Most individuals understand that everything in life has a cost, either explicit, implied, or both. For example, a car has the explicit sticker cost, but it also has implied future maintenance costs.
Then there are opportunity costs; by doing or buying one thing, we give up the opportunity to do or buy something else. By getting up early and hitting the gym, we forego the opportunity for an extra hour of sleep.
Many things have a cost of not doing them. The cost savings of not changing the oil in my car will usually manifest into much greater repair costs down the road.
The cost though, rarely equals the price. If you pay $40,000 for a car but sell it for $20,000 three years later, the cost of the vehicle was not its price. And most would agree that the cost of a pack of cigarettes exceeds its price.
What may not be so obvious is the cost of our attention. The cost of leaving my email open all day is my attention, because I don’t have (nor do many, I suspect) the ability to focus on two things at the same time.
Herbert Simon, who won the 1978 Nobel Prize in economics, had a great quote about this. He said “What information consumes (costs) is rather obvious; it consumes (costs) the attention of its recipients. Hence a wealth of information creates a poverty of attention.”
And so it is with life insurance. The superabundance of information available has the ability to divert one’s attention from what is truly important (getting an appropriate amount of coverage) to trying to understand the minutia of all the products available.
Now I’m not saying that understanding the products is unimportant, but a general understanding of how they would perform in our personal situation is usually all that is necessary to make an appropriate decision.
The complexity of today’s world makes it nearly impossible to understand anything but our own specialty. How many people understand exactly what happens when you start your car? Very, very few, yet it doesn’t stop them from enjoying the benefits that the automobile provides.
So the complexity of life insurance contracts should never stop one from obtaining the coverage and enjoying the peace of mind that it provides.
Like most other things, the cost is rarely the premium (price). And like many other things, there is a cost to not buying life insurance and, depending on circumstances, it can dwarf the cost of buying it.