As a living being one has to face risk, risk here is referred as an uncertain event leading to uncertain outcomes taking various forms in life, health, wealth etc. These risks are not frequent and chances of occurrence are also low but when they occur they cause a devastating effect in one’s life. As one cannot predict when such events wlll occur, it is wise to take a cover against them.
This cover provided is called insurance which helps one indemnify from losses. In insurance we sell our risk of health and life to the insurance provider, in general as we sell we get paid but here we are selling our risk, thus we got to pay to the insurance companies for buying the risk. Do you want to keep such risk with you or sell it as early as possible?
A sane person chooses to cover his health and life with insurance and let’s see what happens if he/she doesn’t.
By any reason, if one suddenly dies, the dependents in the family are the first ones to be affected, as there would be no cash flows coming in through income their day to day expenses are not met, this leads to distraught and the survival may become hard. Even if there is some little income coming in from other sources like rent, that also cannot be utilized by the family if the sole earning person has taken any loan before his/her death. This is because the liability of such loan would become the liability of the family and needs to be cleared. Now as we can see the family doesn’t have any cash inflow left, they tend to take loans for survival, this again becomes a burden to the family. Apart from this, looking at the future there will be goals for the family to achieve like the kid’s education and settlement which also cannot be met resulting in catastrophe for not only current but also the next generation. Hence not taking one proper risk cover before uncertainty occurs would lead to such misfortune.
Assume a person is living a peaceful life along his family with cash inflows through income but didn’t take health insurance and is delaying to take one, suddenly on a fine day he fell ill and consulted a doctor only to get diagnosed with cancer. Now to keep up his health he has to meet his medical expenses, whatever income he is earning will be drained by such expenses but what will happen to his dependents? Should they not survive? If this person has taken health insurance before he fell ill, his medical bills would have been covered by the insurance company, he has an option to take insurance cover with such pre-illness but the premiums would be very high. This is same in the case of a person going through retrenchment of job or disability which may prevent him to work for income. Thus it is always advisable not to delay insurance purchase, keep in mind you are giving away your risk by buying one good insurance policy.
To conclude, by delaying insurance you would not only suffer financially but also mentally. While it is irresponsible to delay purchase of insurance, it is also financially irresponsible to purchase inappropriate insurance (by instrument or by quantum). A professional financial planner can help answer the question of what & how much insurances are needed.