Buy when young, it is cheaper! True or False

[bakuten]

The thing about insurance is.....it is a moral hazard.

Vicious cycle:
1. Buy insurance so that can afford sudden acute healthcare.

2. Hospitals see u very gd to milk...decides to charge more so that can milk the insurance claim gao gao.

3. The more hospitals/healthcare milks...the higher premiums become....and the cycle goes on.


Just ban health insurance and have less regulations for health services.....u will see how fast cost of healthcare will plummet as well as ingenius methods being created to improve on existing diagonostic and treatment methods in order to save cost and be competitive.

 

[Dyhalt]

Its all just sales talk to make you take up an insurance plan.

Practically, you should take up plans that's ideal for your circumstances. For example if your family has history of severe illness, you should take up policies that covers these illness. If you work in risky environment, you should be more focused on work injury insurance... etc

 

[makav31i]

Its all just sales talk to make you take up an insurance plan.

Practically, you should take up plans that's ideal for your circumstances. For example if your family has history of severe illness, you should take up policies that covers these illness. If you work in risky environment, you should be more focused on work injury insurance... etc

Actually if your family have a history of certain medical illness, most likely that illness would be in the exclusion or you will be paying higher premium compared to someone else without any family history of medical illness...Also if you work in risky environment, your premium would be higher or you will be excluded from making certain claims...This clearly shows that you have never applied for any insurance as this two points would be one of the questionnaire that you fill up when applying for any insurance...

 

[henrylbh]

you're not so correct , when you're young cost of insurance is lower, hence more money is vested. so it does makes a difference. the rest, yes you're right.

If you look at risk and return, it's not younger pays less.

 

[icyboiz]

If you look at risk and return, it's not younger pays less.

please elaborate

 

[Dyhalt]

Actually if your family have a history of certain medical illness, most likely that illness would be in the exclusion or you will be paying higher premium compared to someone else without any family history of medical illness...Also if you work in risky environment, your premium would be higher or you will be excluded from making certain claims...This clearly shows that you have never applied for any insurance as this two points would be one of the questionnaire that you fill up when applying for any insurance...

I never said you WONT be paying higher premium, you should pay for insurance that most likely would benefit you... whether its higher premium or not it depends on your personal situations. Its just like phone data plan, you don't need to sign up the most expensive one, but the one that covers your needs.

I'm not going to make it into a personal attack post I'll stop commenting anything else from here.

 

[henrylbh]

please elaborate

Strip the policy from all returns and you will see why you pay less but not cheaper when younger.

 

[w1rbelw1nd]

And it's probably not good value to buy earlier, either. Young people die at vastly lower rates than older people - from an actuarial point of view a 25-year-old is basically invincible - so if you can get a 25-year-old to buy insurance, that's basically free money for the insurance company. (This is why insurance salesmen make this argument that "buying earlier is cheaper" - it's because insurance companies desperately want young, healthy people in their insurance pools who won't claim on their policies!)

The 25-year-old would pay less for their insurance, but they wouldn't pay so much less that it'd be in-line with their lower risk of death. I'm just pulling numbers out of my rear here, but it might be something like "a 25-year-old pays 50% less than a 35-year-old, but the 25-year-old is 90% less likely to cark it during the policy term".

So while it's strictly true that buying earlier costs less, it's also true that buying earlier generally isn't good value - and if you're buying insurance when you don't actually need insurance, you're just wasting money.

Got to disagree the points you brought up in bold. I don't think it is fair to make such a statement. If the insurance premium for younger people commensurate the significantly lower chance of death, it can be perfectly value for money, right?

I suggest TS to look at his and his family needs in the case of death and disability. Insurance is a necessity insofar that you can afford it, and that there is a real need for it. I rather not try to second guess whether being insurance is "good value". Seriously, if you want good value, just get maximum coverage now and commit suicide 1 year late. Sure very value, sure win.

 

[w1rbelw1nd]

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if you ask me, buying young(referring to as baby) getting a whole life plan will be better - why? - like what alot of them have say: chances of something happening to you is actually low. but the questions is that there is always a WHAT IF? so atleast that plan will help cover abit IF anything really happens. why whole life and not term? because as everyone says the chance is low, so even if nothing happens you get a breakeven point after 20 +-(usually) years. so no issue. when young whole life plan can be as cheap as 40/mth or even lower.

Can we have the details of your whole life plan? Taking 20+ years to breakeven is really poor IMO. I have shown previously using other policies that buying term since young, and investing the delta that would have gone to whole life would give better returns. Happy to show you the numbers again with your inputs.

 

[esfar.gt]

Hello everyone,

Speaking as a young chap, I've got a question that I haven't got a good answer lately. When people say "buy insurance when you're young, its cheaper!". How true is this?

From my research, I see that some Term Insurance Premium (E.g. MHA Aviva Group Term Insurance) does not rise along with age. So if I buy 2 years later, I still pay the same per month. On the other hand, I note that there are other policies like CI revise the premium payable if you move up a bracket. However, even when there is such a revisable premium, I won't be worse off as well if I buy later right?

Therefore, to my mind it sounds like the saying that it is cheaper to buy when you're young is fallacious to the extent you don't get a cheaper premium. It only make sense insofar that if you buy too late, you might not be covered for some illness which would be classified as pre-existing.

Put in another way, can I say that:
IF I buy at 26 years old rather than 25 years old and nothing happens to me for that one year, I actually SAVED that one year worth of premiums?

This might be because now young age people are more prone to get a disease in relation to people born in 60s 70s. There are alot of factors involve, environmental pollution etc. and then we hear stats sharing more young people are having diabetic problems, heart diseases and different sort of cancers which are diagnosed when you're young. We tend to be more careless, aren't we ? So it is cheaper to get covered now. However, there could be many other reasons for the concerned statement.

 

[thekang]

Got to disagree the points you brought up in bold. I don't think it is fair to make such a statement. If the insurance premium for younger people commensurate the significantly lower chance of death, it can be perfectly value for money, right?

I suggest TS to look at his and his family needs in the case of death and disability. Insurance is a necessity insofar that you can afford it, and that there is a real need for it. I rather not try to second guess whether being insurance is "good value". Seriously, if you want good value, just get maximum coverage now and commit suicide 1 year late. Sure very value, sure win.

Fully agree with this.

If you strip insurance to its bare-bones product without any investment component, it will never be "good value", since the insurance company has to be able to cover expenses and earn a profit before they offer the product. But the value of insurance is in the utility you gain from protecting your dependents from a catastrophic event, which is likely greater than the premium you pay.

A rough numerical example: people are willing to pay >1k premium annually for 1 million coverage, compared to having a 0.1% chance of dying and losing 1 million (your estimated lifetime income).

 

[Mecisteus]

A rough numerical example: people are willing to pay >1k premium annually for 1 million coverage, compared to having a 0.1% chance of dying and losing 1 million (your estimated lifetime income).

It really depends on case to case basis and their situations.

1) If you are a high income earner, this person is more likely to opt for such coverage.

2) If you belong to the low income group, this person is more likely to reduce coverage to the bare minimal.

3) If the insured is a new born baby, the parents are high income earners and kiasu type, then go ahead and insure the baby early.

 

[thekang]

It really depends on case to case basis and their situations.

1) If you are a high income earner, this person is more likely to opt for such coverage.

2) If you belong to the low income group, this person is more likely to reduce coverage to the bare minimal.

3) If the insured is a new born baby, the parents are high income earners and kiasu type, then go ahead and insure the baby early.

You can adjust the numbers proportionately. The point remains the same.

Also, you are looking at it from the affordability perspective. From the risk management perspective, you have the order backwards.

A rich person doesn't need insurance coverage. Their assets are more than enough for their dependents to live on. Conversely, it is the low-income earner who scrapes by month-to-month that gains the most value from getting insurance coverage.

 

[Mecisteus]

You can adjust the numbers proportionately. The point remains the same.

Also, you are looking at it from the affordability perspective. From the risk management perspective, you have the order backwards.

A rich person doesn't need insurance coverage. Their assets are more than enough for their dependents to live on. Conversely, it is the low-income earner who scrapes by month-to-month that gains the most value from getting insurance coverage.

I am looking at both perspectives. From a risk management and affordability point of views together.

I don't say insurance is not important.

If you follow Maslow's Hierarchy of Needs, the lower income group has to make ends meet first. If they already got a problem raising their kids, finding food and paying for shelter, do you think this group can afford expensive insurance?

If you belong to the middle income group, you most likely can meet the lowest needs. You can use the extra savings to boost up your insurances.

If you belong to the high income group, you can do whatever you want. Don't need to buy insurance also can. But some kiasu parents will buy WL for their babies, top up their CPF accounts, etc.

 

[thekang]

I am looking at both perspectives. From a risk management and affordability point of views together.

I don't say insurance is not important.

If you follow Maslow's Hierarchy of Needs, the lower income group has to make ends meet first. If they already got a problem raising their kids, finding food and paying for shelter, do you think this group can afford expensive insurance?

If you belong to the middle income group, you most likely can meet the lowest needs. You can use the extra savings to boost up your insurances.

If you belong to the high income group, you can do whatever you want. Don't need to buy insurance also can. But some kiasu parents will buy WL for their babies, top up their CPF accounts, etc.

I see that there's no disagreement here after all. You agree that insurance is very important for the lower income.

Whether the lower income chooses to pay for the insurance doesn't change the fact that insurance is valuable, which is the main point here.

 

[Mecisteus]

I see that there's no disagreement here after all. You agree that insurance is very important for the lower income.

Whether the lower income chooses to pay for the insurance doesn't change the fact that insurance is valuable, which is the main point here.

The argument here is whether it is necessary to buy insurance when you are young. Note, I replace the word necessary with valuable. Because value is something that is perceived differently.

 

[thekang]

If you have any dependents at all, then it would make sense to buy. Not sure about TS case though.

Just to add on, the Aviva group term is dirt cheap and only costs $5.17 per month for 100k sum assured. Even the low income can afford this if they wanted to.

 

[icyboiz]

Strip the policy from all returns and you will see why you pay less but not cheaper when younger.

but how can you compare it this way, basically there must be a returns that's why people will take the risk, if there's no returns then no one will take the risk. similar to any other kind of investments or any other decisions we have to make in our life after weighing pros and cons.

 

[icyboiz]

Can we have the details of your whole life plan? Taking 20+ years to breakeven is really poor IMO. I have shown previously using other policies that buying term since young, and investing the delta that would have gone to whole life would give better returns. Happy to show you the numbers again with your inputs.

hi, the point of my statement is not about the returns, is about being insured. what my statement is saying is that, "well, even though chance of something happening is low when my baby is young, but WHAT IF something happen, atleast i get to insure for cheap, and if nothing happen i get to break even and get back my cash." that's all as simple as that.

you get what i mean?? not everything is about high returns

 

[w1rbelw1nd]

hi, the point of my statement is not about the returns, is about being insured. what my statement is saying is that, "well, even though chance of something happening is low when my baby is young, but WHAT IF something happen, atleast i get to insure for cheap, and if nothing happen i get to break even and get back my cash." that's all as simple as that.

you get what i mean?? not everything is about high returns

I dont get what you are trying to say at all. Anyone can get the same result using term insurance + investment. Convenient choice in whole life insurance doesnt equate to optimal choice.