When should you buy your first insurance plan? Is 18 the right age to buy a life policy? After all, the risks of developing a dreaded disease at the age is minuscule. Besides, the magnitude of loss of potential earnings is debatable. Why not wait until you have a family or dependents to protect? That’s not too late to buy a life plan, is it?
The right age to start buying insurance is a hotly debated topic, with proponents generally falling into either one of two camps. Some feel an age-based approach to insurance would be best, that you should only buy a life plan only upon reaching a certain age. Others instead recommend that you wait until you reach certain milestones in life, such as marriage or the birth of your child, before getting a policy.
The confusion is understandable, given that insurance is designed to cater to many different life circumstances. Correspondingly, there are pros and cons to each of these two camps of thought. To help you make the best choice, we examine the merits of each of the two methods above, while providing a recommendation which will allow you to capture as many advantages as possible.
The Age-based Approach
Those who believe in the age-based approach would earmark a date to get their first insurance plan. A common ‘right age’ would be 30, which is when premiums generally remain low for most of us.
Some others wait until they inherit a sum of money, such as the proceeds of a mature endowment plan, which they then use to purchase a life insurance policy.
The main advantage of the age-based approach is that it gets you started on the insurance protection you need. The idea is that no matter what, once you reach your desired age, you will commit and get the necessary insurance policies.
This saves you from the risk of delaying your insurance protection until it is too late – i.e., the onset of a health condition or disease that would drive your premiums up, or worse, make you uninsurable.
However, buying insurance just because you reach a certain age doesn’t allow you to plan for future events. For example, let’s say you decide to buy insurance only at 30 years old, but get married 3 years later. Your initial coverage did not account for your spouse, which means you now have to get another plan to top-up the difference.
As policies are executed singly, you’ll likely be paying for additional service fees and charges, wasting money that could otherwise be used for higher coverage.
Not only that, depending on the insurer or plan you choose, you may have to undergo more medical check-ups in order to qualify for the additional coverage.
The Event-based Approach
For the second method, the idea is to buy insurance only upon reaching a certain life event, such as marriage, or the birth of a child. The advantage of this method is clear – it allows you to plan for the insurance coverage you need, including the needs of your spouse and/or child.
However, there is a danger in following this method too closely – what if by the time you get married, you discover you already have diseases such as high blood pressure or you are pre-diabetic? This would render you uninsurable, preventing you from getting the protection you need.
At the very least, the disclosure of these conditions will drive your insurance premiums higher than the average for your cohort.
Then, there is also the temptation to keep pushing back the purchase of your policy, which increases the period during which you stay uninsured against a tragedy or accident.
For Maximum Advantage, Buy Life Insurance as soon as You Can
Waiting till you hit a certain age, or until an expected life event, to purchase your first insurance plan may seem like a logical plan. Yet, it is not watertight.
Singapore Life believes there is no right age. Instead, good insurance is insurance that is available when needed. As such, we recommend purchasing your first insurance plan as soon as you can, because doing so provides several advantages.
For one, locking in your life insurance early ensures protection against critical illness that may strike later on in life.
This means that if you do experience the onset of a serious health condition, such as heart disease or cancer, you will receive the finances you need to treat the disease. And with the monetary toll taken care of, you and your family will be better able to focus on your recovery.
For another, because your individual risk is low while young, your premiums will also be much lower.
Lower premiums don’t just make insurance more affordable, it also means that during the initial years, you’re enjoying full coverage at lower prices, getting more bang for your buck.
And perhaps the most compelling reason to start your life plan as soon as you’re able: Doing so eliminates the risk of facing a serious disease, accident or other catastrophic incidents without the necessary resources to deal with it.
There’s a third reason to start your life insurance as soon as you can.
Remember that buying insurance according to age may not be advantageous, because increasing your coverage may mean more medical check-ups and added service fees for an extra policy?
Well, with some insurers, your policies come with a Guaranteed Insurability Option, which makes increasing your coverage a hassle-free experience.
When you exercise the option, you can raise your coverage up to a certain amount determined by your insurer (Singapore Life lets you increase your coverage by 25% of the sum assured, or $250,000, whichever is lower) within 6 months of marriage, the birth of a child, or when you take on a more expensive property.
And the best part? You can do so without going for further health checks nor paying extra service fees.
Don’t make the mistake of waiting to buy your life policy, obsessing over the right time or age.
Instead, arm yourself with an appropriate life policy so you can confidently plan and lead the life you want, with the assurance that should the untoward happen, you will have the resources you need to continue along your desired course.
And the sooner you do this, the better.
This native editorial is published by Singapore Life and can be viewed at singlife.com/blog
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