The timely purchase of life insurance

While we all may be familiar with English poet Edward Young’s quote, "Procrastination is the thief of time." I prefer to think of Benjamin Franklin’s quote, "You may delay but time will not."

The word procrastination has been defined as the action of delaying or postponing something.

In a 2023 study, Fred Johansson, a clinical psychologist at Sophiahemmet University in Stockholm, linked procrastination to a panoply of poor outcomes, including potential health issues such as depression, anxiety and stress.

Procrastination in financial planning may seem pleasant in the short-term but it will eventually catch up with you.

Just like avoiding exercising, delaying a decision to purchase life insurance creates more stress and missed opportunities.

The good news, however, is that it is not too. This week's column looks at the importance of purchasing life insurance today.

Time insurance

Life insurance could also be called time insurance. When someone dies and the proceeds of his or her life insurance policy are paid to the beneficiaries, that money buys time until they can adjust financially and emotionally to life without the insured. Remember, only your financial advisor will walk into an unfortunate situation, with a cheque to pay your bills.

Human life value

The human life value concept was created to measure the economic value of an individual’s life.

While the love and support of someone cannot be replaced when he or she dies, the financial contribution they make is replaceable.

This concept is a measure of an individual’s financial contribution, which simply means the measure of the value of benefits that the dependents can rightfully expect from their breadwinner. The human life value is often measured in wrongful death lawsuits, to determine monetary awards to be paid to families.

Insurability

As life insurance is bought with age and good health, the younger and healthier you are, the cheaper your premiums.

As we age, the risk of us developing health conditions also increases, which means that we now impose a greater risk on the company.

If an unforeseen health condition develops, it could make you uninsurable or result in higher premiums for limited coverage. This would undoubtedly place your family at a disadvantage as proceeds may now be significantly lower than if you were to purchase a life insurance policy at a younger and healthier age.

Investment growth

Many life insurance policies, such as whole life policies, have an investment component. By procrastinating the purchase of life insurance, you reduce the time available for these investments to grow, thus, impacting the potential benefits. Procrastination here does not only mean a missed opportunity to ensure financial security for your family but also places your investments at a disadvantage.

This column by Nutan Ragoobir, a senior insurance professional, author and founder of the Girmitya Foundation, will appear bi-monthly in Business Day.