I got an email from some clients a few days ago. In spite of their best efforts their small business had fallen off so badly a few years ago that the husband made the decision to let the life insurance they had in force lapse.
I’ve been staying in touch waiting for things to turn around but as the wife said in her email, “I have a hard time not giving up on things getting better any time soon for us in the income department. But I find myself holding my breath until John wakes up some mornings. We know that we are playing Russian roulette without life insurance. As we’ve discussed before, I would be up that proverbial creek without a paddle if he passed before we get some insurance in place. I think the only solution is to cut some things to make room in the budget for life insurance. We’re in the process of making some moves in that direction.”
John (not his real name) is diabetic and both of them let their weight fluctuate up and down. Each time we would talk I would get their current weight and his current A1c and after shopping it, give them the best possible rates. Inevitably, because the quotes weren’t as good as they wished for, they would ask, “how much do I need to lose to get to the next rate class?” or “if I get my A1c back down below 7 what would the rate be then?” The question was never “how much can we put in force within this budget?”
I know I sounded like a broken record, but at our age, late 50’s, you can’t set a future goal of lower weight or lower A1c and hope to get there and get a lower rate. Guys, our rates are going up faster due to age than we can possibly get them down with a change in habits and lifestyle! The truth is you can chase that one until you die…..without life insurance.
My guidance in these situations has never changed. Take what you can get approved for and buy as much life insurance as you can fit comfortably in your budget. Put it in force. Then do all of the things you are asking about anyway. You shouldn’t need the inspiration of a lower life insurance premium to move you to do the right things for your health.
Something is always better than nothing. If I have a client that is approved at a higher rate than we had hoped for, and they don’t have anything in force, I always encourage them to put the approved coverage in force at some level. Even if I know that we can take the business to another company and get a better rate, I know that it will take time. We’re not shopping for cars folks! If you don’t get the deal you want you aren’t guaranteed you can keep driving the old one until a better deal comes along. PEOPLE DIE UNEXPECTEDLY….PREMATURELY…AT VERY INOPPORTUNE TIMES! If you have life insurance in force already and are applying for a replacement, that’s a little different. At least if you pass on an offer you aren’t left without coverage.
Bottom line. I have seen people become uninsurable while working on some issue that they hoped would get them better rates. I have consoled widows whose husbands didn’t buy life insurance because they just wanted to lose 20 more pounds for that next rate class.
By the way, I think it’s important to disclose that when I recommend that a client put a policy in force while we shop for a better rate, it’s not because I make a pay day. Unless that policy stays in force for more than a year, any commission I’ve been paid has to be paid back to the company. My goal is to make sure they are covered until we have a new policy in force.
If you have any questions or would like to have a frank discussion about whether you can get to the next best rate class, email or call me directly. Let’s talk.