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I’m only 28 years old and I never get sick. Why would I buy insurance now?

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In the years I’ve been working as an insurance advisor, I have helped clients work through hundreds of questions about their insurance needs. But one of the most common questions I get is “I’m only 28 years old and I never get sick. Why would I buy insurance now?”

Actually, this is the best time to get insurance. The younger you are and the healthier you are, the less expensive your insurance will be. In fact, the premiums you pay on a policy you obtain in your 20’s and 30’s (assuming you are healthy) can be less than $40 per month. As well, with many plans, you can secure your low rate for years to come by purchasing insurance and locking in the rate.

As we get older, our health risk factors increase, so insurance companies do charge higher premiums to account for this risk. If you wait until you are over 40 or 50 to purchase life or disability insurance, the premiums are going to be significantly higher than if you purchased in your 20’s or 30’s. Additionally, the odds of finding yourself with a pre-existing condition as you age are higher, also resulting in higher premiums or perhaps even exclusions to your policy.

Insurance policies make good financial sense when you are young. As we all know, accidents or illnesses can occur at anytime, and it is critical to ensure that you and your loved ones are protected. Even if you don’t have a family, should you suddenly pass away, your life insurance could be used to cover the estate expenses, funeral costs and more. Similarly, if you find yourself unable to work due to an illness, disability insurance can protect you until you transition back to work.

There are a multitude of reasons to purchase insurance – protecting your family, protecting yourself from a possible loss of income, a tax-sheltering strategy or even as an investment. Whatever the reason, the best time to buy insurance is when you are young and healthy.

This is a pretty common question I get from clients.  Many assume it is like the long term or short term disability plans they may be offered through their employer.

In fact, critical illness insurance is quite different, although the critical illness plans work well with long term disability benefits.  Most commonly, critical illness insurance provides you with a lump sum benefit benefit to help support you financially if you are diagnosed with and survive a covered critical illness. You can use it to augment your health insurance plan and any group disability coverage you may have.

The lump sum can be used in a number of ways:

  • Selecting different treatment options:In Canada, you can access  medications and treatment that may not covered by provincial health plans. Outside Canada, you can pay for medical care that may not be available at home, in addition to your family’s travel and lodging expenses.
  • Managing your financial situation: Pay down your mortgage, reduce your debt or pay off a credit card. or reduce your mortgage, credit cards or other debts. Help keep your business running.
  • Improving your mobility.   You may need to hire help to assist you with your recovery, or modify your stairs or car to get around easier.
  •  Flexible spending: use the benefit in a number of ways that can help you get better – counseling, time with your family, a spouse’s leave of absence from work.

While no one wants to think about getting cancer or having a heart attack or stroke, the reality is that most Canadians either will experience or will know someone in their family who will undergo this type of health situation.  While we need to do our best to live healthy lives, we also need to plan for these types of situations to minimize the potential financial risk that we and our families could experience.  Many of the expenses associated with critical illness  (like modifications to your home, private nursing, child-care) may not be covered under our existing provincial health plans, so additional funds to reduce that financial stress are critical.

When you are looking at critical illness plans, it’s also important to explore the other options that the provider offers.  Plans can include access to leading-edge doctors, daily living assistance benefits and counseling services.

There are a variety of options and ways of structuring your critical illness insurance plans and a good advisor will be happy to explore the type of plan that best meets your needs.

It is totally fair to compare market rates and life insurance policies to ensure you are not only getting the best rate, but also the best coverage. However, it is crucial to not cancel your life insurance plan until you have another plan fully lined up and paid for.  The last thing you want is to somehow get denied on your new plan and be without insurance, even if it is only for a short period of time.

The information above is intended as a summary only. Your policy will contain complete details on terms and conditions, including benefits and exclusions.