OK, here’s the scenario:
Your broker has worked diligently to prequalify you for coverage. He has identified the most competitive and reliable company, product, and price for you. You approve of his work, and have submitted an application. You have met all the underwriting requirements, and have been approved for coverage. Of course, the rate at which you have been approved is the rate that you were quoted. That goes without saying, because that’s the way the life insurance purchase should be handled.
The company is ready to issue the policy. They will send it to your broker, who will deliver it to you for signature and payment. You will then have the protection you need, and move on with your life.
But you wait. Things have come up! Business. Kids. Parents. Big deals. Client demands. All important stuff. But you know what? You really need to buy the policy. Today. Here’s why:
You could lose the offer.
The longer you wait, the greater the possibility something will happen to kill the deal. You might unfortunately get sick. Or hurt. A medical condition previously undetected might act up. Maybe you will take on a new job that requires foreign travel, and therefore a higher premium. The carrier has the right to demand proof of insurability from you until you take the policy. Don’t give them a reason to raise the price, or to deny you altogether.
You could pay a higher price later on.
Let’s suppose nothing happens to change your insurability, but you wait anyway. You postpone the purchase for another six months. Then, when you are finally ready to buy, guess what? The price is higher because you are now older from an insurance underwriting point of view. You are closer to your next birthday. So the price will go up simply due to age. If you are in the older age brackets, such as 60 through 80, that higher rate could be significant.
You could trigger unwanted liabilities and unexpected cash flow problems.
Is the life insurance intended to fund a buy-sell agreement? If so, then no funding will be in place until the policy is in force. If tragically you die before you have coverage, then your business partner may have a bill he or she can’t pay. Is the life insurance intended to preserve your income for your surviving spouse? If so, then without an insurance benefit, he or she may have insufficient income to pay household bills, taxes, and so on. What will she then do – go back to work?
These are some of the unforeseen – and undesirable – consequences of postponing the purchase of your life insurance, just when the stage has been set to get it done. How can you avoid them? Take a breath, call your broker, and tell him to bring you that policy. You’ll be glad you did.