Why Life Insurance is a Missed Opportunity for Many Sri Lankans

Life insurance is essential in providing financial stability for families, especially during unexpected circumstances. However, it is still underutilized in Sri Lanka when compared to European nations. Many Sri Lankans still regard life insurance as an unnecessary expense rather than an essential financial plan for the future. This article investigates the primary causes for the low demand, the benefits of obtaining life insurance early in life, and the risks of delaying coverage until after the age of 50. Addressing these difficulties could encourage more Sri Lankans to use life insurance to secure their own and their loved ones' financial well-being.

One reason for the low uptake is limited awareness and cultural attitudes that discourage discussions around death or financial planning for unfortunate events. Some Sri Lankans think that purchasing life insurance is pessimistic or unnecessary, while others prioritize immediate financial needs due to budget constraints. Trust issues with insurance providers also play a role many people fear that insurance companies may delay or deny claims. Furthermore, low financial literacy prevents individuals from understanding the long-term value of life insurance, which contrasts with Europe, where it is a well-integrated part of financial planning and public education.

Life insurance offers many significant benefits that can help families avoid financial strain. Policyholders gain peace of mind, knowing that their families will have access to financial support for funeral expenses, debts, and daily living costs in their absence. It also functions as a savings tool, enabling policyholders to accumulate funds over time for retirement or children’s education. Additionally, policies offer tax benefits, making it easier for individuals to manage their financial responsibilities. With health riders, policyholders can also access medical coverage, easing the burden of hospital bills and emergencies.

Delaying life insurance has various disadvantages, particularly for those who wait until they are over 50. Younger people pay lesser premiums because they are in better health, but elderly people pay more and have fewer coverage options. Health difficulties that occur with age make it more difficult to qualify for coverage, resulting in either exclusion or denial. Waiting too long also limits the opportunity to save or take advantage of investment-linked policies. Finally, by purchasing life insurance early, people can protect their families' financial stability and avoid the stress and costs associated with seeking coverage when it may no longer be available or affordable.