I have, over the years, made it quite clear that there are distinct advantages to buying life insurance when you are young and healthy.
It’s not that over 50 life insurance suddenly becomes horribly difficult to obtain. for most of us it is just more expensive due to age and really not that bad when you tack on the normal over 50 health issues like cholesterol, blood pressure and maybe a little more than preferred weight.
I have noticed that professionals, physicians, attorneys and CEO’s are more likely to have their life insurance ducks in a row that average 50 or 60 year old, but today was an exception that should give pause for all professionals to consider. I had two prostate cancer life insurance cases present themselves back to back this morning and in both cases there was compelling immediate business life insurance need. One was a doctor that needed life insurance as collateral to secure a $3 million dollar loan and another was the CEO of a company that is being purchased and part of the agreement is that he will continue to run the company for 5 years and carry substantial key man life insurance in favor of the company during that period.
Prostate cancer life insurance is no big trick in an average case where a client has a PSA below 10 on diagnosis, a Gleason grade of 6 or below and a T2 or lower stage. If it’s been a year out from treatment and with a prostatectomy a client has a PSA of 0, a standard plus rate is certainly in the cards. If the client elects for radiation therapy and their PSA has been at .5 or below for a year, again standard plus rates are attainable.
But the two aforementioned professionals didn’t quite fit into that kind of scenario. One is two years out from treatment and has a PSA of 0, but the surgical biopsy showed a mid stage, Gleason grade 9 prostate cancer. The other was just diagnosed with a fairly low stage, Gleason grade 7 cancer and hasn’t even decided what treatment option to pursue yet. The first one is insurable but at standard rates and a $15 flat extra for 5 years. The second won’t be insurable until he completes treatment and his PSA meets the requirements noted above.
To put that $15 flat extra charge in context, the minimum he needs is $2 million worth of life insurance and the flat extra alone will cost $30,000 a year for five years. The other case, once he is insurable will likely have a flat extra of about the same amount for 2 years, but on his $3 million it will be $45,000 a year extra.
In other circumstances you might find these two putting off the purchase of insurance for a while or settling on smaller amounts, but because they both are contractually bound to come up with the life insurance we are doing our best to provide it with the least damage to their bank accounts. For that reason I am shopping the first case to all of my regular companies and to Lloyds of London who will underwrite life insurance in a case like this and exclude coverage for the prostate cancer. In the case of the client that was just diagnosed his only option may be Lloyds.
Bottom line. I’m not necessarily an advocate of buying life insurance you don’t need, but I am all for planning ahead. It would have cost either of these very wealthy guys peanuts to have a $5 million term policy in force when they got into the positions they’re in, pre prostate cancer. If they never used it, the cost would have been less than one year’s premium now that they have to have it.