Time is Money: The High Cost of Procrastinating on Life Insurance

By on February 3, 2014

February is Time Management Month. All this focusing on how we spend our time has a way of bringing up thoughts on mortality and what would happen if I couldn’t be around to support my family. One of the most important financial planning moves any breadwinner can make is to purchase life insurance.

Just because you are young and healthy today doesn’t mean you couldn’t be sick or worse tomorrow. Life insurance is about providing for your dependents — a spouse, children or other guardianship — after you are gone. Without it, loved ones could be burdened with debts causing them to lose their home, college aspirations or financial independence.

According to a JD Power and Associates study in 2012, 50 million Americans are without adequate life insurance coverage and 40% of adult Americans are without life insurance. If you have been waiting to buy life insurance, remember the words of Benjamin Franklin, ”you may delay, but time will not.”. Time is a factor when it comes to life insurance and the longer you procrastinate the more it could cost you to buy or cost your family to protect themselves.

The Costs of Waiting to Buy Life Insurance

People wait to buy life insurance for various reason (see more below); unfortunately, when it comes to life insurance older is not always wiser. The longer your family is unprotected, the greater the risk of leaving them high and dry and the more it could cost you in the future.

Life insurance rates are based partially on age. Let’s face it: the more birthdays you have, the greater the risk of you dying, and the less attractive you look to insurance companies. In addition, waiting to buy could result in the onset of a significant negative health condition, that holds the potential for both higher premiums, a decline in coverage or even a denial of coverage. Your best strategy is to apply for insurance while you are young and healthy.

When you are young and healthy, you have more options for locking in the type of policy you want with a premium rate you can afford. Additionally, you can often qualify for flexible policy terms which include an option for converting your first, less-expensive term life policy into permanent life coverage if your needs change.

Common Excuses for Not Buying Life Insurance

So why would anyone wait to buy such important financial protection? Many Americans are just not sure if they can fit life insurance premiums into their budget, and if they could, many are not sure what type of life insurance to buy or how much coverage to get.

Here are the four most common excuses for not having life insurance:

  1. “It’s too expensive.” – Compared to what, a vacation in the Caribbean Islands? Life insurance has never been more affordable. There are inexpensive policies available for as little as $3 a day. Now what’s your excuse?
  2. “I have other financial priorities.” – Most families put off purchasing life insurance since they prioritize their debt, mortgage or retirement savings obligations. If you are struggling now, consider how hard it will be to manage without the family breadwinner. A few dollars spent on affordable coverage today can really come in handy when the family needs it most.
  3. “I don’t have time.” – If we had a dollar for every time we heard this uttered, we’d have a lot of dollars! You have to make time in your schedule to sit down with your insurance agent or financial advisor, discuss your options and sign up. You could be in and out in minutes or take some time to be thorough and spend an hour weighing options. Either way, you have time.
  4. “I don’t know enough about it.” – We all can’t be experts in insurance, but that is why we have FinancialSafetyNet and our trusted financial advisors to educate and guide us towards the best possible choices. Brush up on the basics of life insurance, various policy types and options in your spare time. Then talk with a trusted agent or advisor, who understands your financial situation, to help you sort out the details.

Purchasing a life insurance policy is an informed decision that takes planning. If you have been using any of these excuses, it’s time to be proactive and ensure the financial health of your family.

When to Buy Life Insurance

The best time to buy any insurance product is, in theory, right before you need it, unfortunately, nobody knows when that time will come. Whether you are a young family and need only a little or older with more and more responsibilities (i.e.: a large house or kids in college), with life insurance, your needs will change over time.

  • Commit to at least buying an inexpensive term policy when you are young with dependents; rates are affordable and enrollment is easy. Adjust your policy as your situation changes.
  • Consider permanent life insurance products when your estate is large enough to be subject to estate-tax as your heirs can use the death benefit to pay the IRS. If you do not want the death benefit to be counted as part of the estate, consider holding the policy under a trust.
  • Life insurance can even be used as a vehicle for generating retirement income. The various permanent life insurance policies come with death benefits (the payment to surviving beneficiaries) and various cash-value components which are invested to help the policyholder keep up with inflation, borrowed for special expenses (buying a home or going on vacation) or used for retirement income.
  • Life insurance offers tax benefits all throughout your life.  Not only are you able to transfer a death benefit (income) to your beneficiaries tax-free, but some policies have options for tax-deferred savings and investments – this is money that you could use to supplement your retirement income, pay for college, pay off a mortgage or whatever you wish.   When you have reached the max-limit of retirement contributions, you can make tax-deferred investments in a permanent life insurance policy.  Additionally, some policies invest in stocks and market indices; growth harvesting to re-balance the portfolio’s asset allocations within the policy are not taxable.

Once you purchase life insurance or if you already have a policy, remember to review your terms once a year or every other year to ensure you have enough coverage.  You may need more coverage or can save by making adjustments to your policy.

If You Need Life Insurance, Stop Wasting Time and Buy Some Today

Life insurance can help your family to live better today and have more tomorrow. It is a key factor in setting up your estate and financial planning to provide financial security for your loved ones even after you’re gone.

Give your loved ones some peace of mind knowing that they will not have to worry about finances while going through the emotional strain of losing you. Speak with your trusted insurance agent, financial advisor or estate planner today about the right life insurance products for your family.

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About Scott Ho

FSN insurance and retirement journalist - Planning for your retirement or understanding your insurance needs can be confusing and difficulty. Scott knows these tasks can seem daunting. He offers his experience to make choosing insurance coverage and planning for your golden years a successful endeavor. Connect with Scott at !

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