the holder’s life expectancy. The uninsurable individuals are those who have a probability of an early death or death in the near future.
Each insurance company has its own criteria to assess if the applicant is insurable or not. Most of them consider the age, severity of existing health condition, time of diagnosis, and if the person have done necessary steps to regain better health conditions.
Upon evaluation, the insurance company will decide if they will decline the application or offer other policies with higher premium.
Consider a 35-year-old woman who was diagnosed of chronic kidney disease four years ago. She needs dialysis treatment two times a week. She also regrets not being able to take care of her three children because she collapses every time she gets tired.
Her fear for her children’s welfare if she passes away prompted her to look for a life insurance. However, no matter how heart breaking her story is, she is still considered uninsurable.
Had she got a life insurance 10 years ago, the matter could have been very different. She could have bought a life insurance at a low premium.
Should Millennials Purchase a Life Insurance?
Banko Sentral ng Pilipinas shared that 67.3% of Filipino adults are aware of life insurance, but only 20.8% admits to be covered. Among them, 26.1% have a life insurance because it is part of their companies’ program for employees.
Overall, 60% to 80% of Filipinos do not have an insurance. Why? The top reason is lack of money. There’s also the perception that life insurance is expensive.
What they do not know is that life insurance policies are cheaper if they start buying at a young age.
Consider it as an investment for your loved ones. One of the best gift you can give to them is to take away the financial worries even when you are gone. You may be young and fit today, but nobody can foresee until when.
What is the perfect age to get a life insurance? There is no specific numerical answer for this question, but as Nelson Mandela puts it, “We must use time wisely and forever realize that the time is always ripe to do right.”
You will never be too early, but it could be too late.
When should you buy your life insurance? It is yours to decide.