The cost of delays when taking out life insurance: why timely action matters

For ultra-high-net-worth (UHNW) clients, financial planning is typically centred on investment structuring, tax efficiency and estate preservation. Protection planning, particularly life insurance, is frequently deferred, often viewed as something to address later.

This creates a fundamental inefficiency in otherwise well structured strategies.

Data from the Actuarial Post shows that 6.5 million UK adults delay arranging life insurance until key milestones. For UHNW clients, the consequences of this delay are more pronounced. Life insurance is uniquely sensitive to age and health at the point of application, with both factors directly driving cost and availability.

Put simply: the longer the delay, the higher the cost and the narrower the available options.

Premiums are calculated based on risk at outset and fixed for the duration of the policy. Securing cover earlier effectively locks in pricing at a lower risk profile. Delaying by even a few years can result in materially higher premiums for an equivalent level of cover, particularly for the sums assured often required for UHNW estate planning.

In parallel, the probability of adverse medical disclosures increases over time. Even relatively minor conditions, such as hypertension or elevated cholesterol, can lead to premium loadings, exclusions or restricted terms. These are not hypothetical risks; they are common underwriting outcomes.

Deferral therefore introduces a compounding cost: higher base premiums combined with an increased likelihood of less favourable underwriting decisions.

Underwriting complexity reinforces the cost of delay

For UHNW individuals, life insurance is rarely a standardised product. Policies are underwritten on a bespoke basis, reflecting estate size, liquidity requirements and planning objectives.

Insurers will typically assess:

• Total estate value and structure
• Projected inheritance tax (IHT) exposure
• The purpose of cover (e.g. liquidity provision)

For higher levels of cover, medical underwriting becomes more detailed, often requiring:

• Full GP reports
• Insurer-led medical examinations
• Specialist reports where appropriate

This process is both time intensive and highly sensitive to the applicant’s current health position. As clients age, underwriting becomes more restrictive and insurer appetite can reduce, particularly for larger cases.

Delaying engagement does not simply defer a decision; it alters the terms on which that decision can be made.

IHT planning becomes more expensive to implement over time

Life insurance, written in trust is a key mechanism for providing liquidity to meet IHT liabilities. However, the efficiency of this strategy is directly linked to when cover is arranged.

From April 2027, unused pension funds will form part of the estate for IHT purposes, increasing potential liabilities for many UHNW clients. This will drive a need for higher levels of cover.

Arranging that cover later, when premiums are significantly higher, materially increases the cost of implementing the same strategy. In some cases, it may render the solution commercially unattractive.

Early action, by contrast, secures lower cost cover for a liability that is, in many cases, already foreseeable.

Delay erodes pricing efficiency and planning flexibility

A proactive approach delivers clear advantages:

• Lower premiums secured at a younger age
• Reduced exposure to adverse underwriting outcomes
• Greater flexibility in structuring cover alongside estate planning

Conversely, delay results in:

• Incrementally higher costs year-on-year
• Increased likelihood of exclusions or ratings
• Reduced insurer appetite for complex or high-value cases

This is not a marginal effect. Over the lifetime of a policy, the cost differential between early and delayed implementation can be substantial.

A clear role for professional introducers

For professional advisers, the timing of introducing life insurance is a commercial decision, not an administrative one.

Raising protection planning early:

• Secures pricing at a more favourable stage
• Preserves underwriting optionality
• Supports more cost efficient IHT mitigation

Get in touch

At John Lamb Hill Oldridge, our advisers are experts in offering bespoke insurance that supports high-net-worth and ultra-high-net-worth clients in protecting their wealth.

For more information about how we can help you to support your clients, please get in touch. Email mail@jlho.co.uk or call us on 020 7633 2222.

Please note

This article is for general information only and does not constitute advice. The information is aimed at retail clients only.

All information is correct at the time of writing and is subject to change in the future.

The Financial Conduct Authority does not regulate estate planning, trusts, or tax planning.

Note that financial protection plans typically have no cash in value at any time, and cover will cease at the end of the term. If premiums stop, then cover will lapse.

Cover is subject to terms and conditions and may have exclusions. Definitions of illnesses vary from product provider and will be explained within the policy documentation.