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  • Erin McCloskey, CFP®, EA

Lock In Your Good Health Rating for Life

Updated: Oct 22, 2019


What are things on your To-Do list that you consider important, but not urgent? I think getting a life insurance policy is often on that area of our lists. 


If anyone is depending on your income, if you do not want to leave debts unpaid, if you want to leave money to heirs or to a favorite charity, then getting a life policy on yourself or your spouse will solve those issues. 

I bet it doesn’t surprise you that these policies are more expensive the older or sicker you are when you apply.   


There is good news for you who get life insurance when you are in good health! You can ‘lock in’ that health rating for your entire life now, either by getting a permanent policy or by getting a Term Life policy now, and then near the end of the term, converting it to a permanent policy then. 


Example: 

Gill, age 38, purchases a 20-year term life insurance policy. He is in great health and as a result of his paramedical exam, gets a health rating reflecting this. Because he chose a term policy, the premiums are cheaper than the same coverage, but a permanent policy. 

In his early 50s, Gill is diagnosed with high blood pressure and has a mild heart attack. He tries to be healthy, but does consume more alcohol than he used to and has gained a little extra weight. 

When Gill is 57, almost at the end of his 20 year term, he converts the policy to a permanent policy. He does not have to do a new paramedical exam. Even though he is not in as good of health as he was at age 38, his very good health rating comes over to his permanent policy and as a result, his premium (price) is not as high.   He adds a Long Term Care rider and feels secure that he will have the protections guaranteed by the insurance company. 



*Definitions:

Term life policy: 

Provides life insurance coverage for a fixed payment for a fixed amount of time.  There is no associated ‘cash value’. If not used in the time frame, the policy simply ends. Many companies offer the opportunity to ‘convert’ a term policy to a permanent life policy.


Long Term Care rider:

A policy add-on that takes money out of your death benefit in order to pay for long term care (LTC) — nursing homes, private nurses, etc. It's not uncommon to have this and the accelerated death benefit (ADB) considered one item on policies, but the qualifications for each are different: ADB requires a terminal illness diagnosis before being triggered; the LTC rider are triggered by chronic illnesses that leave you unable to take care of yourself.

LTC coverage can also be purchased as a standalone product from some companies, but can be more expensive and harder to qualify for.


The cost and availability of life insurance depend on factors such as age, health, and the type and amount of insurance purchased. Before implementing a strategy involving life insurance, it would be prudent to make sure that you are insurable by having the policy approved. As with most financial decisions, there are expenses associated with the purchase of life insurance. Policies commonly have mortality and expense charges. In addition, if a policy is surrendered prematurely, there may be surrender charges and income tax implications.

Erin McCloskey, CFP, EA holds financial registrations in the following states: CA, NV.  CA Insurance license #0M04184. NV Insurance license #3348240.

This is not a solicitation for sale of securities in any jurisdiction.


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