The Cost of Delaying Protection

It can be tempting to delay taking out life insurance or other protection cover, particularly if you are young and healthy and do not feel an immediate need for cover.

Some people assume that putting off taking out a policy means saving money because they will pay premiums for fewer years. However, prolonging the decision could actually make life insurance more expensive and reduce the options available to you in the future.

The cost of delaying

Every life insurance policy is different, depending on the policyholder’s specific circumstances. Your premiums will be calculated based on how much cover you need, your age and general health. As you get older, premiums tend to become more expensive to reflect the increased risk of mortality.

You might think that waiting six months won’t make much of a difference to the cost of your policy, but what if you had a health complication within that time? Even a minor change to your health can cause insurers to increase premiums, impose exclusions or reduce the level of cover. Getting a policy sooner rather than later can help secure lower premiums and provide long-term certainty for both you and your family.

Consider your wider financial plan

Life insurance can play an important role within a financial plan, particularly when it comes to preserving wealth for future generations. From April 2027, unused pension funds will be treated as part of a person’s estate, prompting many people to review their existing arrangements. Because of this, some families are writing life insurance in trust to ensure that beneficiaries are not taxed on the money they receive from their insurance policy. If your family will rely on a life insurance payout to support them after your death, it is particularly important to review your cover now.

Thinking of leaving the UK?

Life insurance is also worth considering if there is a chance that you may live abroad in the future. Whether you are planning to retire overseas or relocate for work, your residency status can affect your cover. Some policies only insure permanent UK residents, while others may be happy to keep existing cover in place. Taking out a policy well in advance of moving can increase your chances of being eligible for UK protection. It’s therefore advisable to get cover as soon as possible and familiarise yourself with the policy terms.

Contact us

While delaying a decision about life insurance may seem harmless, it can significantly impact the cost and level of cover you receive. We can help you understand how protection fits into your financial plan. Get in touch for advice.

As with all insurance policies, conditions and exclusions will apply

Source: https://www.ftadviser.com/content/47c79204-94cc-4a88-b7a3-de16d85d7846