After years of sharing my content across different platforms, there’s one thing I never tire of hearing. And that is the phrase: I didn’t know THAT about Life Insurance!
So, I thought I’d compile a short list of all the things you don’t know you don’t know about Life Insurance.
Some of these Life Insurance nuggets might help you to make a quicker, better decision today, and others might be pieces of information you stow away in your back pocket for a later day.
Here’s my list:
- Your Underwriting Terms Are Never Set in Stone
The terms you buy your Life Insurance policy can change over time. The amount of Life Insurance coverage, your health reports, and your premiums can all change over time.
For those of you that have been procrastinating until the ‘perfect time’ to get your Life Insurance in place, here’s what you need to know: You do NOT need all the planets to line up to get the best possible deal. Your policy will always get more expensive as time passes.
So, get your best offer TODAY and readdress it in the future annually until you get to the ideal price point and amount of cover.
- What Smokers Past, Current, and Future Need to Know
If you are a smoker today, you buy at smoker rates. If you switch to being a non-smoker (13 consecutive non-smoking months for most insurers), you can reapply for non-smoker rates. Your premiums could be up to 80% cheaper.
If you are a non-smoker when you buy the policy and you’ve done a medical Cotinine test and passed it, you don’t need to tell the Insurer you’ve become a smoker in the future if your policy is already active. They are liable to cover you.
- Life Insurance Isn’t a Two-Party Deal
The policy owner, the payor, the Life-Insured, and the beneficiaries don’t have to be one or two parties. They can be up to four different individuals/entities.
For instance, your company could own a Life Insurance policy that you pay for in part or whole. You are the Life-Insured party, and your family could be the beneficiaries.
- Life Insurance Can Help You Cover Inheritance Tax
Life insurance payments are an acceptable form of covering the risk of Inheritance taxes.
For instance, if you’re leaving behind a hefty property portfolio, you can arrange for your beneficiaries to receive a Life Insurance payout for the amount they would be liable to pay in Inheritance Tax. This preserves their Inheritance and prevents them from having to sell parts of your estate to pay for other parts of it.
- Term Life Insurance is Like Automobile Insurance
Term Life Policies are purpose-driven. If the benefits are the same, and you can secure cheaper premiums from an Insurer of equal or better strength, go ahead and make the switch. This is, of course, if you are still insurable.
If you don’t need your Term Life Insurance policy anymore, cancel it.
- You Can Spread Your Universal Life Premiums Out
Payment terms on Universal Life or Whole Life policies can run until 95 or even 100 years. While a payment structure like that allows for better cash flow, it does result in higher premiums overall.
To give you an idea of what this looks like, you could end up paying up to 1.5-2x higher for the same policy over 100 years instead of over 75 years.
- Your Policies Need to be Audited Regularly
Policies purchased with Critical Illness Cover years ago may have a fewer number of conditions covered than a policy you would buy today.
Insurers do not upgrade clients to the new cover automatically as the new cover is priced differently.
Conducting periodic audits of all your policies will ensure that your coverage is relevant today and you’re paying the best price for the maximum amount of cover today.