So your decision is to wait until later in life to buy personal insurance – why buy now if you are more likely to use later? Right now you’re young and healthy and cover doesn’t feel particularly urgent right?
Yes, you can choose to wait but the key to your decision is ensuring you are aware that insurance options available today aren’t necessarily the options you will have later. Age, health, medical history, and the type of cover you could be applying for all influence the price and terms set by the insurer. Age is a major factor insurers base personal insurance pricing around. With some premium structures, premiums are re-calculated as you get older. The current age forms part of the assessment. Someone over 65 represents a different risk to someone aged 35.
Your health history changes
This is the bigger consideration when applying for Insurance later in life. Depending on the cover, insurers include your health, medical and family medical history, amongst other risks. Your health at 40 could have been significantly different than in your 60s. A condition, injury or health issue that develops before you apply becomes part of the information considered during underwriting. Depending on the condition, insurer and product, an insurer may still offer standard cover. Alternatively, they may offer cover with a higher premium, an exclusion or other special terms.
Different insurance products and benefits can have minimum and maximum entry ages, expiry ages, or age restrictions around particular features. In some circumstances, an application or particular type of cover may have a higher possibility of being deferred or declined.
When timing becomes important
If you already have personal insurance in place and subsequently develop a health condition, your existing policy doesn’t simply get medically underwritten again each time your health changes. Whether a future claim is covered will depend on the terms, definitions and exclusions of the policy.
Applying for new cover is different. Your health information at the time of that new application may need to be assessed. This is also why cancelling an existing policy with the intention of simply buying another one later deserves careful thought. If your health changes in between, replacing that cover may not be as straightforward as it once was. The Financial Markets Authority specifically cautions New Zealand consumers about changing or replacing personal insurance where existing health conditions could be treated differently under a new policy.
The right age to get insurance?
Age alone does not determine whether you need insurance – your circumstances do. Instead, consider what is happening in your life. Have you brought a new home? Had children? Are you building a business? Would being unable to work create financial pressure? Would a serious illness substantially change your financial position? These are more useful triggers for considering Personal Insurance than reaching a particular age.
And if you decide Insurance isn’t a priority for you right now, that’s your choice. Just make that decision knowing that waiting can change the price, terms and options available later.
This article is intended as general information only and should not be considered personalised financial advice. Insurance recommendations should always be based on your individual circumstances, financial objectives, existing cover and the terms and conditions of each policy. Lifestyle Cover can help you understand your options and tailor a protection strategy that’s appropriate for your needs.