I just took out over $1 million of life insurance. You are probably thinking that seems like a lot of insurance cover to take out at my age, right? I took out insurance for the reason of future insurability.
Currently, I am 26 years of age, single, with no debt and no dependents. If I were to pass away tomorrow, there would just be the cost of my funeral which would need to be covered (undoubtedly by my parents). But what if I were to become permanently disabled or confined to a wheelchair for the rest of my life?
With no debts to repay and no dependents to care for, there would be the cost of someone to care for me. Being single, you would expect this responsibility to fall to my parents. My parents have worked hard all of their lives and are now looking towards planning their retirement. I don’t know about you, but the last thing I want is for my parents to be spending their hard-earned retirement savings looking after me.
So, I have taken out enough disablement insurance to provide me with an income for the rest of my life (that is, for another 59 years if I live to age 85). This cover will allow me to seek out any care I might need without having to rely on family or friends. I’m even insured for Cancer, Diabetes, Alzheimer’s and the list goes on. As a 26-year-old, why am I making sure that I have sufficient insurance?
I don’t have a mortgage yet but one day I will. I don’t have children yet but one day I might. I don’t need insurance cover now, but when I do it may be too late. If I develop a condition tomorrow deeming me uninsurable to an insurance company, I will already have the cover in place to ensure I am covered in the event any of these future events occur.
Lower insurance premiums:
You can choose an insurance premium which will stay the same for the rest of your life (increasing with CPI) or one that starts off cheaper but increases as you age. Choosing a premium level now means that my premiums will remain the same for the rest of my life. It will also save me money over the longer term when premiums become cheaper than they would have been had I chosen for them to increase with my age.
I’m fit and healthy:
There are so many accidents and illnesses in the world it feels like it’s only a matter of time before I may suffer some form of illness. Taking out the insurance cover I will need while I have no medical problems means that my body is fully covered. If I didn’t take out this cover until I was 30 and developed a sore back or diabetes in the meantime, any new insurance amounts I applied for would most likely not cover my back or my premiums would be increased to allow for this increased risk.
I don’t need to apply for insurance again:
I am now fully covered. That includes all of my body and any future events which I may need additional insurance cover for. As my insured amount increases with CPI each year, this will ensure my benefit amount increases over time and isn’t diminished by inflation. Of course, this is within reason. A more comprehensive policy may come out or I may require a lot more cover due to unforeseen circumstances and choose to apply for more cover.
No matter what age you are, if you are working you should consider getting your insurances in place now to protect yourself and your income for the rest of your life. Don’t leave it until you need it, by then it may be too late. Do it now for peace of mind.
At Blueprint Wealth, we offer financial advice that is right for you, no matter what stage of life you are at. Contact us to set up a plan that is right for you.
*Ebony Van Hamburg is an Authorised representative and credit representative of Blueprint Planning Pty Limited (ABN 78 097 264 554), trading as Blueprint Wealth; Authorised Representative and Credit Representative of AMP Financial Planning Pty Limited, Australian Financial Services Licensee and Australian Credit Licensee.