5 Reasons Why You Should Start Your Insurance Plan Early

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If you’re someone who just landed your first job after graduation, the chances are you’re enjoying your hard-earned money on things that you love. There’s also a high probability that you’re still adjusting. Still trying to get the hang of it so you spend on yourself for motivation.

There’s nothing wrong with that. It’s absolutely normal and acceptable to treat yourself. With every gratification, comes a new motivation for the next work week! On the other hand, if you’re in your 20s, it’s also quite easy to disregard and overlook your priorities.

It is likely that insurance is not on your priority list yet. Maybe you choose to prioritise your savings, loans, and family more than anything else. But did you know that starting your insurance plan early is better than allocating all your money in mere savings?

To help you understand why now is the best time to start your insurance plan, here are 5 reasons why you should start early.

 

1. At a young age, you have less underwriting which appeals to insurance brokers and companies

Underwriting is the term used in insurance that refers to the process where they determine your risks. In business insurance for example, before you’re fully granted a business insurance plan, insurance brokers need to negotiate with underwriters about your risks and if the plan that you’re applying for suits your underwriting.

The same goes if you wish to apply for life or health insurance. If you’re in your early 20s, healthy, without any medical conditions, it’s easier to be granted a plan that you like. On the other hand, if you’re in your 40s and wish to apply for health insurance, the tendency is that they’ll have to assess your medical condition, financial stand, and beneficiaries before granting you one.

The younger and healthier you are, the more plans are available for you to apply and choose from. 

 

2. You get better, cheaper deals for a good insurance plan coverage

In relation to point number 1, since you have fewer risks at a young age, you have the advantage to invest in a good insurance plan coverage at a lower price. In short, it’s easier to qualify for great coverage for a lower premium. 

The way it works is that the insurance broker or company you plan to apply for calculates and assesses your age and medical condition. If they see that your underwriting is good (with few risks), the insurance company knows that their risk is also low. 

The reason why insurance plans are cheaper when you are in your 20s is that insurance brokers and companies know that you are far likely to use up your investment in the next few years or more. Insurance brokers and companies make sure that every plan that they grant to an insurer is a win-win situation. 

 

Premiums tend to be more expensive as you age

This is why people who try to apply for a plan at the age of 35 and above are more likely to be offered higher premiums. Since health conditions normally start to show at that age, it is also more likely for you to accumulate risks that might need you to use your insurance plan.

With that, if there’s a plan that has great coverage and benefits, it will be harder for you to be granted one. If luckily your underwriting is good enough to support that you’re qualified for great coverage, expect that your premiums will be more expensive than if you start your plan early in your 20s.

 

3. You get to build a good compounding interest rate for your plan

Just like in any other investment type, if you start your insurance plan early, you get to build a good compounding interest and benefits in the future. Compounding interest is the term used for the amount of interest that your investment’s interest earns over a period of time. 

In simpler terms, compounding interest is the act of adding more interest to a current interest. This is a really great advantage especially if you wish to start a life insurance plan early. Specifically, plans that have a great cash value. Other insurance plans such as dividend-paying whole life insurance have an option for you to allocate cash that can be used for additional cash savings. 

When you start early, you give more time for your insurance policy to grow in value. Depending on the type of plan, starting early allows you to take advantage of your insurance and to rely on it when the time comes that you need it most. 

In business, if you plan to start your business insurance plan early, there’s also a high probability that you’re building great compounding benefits to your plan that your business might benefit from when a misfortune happens. 

 

4. You get to early secure yourself and your family from any unforeseen incident

If you’re the breadwinner of your family, insurance brokers and financial advisers recommend getting an insurance plan as early as you can. It would also be a smart move to apply for a plan where you have an option to designate beneficiaries, either revocable or irrevocable. 

Imagine, let’s say you start your insurance plan at the age of 22. Then, 10 years later an accident happens where you are critically diagnosed. If you have health insurance, it can cover your hospitalisation. When the worst-case happens (hopefully it won’t), and you have whole life insurance, your beneficiaries will benefit from it as well as get a guaranteed policy cash value. 

If by then, at the age of 32, you are still single and your declared beneficiaries are still your parents, you’re giving them a future of security. There’s a probability that your parents will be in their senior year by then. But at least, you ensured them a future of financial freedom. Most especially if they are solely relying on you and their pension for a living. 

 

5. You start an investment that provides you with a plan B

If we combine all of the points discussed above, they all direct to one important category: investment. There’s one thing that financial advisers and insurance brokers have in common. They both believe insurance is one of the best instruments where you can invest your money. 

We use the term investment on things where we allocate our money. We expect that our investment will make more profit and earn an interest in the future. With all the points discussed, you’ll see that’s exactly the case with insurance. Aside from an investment, it provides you with a plan B that you can call your safety net.

Aside from death, another inevitable thing in life is our health. As we age, we can only do as much to prevent it from deteriorating. Sometimes, regardless of how much we value and take good care of our health, unexpected conditions occur without any warning.

Aside from death and our health, the inflation rate is one of the permanent things in human life. If we combine all these three inevitable factors, we can see how much insurance plays a vital role in ensuring one’s financial security plan. In case of any health, death, or business misfortune, insurance serves as a great fallback for you to move on and start with your plan B.

 

Your future self will surely thank you if you choose to start now

At the moment, these reasons might not be enough yet to convince you to see the importance of insurance. That’s okay. It’s normal that we value other priorities that matter to us. 

But if you ever envision your future where a misfortune happens and you find yourself left with nothing, maybe you can take that as a sign to consider and start your insurance now. 

Remember, you don’t need to have all types of insurance all in one go. Start with a plan that aligns with your long term plans. One that you know for sure will benefit you the most. 

 

About the author: 

Bianca Banda is a writer for Lewis Insurance, an insurance company located in Australia, offering wide financial services and management for both business and family matters through proven quality service, trusted support, and expert advice. She is a massive lover of Japanese cuisine and enjoys binge-watching comedies or variety shows.

 

Bianca Banda
Bianca Banda
Bianca Banda is an ardent writer, aiming to share helpful information and ideas effectively and engagingly.

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