Best_age_to_get_life_insurance
00:00:00.000 | Hello, everybody. It's Sam from Financial Samurai. I hope everybody had a wonderful Thanksgiving.
00:00:05.760 | I know I did. I finally got my parents to come visit us after three years of being away
00:00:12.560 | thanks to COVID. Three years, that's just way too long. And it's kind of sad, really.
00:00:18.840 | This is the biggest downer of the pandemic, keeping families apart. And so three years
00:00:23.760 | is the entire life of my daughter. So better late than never. But at their age, it's even
00:00:29.840 | more important to spend time with them. So I hope all of you guys get to spend time with
00:00:34.400 | your loved ones as well this holiday season. Another thing I hope for is health, good health.
00:00:41.040 | This winter has been pretty tough, especially for parents with little children. We're going
00:00:45.900 | through this tridemic of flu, RSV and COVID-19. My poor little guys, sniffling, coughing for
00:00:54.720 | two and a half months, and then my wife got sick, and then I got sick. So when I was sick,
00:00:59.960 | I just focused on writing, writing as much as I could. Because I couldn't speak, I couldn't
00:01:06.000 | record, I was just coughing. And you know, you can even hear me now I have someone of
00:01:10.360 | a hoarse throat. But things are better now. And I'm going to take full advantage and start
00:01:16.360 | recording again. So this is kind of an example of trying to make lemonade out of lemons.
00:01:23.240 | You know, when we're physically down and out, I think we can use our minds. And when our
00:01:28.720 | minds are down and out, I think we should go out there and play and be physical and
00:01:33.960 | utilize our bodies because there is this mental to physical connection I think we all have,
00:01:40.080 | which is important to nurture, nurture them both for better health, mental and physical
00:01:44.640 | health. Speaking of mental health, if you have been feeling more anxious since the pandemic
00:01:50.160 | began, that's totally understandable. I think all of us have had some uptick in anxiety
00:01:55.920 | because of the fear of the unknown uncertainty, and even death, unfortunately. So I stumbled
00:02:03.000 | across this article on CNBC that highlighted how much life insurance demand increased since
00:02:11.200 | 2020. And so finally, I was able to quantify how much more anxiety we are actually feeling.
00:02:19.640 | Because reconciling the two in terms of feeling and data is a good way to understand whether
00:02:25.600 | what we are feeling is logical or not, whether we are normal or a little bit crazy for the
00:02:31.640 | way we're thinking and feeling. So this data, if you click over to the post, shows that
00:02:38.080 | life insurance application activity was up 3.4% in 2021, after a record breaking 3.9%
00:02:45.320 | in 2020, according to the MIB Life Index's 2021 annual report. Now 3.4% and 3.9% doesn't
00:02:53.800 | sound huge, you know, especially with, you know, stocks going up and down 10 plus percent.
00:02:59.520 | But these numbers are huge for the life insurance industry, which is relatively stable. And I
00:03:05.280 | suspect once the 2022 data comes out, demand for life insurance will also be up again.
00:03:11.000 | But what's more interesting, what's more interesting is the 15.4% and 11% increase
00:03:18.400 | in what life insurance paid out in the form of death benefits for 2020 and 2021. And this
00:03:24.400 | is according to the data from American Council of Life Insurance. This double digit yearly
00:03:29.360 | increase in death benefit payouts is massive. Just think if you were running a business
00:03:35.280 | where your costs were up 11 to 15.4% year over year, but your revenue in terms of life
00:03:42.000 | insurance premiums collected was only up between 3.4 to 3.9% during the same period. You hope
00:03:49.680 | your expenses will normalize as mortality rates revert back to the mean. In other words,
00:03:54.920 | people go back to living longer based on trend. However, you're not exactly sure when or if
00:04:00.360 | this will ever occur. At the same time, you also fear the long term repercussions of COVID,
00:04:06.280 | which could lead to higher mortality rates, i.e. earlier deaths and fewer premiums paid.
00:04:12.920 | So what are you going to do? Well, if you are a life insurance company, you are going
00:04:17.880 | to raise premiums to make up for lower profitability, especially publicly traded life insurance
00:04:22.960 | companies, which have to answer to its shareholders. And one way to justify raising premiums is
00:04:29.520 | by implementing COVID related questions in the future. So you can imagine, you know,
00:04:34.280 | it's probably going to take five, 10 years to see what are the repercussions of COVID
00:04:41.180 | for mortality rates, your life expectancy, right? We don't know the exact implications
00:04:45.960 | of COVID because there's long COVID and who knows how that will affect us. And there's
00:04:52.260 | also the repercussions of the vaccines. We think they're safe, but nobody really, really
00:04:57.560 | knows until maybe 10, 15, 20 years later. So you can see a situation where next time
00:05:04.560 | you want to get life insurance, let's say in five years or 10 years, there'll be a questionnaire
00:05:09.240 | that says, have you ever got COVID? And you say yes. And in the algorithm or their calculations
00:05:15.920 | or underwriting, they might bump up your premiums by 3% from the baseline. And if you say, oh,
00:05:22.320 | you got the Moderna vaccine, they might bump it up by another 1 to 2%. And if you say,
00:05:28.480 | well, you have long COVID, well, maybe your premiums go up by 20%. And then there might
00:05:33.600 | be a question on how many times did you get COVID? And the more times you get COVID, the
00:05:38.640 | higher your premiums go. So if I were a betting man, which I absolutely am, and I'm also a
00:05:44.240 | logical thinker, I expect life insurance carriers to raise premiums to account for higher COVID
00:05:49.600 | risk. It's probably not going to happen now or next year, but it's certainly I think going
00:05:55.920 | to happen in three to five years time, because why not? They can use COVID as a green light
00:06:02.200 | to charge higher premiums, thereby increasing their profitability, or at the very least,
00:06:07.840 | losing less. It's totally rational. After I published my post on life insurance demand,
00:06:13.240 | I actually found an amazing chart from the CDC that highlights life expectancy at birth
00:06:19.160 | by sex in America. And I put that chart and the data in the post. And if you look at the
00:06:24.600 | chart, this is the first time in 21 years, at least that life expectancy has declined.
00:06:30.840 | And not only has life expectancy declined in America, which is pretty low already versus
00:06:36.840 | how much we spend on health care, and versus other developed nations, the life expectancy
00:06:43.680 | has declined a lot. You would expect maybe a you know, 0.1 to 0.3 year decline in life
00:06:50.000 | expectancy per sex, but not a two to three year decline in life expectancy. The decline
00:06:57.160 | is pretty shocking. Now, hopefully, the life expectancy line will revert back to trend
00:07:03.280 | in several years, but you just don't really know. Therefore, it's best to lock in an affordable
00:07:09.080 | term life insurance policy before premiums go higher. And to recap, the best age best
00:07:16.280 | age range to get life insurance is about 30 to 35. And the pest term duration is about
00:07:23.120 | 30 years. Because at 30 to 35, your premiums aren't very expensive. But after 3035, your
00:07:31.480 | life gets a lot more complicated, especially if you want to get married and have children
00:07:37.400 | buy a home with a mortgage and take care of your elderly parents. Life gets much more
00:07:42.640 | complicated. And also, you will notice many more people have health issues. And unfortunately,
00:07:49.960 | many more people pass away once you're in your 40s and 50s. It's very apparent to me
00:07:54.800 | folks at the age of 45. Right now, I have some little annoying health issues, you know,
00:08:01.160 | with my ear, my hip pops, my shoulder hurts, it's probably because I play too much tennis.
00:08:07.240 | But you know, I had a shortness of breath issue during the pandemic. And I probably
00:08:10.880 | attribute that to increased anxiety and also a relapse of my asthma, which I had as a child.
00:08:17.480 | And so these things as they collect on your record, when you go see doctors for your health
00:08:22.320 | issues, will be on your health record. And then the life insurance companies will find
00:08:26.860 | out what you got, because they have a legal right to and then they will charge you accordingly.
00:08:32.600 | Straight up, one of my biggest financial mistakes was only getting a 10 year term policy in
00:08:38.000 | 2013. That was four years before our son was born. And at the time, I was like, okay, a
00:08:45.160 | year out of my early retirement job, I should probably get life insurance because I have
00:08:49.200 | this big mortgage. So I was being responsible for getting a life insurance policy equal
00:08:53.880 | to the amount of my big mortgage. Because if I were to pass away, my wife at the time
00:08:58.720 | would have a very difficult time paying that mortgage based on her existing income. But
00:09:04.080 | I failed, I failed to forecast the future that we would have two kids, and we'd have
00:09:09.600 | a much more complicated net worth. I also failed to realize that going to a sleep center,
00:09:15.080 | there's a brand new fancy sleep center in downtown San Francisco, was also going to
00:09:19.680 | result in me getting charged a lot more for my life insurance policy upon renewal. So
00:09:26.960 | when I was 40, when I turned 40, my premium went from $40 to $450 a month. I mean, that's
00:09:33.560 | ridiculous, right at 40 years old. And that's with USA where I've been a member for 20 years,
00:09:39.040 | and I have multiple insurance policies. And during expiration on January 2023, my premiums
00:09:46.400 | are going to renew to $750 a month from $40 a month. So that is outrageous. And that's
00:09:52.800 | something that obviously I'm not going to pay. So thankfully, thankfully, I spent time
00:09:58.440 | December 2021 shopping around online with Policy Genius and I found an affordable policy
00:10:05.840 | with no medical exam through SPLI for $110 a month. And it's a $750,000 term coverage.
00:10:14.400 | It's not the million dollars that I had, but more than 250,000 wealthier than I was 10
00:10:20.440 | years ago. But it gives me so much peace of mind. It's not just you know, paying an affordable
00:10:26.520 | amount of $110 versus $750 at the age of 45. It's just getting this policy renewed for
00:10:33.000 | another 20 years until my kids are 25 and 23 years old. That's pretty hopefully a mature
00:10:40.920 | enough age for them to understand what's right and wrong and have good personal finance fundamentals
00:10:45.960 | so they can be independent folks. So what I realized today, especially after seeing
00:10:52.000 | the life insurance payouts up 11 to 15 and a half percent in 2020 and 2021 is that me
00:10:59.920 | getting life insurance, you getting life insurance is not just about getting that death benefit
00:11:06.200 | to help help your survivors live life once you're gone. But it's also providing you a
00:11:13.480 | peace of mind that really is quite valuable. As soon as I got my new 20 year term policy,
00:11:19.760 | I felt a tremendous sense of relief. I mean, I would spend way more than $110 to feel the
00:11:27.200 | relief that I experienced now and the much less anxiety that I experienced now. I mean,
00:11:32.520 | to quantify, maybe I'd be willing to spend $1,000 a month for this type of relief. I
00:11:39.280 | know some people spend $1,000 a month seeing a therapist for their problems. So it's just
00:11:44.720 | a realization that as a parent, you know, as a middle aged parent, you've got your kids
00:11:49.600 | to take care of, you've got your parents to take care of and think about. It's about anxiety
00:11:55.120 | minimization and stress management. And that's what life insurance has provided me and my
00:11:59.520 | wife. I hope everybody stays healthy and safe this holiday season. If you haven't gotten
00:12:05.680 | life insurance, I highly recommend you get an affordable policy. I do think premiums
00:12:10.400 | are going to go up thanks to COVID. Also, if you want to cancel at any point in the
00:12:15.920 | future, you can. This is something I failed to realize at the age of 35. I was thinking
00:12:21.240 | to myself, okay, if I sign up for a 10 year policy, that means I have to pay for 10 years
00:12:26.240 | the premiums to get my insurance. Well, that's not true. It's a term policy you can cancel
00:12:30.880 | whenever you want or need to. Alrighty, folks. In conclusion, if you want to shop around
00:12:35.680 | for affordable life insurance, check out Policy Genius at financialsamurai.com/pg. You can
00:12:43.240 | get free real quotes based on your situation. I'll talk to you folks later. It's time to
00:12:48.760 | rest my voice.