When is the best time to Buy Life Insurance?

The most glib answer is to buy it right before you die. The next-glib answer is to buy it right before you become uninsurable.

When deciding when to buy, some truisms should be borne in mind:

The older you are when you buy, the more it costs.

You have to be very healthy to get the best deal.

The worse your health, the more expensive the policy.

Once you have it, it cannot be taken away from you.

Medical conditions are scrutinized today more than in the recent past.

Some people with certain health conditions, occupations and hobbies cannot get life insurance.
Some other factors also influence cost.

For example, over the past few years most insurers have changed to a new mortality table in setting their premium rates. Since people are living longer than when the older mortality tables were published, the insurers can now expect to collect premiums for a greater number of years and hold onto the lump-sum death benefit longer before they pay it out to the beneficiary. So, the new table reflects greater longevity, which leads to lower premiums.

Is this a good time to buy term insurance? Term insurance costs have actually dropped by as much as half for a given age since the mid-'90s. In this decade alone, they have gone down about 4 percent per year.

For 2008, pundits are predicting that term rates will drop by only about 1 percent. Those same pundits expect the cost of permanent insurance - that is, whole life and universal life - to stay the same in 2008.

Some consumers believe that life insurance rates become very high if one waits until age 40 or later to buy. In reality, cost, which generally stays level after the policy is purchased, is incrementally higher for each year that one waits to purchase. And the older one is, the greater the increment from one age to the next. But there is no quantum leap.

The most important thing to keep in mind is that you need to get the appropriate insurance policy while you are still insurable. Once you cross that line of uninsurability, all the money in the world will not buy coverage for you.

J. Brendan Ryan is a Walnut Hills insurance agent. E-mail him at jbryanclu@aol.com