You are 22 years old. College is wrapped up and you are now employed. You live on your own, or perhaps with a few friends, working during the week so you can enjoy time off on the weekends. You are single, with few commitments.
So here’s a question….Do you want life insurance?
“No” is what you will most likely say, and I do not blame you. Now that you are in the working world, you have expenses, and many more than you realized (rent, utilities, cell phone, possibly a car, etc). Why add another expense at this time when you already feel overwhelmed? Also, you are not married. You have no kids. No one is depending on you god forbid something were to happen. Even if you believe life insurance is something to eventually address, there’s no need for it now. You are invincible, in great health. This is something you will review when the stage of life is appropriate.
The above arguments are strong ones and do have merit, however what are the opportunity costs of not getting a policy today? Here are some quick points:
The Cheapest Cost is Now — Insurance companies calculate your insurance cost based on your age, so purchasing a policy today versus tomorrow is always at a cheaper amount. In the sample of you being a 22 year old, the cost of policy ownership is much lower since you are statistically further away from death, then compared to when you are 10 years older.
Future Health Risk — Odds are, you will still be pretty healthy when you are 25, 28 and even in your 30’s. However, we have no idea where our health will take us as we continue to age. You have a good chance of strong approval ratings with insurance carriers for a while, but it’s also possible health factors get in the way. For example, if there are changes in your cholesterol and blood pressure readings, that can be a factor towards an increase in cost. Let’s say your job continues to increase your stress levels, and you are being monitored by a physician for anxiety or depression — that too can make insurance more expensive. Even something like gaining a few pounds over the years could be evaluated by the insurance carrier as additional risk, resulting in more cost to you.
Death — The odds of passing away in the next few years or even decades are very low, in fact extremely low. However, it does happen. We’ve all heard stories about the one friend who was in a deadly car crash, or a young family member who developed terminal cancer. This is by no means a scare tactic— it’s simply a possibility that if a policy is not taken, you may never get the opportunity to put one in place if that did occur.
In addition to the above points made, I listed below a few “did you know” points to consider.
DID YOU KNOW that drinking alcohol in excess or smoking marijuana, can automatically result in higher life insurance cost? Even vaping socially can have a life insurance carrier red flag your application, resulting in premiums that could be 3–4x higher than what you would pay if you did not have those habits. One other note to mention as this topic recently has popped up more in our findings with people to obtain life insurance. For those who do not smoke, but intake nicotine through patches or gums (which according to studies, is being used as a way to focus more while doing tasks or working), life insurance carriers will still consider you at smoking rates for higher premiums.
DID YOU KNOW that family health history can increase your insurance premiums, even if you have perfect health measures? For example, let’s say one of your parents passed away before the age of 60 due to heart disease, cancer, or some other condition. If you do not have any upfront signs of the condition your parent passed away from, nearly all carriers will still drop your rating slightly, increasing your cost due to risk associated with your family history.
DID YOU KNOW if you partake in activities like skydiving, piloting, scuba diving and others, that the insurance companies can increase your premiums to high levels for the associated risk? Even just training to be a pilot, scuba diving a few times a year, or even mountain climbing, can dramatically increase your insurance premiums — even higher than smoking does.
DID YOU KNOW many insurance carriers now offer young professionals no medical exams with quicker approval times? In many instances, you need a paramedical exam as part of your life insurance application. Pending how much coverage you are considering, and if your health background checks out, it’s now possible to waive the medical exams and obtain life insurance approvals faster. After a certain age, and with potential health conditions, the accelerated underwriting programs for younger people will no longer be accessible.