One of the things that is hard to drive home to people who are looking for life insurance is the cost of waiting to correct a situation that is keeping them from the rate class they want. Probably the single issue where this comes up most frequently is obesity.
Just a quick example. Let’s use me at age 55, good health. I’m 5’10 and for the sake of this example I weigh 260#. I want $250,000 of 20 year term and I can only budget about $1200.00 per year. The problem is that at 260# the best rate class I qualify for is standard and the best annual rate is $1482.50. So, being my typical customer I tell myself that I will go on a diet to get down to 225#. Then I will be in a standard plus rate class. Just 35#. I can do it.
This is where the cost of waiting kicks your overweight rear. Let’s say I really go nuts and actually lose 50# in the next twelve months. I’m only a year older and now I qualify for standard plus rates, right? Not quite where I wanted to be, but instead of $1482.50, the rate is $1325.00. Wrong. Life insurance underwriters have caught on to the fact that dramatic weight loss is almost always temporary, so whatever you lose in a years time if it’s over 20#, you get half of it added back on for underwriting purposes. So, I lost 50# and I get 25#, added back on, making me 235#, and I am still in a standard rate class.
So, I beat the odds and maintain my weight at 210# for a year and now I truly qualify for standard plus rates. The problem is I am 57 and the rate is now $1452.50.
But the real issue with postponing life insurance for rate gratification is that during that two years you didn’t do anything to lock in your insurability. So, let’s say that during that period one of the obesity buddies shows up. Let’s take diabetes. Your rate would be at least 50% higher than the $1452.50. What about cancer? That would likely render you not insurable at all until after treatment and a waiting period.
Bottom line. Buy your life insurance now, even if you only buy 10 year term insurance. At least it locks in your insurability. Then work on your weight or your cholesterol or whatever is keeping you away from your dream date with your dream rate.
At younger ages when the rates increase less each year due to age, a guy in your situation above might be better off in your rate comparison by waiting until he could lose some weight and qualify for the better class.
The risk of waiting and getting diabetes or outright dieing would be pretty scary.
I usually just advise people to get the best that they can qualify for now and if they qualify for a better rate later then so be it. Trying to hold out applying because you want to apply in a year or two with a clean slate is just asking for it if you ask me.
Michael,
While being younger changes the numbers, I think you will agree that prudent advice would be to put something in force and reapply after the weight loss. Being uninsured is simply not being responsible.