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.