How To Decide On The Best Time To Buy Insurance

Insurance is a massive business.

The net value of insurance premiums stood at $1.22 trillion in 2018, according to a report by the Insurance Information Institute or III. The premiums of property/casualty insurers contributed 51% of this value, while that of life/annuity insurers made up the remaining 49%. Further, in 2019, the industry employed about 2.8 million people, according to a report by the US Department of Labor, to meet the increasing needs of the insurance buyers. Another report by Policy Genius revealed that 57% of US adults held life insurance in 2019. The same report also reveals that 37% of that life insurance was bought as an income replacement, and 30% to provide for burial expenses.

Clearly, there’s no doubt about the awareness of the need to get insurance. However, there’s, perhaps, some confusion out there about the right time to buy insurance cover.

According to one common notion, you should buy insurance when you’re expecting something to go wrong at home, business, or any other aspect of your life. While insurance may secure you from imminent threats, how will you know what life is going to throw at you tomorrow? It’s impossible to predict disasters, and you should be proactive at all times to secure your financial future from probable threats. Also, if you hold on till the threat is upon you, chances are it will reflect in the form of a higher premium. For example, the premium rate for life insurance increases by 8-10% with advancing age. In case of property insurance, the older a building is, the higher will be the premium rate for it.

In essence, insurance is a crucial investment that you should make while you still have the chance to a better future. Buying early, before you think you need it almost, is the right option.

Hence, knowing when to buy insurance is critical to securing your financial future. But when is it the right time?

When you start a new business

Building a new business is a tiresome affair, and you need to focus on so many things. It’s natural to forget all about your insurance needs in that situation. However, this shouldn’t be the case, and insurance should be among your high priorities. If you’re setting up a family-only business, having a property and equipment insurance may be enough to start with. But in most cases, if you’re employing people, you will have to think about getting worker’s compensation insurance and other similar policies to protect you from lawsuits and penalties, in case anything goes wrong. This apart, you should also consider auto-insurance, if your business is in the transport and logistics sector.

When your current insurance is set for renewal

You can compare your renewal rates with other offers in the market to take a well-calculated decision. Generally, the renewal paperwork is received 30-45 days before the renewal process, and you will have ample time to research the market for newer and better offers. Switching is all the more important when you notice a major change in the renewal rate, while the benefits remain more or less the same. You may contact your insurance agent or opt for a different carrier, whichever seems appropriate to you under the current circumstances.

When you’re dissatisfied with your insurance carrier

Suppose your renewal date is far, but your current carrier falls short on customer service or other reasons. What should you do then? Can you switch your insurance provider in the middle of the term? Of course, you can. Make sure you have the insurance for a few months before you switch, so you don’t have to pay any penalty. It will be mentioned in your policy whether you need to pay fees to cancel the policy midterm and details of any refunds that may be due. It’s important to inform your current insurer about your decision beforehand and discuss the necessary steps you should take.

When you buy a new property

Buying a new property is in itself daunting. If you’re a real estate investor, you may already be aware of your insurance requirements before you start actively looking for tenants. Depending on the type of building, the best time to buy building insurance is before the tenants move in. It will also reduce the chances of misunderstandings between the landlord and the tenants. If you buy a property in a disaster-prone area, you should also consider covering it with flood or other suitable insurance to offer maximum protection.

When you start a family

Most of the time, people don’t buy insurance until they reach middle age and feel the need for it in their bones. However, you should always be proactive and buy insurance early to enjoy maximum benefits. As mentioned earlier, the premium rates of life and health insurance tend to increase with each passing year, as age-related complexities start impacting the actuarial calculations. This may affect your insurance premium, leading to financial issues when you start planning a family. Therefore, it’s unwise to keep postponing your investment in a suitable insurance cover.

You will, almost certainly, need professional advice while looking to buy the most suitable cover for your health, business, property, or life at large. Therefore, it’s better to opt for an insurance agency that takes a personalized approach to understanding every client’s specific needs. Talk to the agents about your policy requirements and take their suggestions while shopping for insurance. This will help you choose the best policy at the best time.