On Life, Death, and Insurance

The average life expectancy of an Indian is 67 years. This is a comforting number for most people. 

Unless that is…

You’re in your 60s already.

But worry not, here’s another statistic for you. If you’ve already lived till the age of 60, you’ll likely live for another 17 years. 

That’s a lot more reassuring, isn’t it?

It probably is. 

Humans are extremely resilient and you’ll most likely live a long healthy life. In fact, it’s not just a feature unique to humans. It’s a feature you’d find in every living organism. Try to swat a fly and it will bamboozle you with speed. Try to corner a cat and it will jump at you to defend itself. Try to pick a fight with a kangaroo and you’ll regret ever making that choice. 

But unlike these other animals, humans are acutely aware of their mortality. We know we will die one day. We are smart enough to recognize that our constant battle to evade death is a futile exercise. A kangaroo doesn’t think about the prospect of death unless confronted with imminent danger. But humans do. We think. We brood and we are often consumed by existential dread. Although we fight for self-preservation, we are resigned to the fact that we will die, one day. 

And it’s one of the reasons why we devise prescriptions to keep this potentially devastating existential terror at bay. As the authors of the best-selling book, The Worm at the Core write —

“Since the dawn of humankind, cultural worldviews have offered immense comfort to death-fearing humans. Throughout the ages and around the globe, the vast majority of people, past and present, have been led by their religions to believe that their existence literally continues in some form beyond the point of physical death. Some of us believe that our souls fly up to heaven, where we will meet our departed loved ones and bask in the loving glow of our creator. Others “know” that at the moment of death, our souls migrate into a new, reincarnated form. Still, others are convinced that our souls simply pass to another, unknown plane of existence. In all these cases, we believe that we are, one way or another, literally immortal.”

But we aren’t. We will die one day and there comes a time in every person’s life where they have to confront this reality. And when that day comes, I hope you’re thinking of protecting your downside. Not just yours, but your loved ones who may have a tough time dealing with your absence. 

I know most people don't consider insurance a worthwhile enterprise. We dismiss the prospect of financial security with such nonchalance that you’d think most of us have figured out the code to live forever. In fact, the few people who do buy insurance make the purchase to save on taxes. This proposition is so absurd that I can only liken it to an individual buying a sports car because it has good seat covers. Sure, seat covers are nice, but I am sure you have more compelling features to consider before making your purchase. 

When a family friend passed away recently, he left a grand total of 4 lakhs in savings. This was a loving, intelligent man who deeply cared about his family. And by all measures acutely aware of his mortality. He had an organ donation card. He was religious and he did whatever little charity he could. Yet, for all his noble attributes, he had no insurance. He didn’t have a large saving corpus and his family now has to face the daunting prospect of carving a livelihood without the sole breadwinner. It is truly inexplicable.

For about Rs. 15,000 a year, he could have left his family close to Rs. 1.5 crore. If he had only considered buying a term insurance product. Yet, he didn’t, and knowing him, I can write with some conviction that this will probably be his biggest regret.

The point of this story isn’t to scare you. And it most certainly isn’t to induce terror. Let me reiterate once again — That you will in all likelihood live beyond the age of 60. You will see your kids grow and your grandchildren too. But probabilities only tell you half the story. They don’t tell you what happens “ if” and “when” you die. That narrative, while uncomfortable, is all too real for you to ignore. For most people reading this, paying Rs. 15,000 a year isn’t really a herculean task. It’s a small cost to bear for a lifetime’s worth of protection. 

And I am not saying this from an outsider’s point of view. For the past 3 years, I have been writing extensively on financial matters — at Finception and Finshots. And yet, for all the sophisticated explainers on how to think about money, there are only three financial products in my kitty that I think are indispensable. 

A term insurance plan, a health insurance policy, and a couple of index funds. 

That’s it. The stock portfolio, the remaining mutual fund investments, and cryptos don’t feature in my list because they’re dispensable. I can live without them. But I cannot, in good conscience continue to lead a life without securing the lives of those who I consider dear. 

So my limited point is this — If you’re thinking about buying insurance, please don’t be short-sighted. Think about weaving insurance into a holistic financial plan for you and your family. And if you are still not sure how to go about things, we have a whole host of explainers at Ditto. We are hoping it’ll set many things straight. If you have other queries, you can talk to us directly. 

But no matter what do you, don’t be the kind of person that buys a car because it has a good seat cover. 

Don’t be the kind of person that buys insurance to only save on taxes.

Until next time…