It has been said that we live in an age of instant gratification; we want it, and we want it now! But is that the mindset that will best help us achieve our goals most efficiently? Not according to the Stanford marshmallow experiment.
Walter Mischel, a Stanford psychologist studying delayed gratification, offered children in his study one marshmallow now, or two if they could wait about 15 minutes. Follow up studies indicated that the delayers were more successful in many measurable areas of life.
We really don’t need scholarly studies to tell us that though, as we can see it all around us. We see it in perhaps the most extreme symbol of instant gratification in our society, the credit card. Madison Avenue relentlessly pounds it into our head that we don’t have to, in fact shouldn’t, wait. But that message is setting us up for failure.
Success is not achieved with one gargantuan monumental effort. Rather it is the result of persistence, of a consistent, focused, and sometimes strenuous effort. And so it is with a life insurance program.
I have written extensively about the difference between term and whole life; why they even exist and the designed uses for each. I often meet people who are using them inappropriately, sometimes deliberately, but also sometimes because they were misinformed.
Since it is much more important to get the proper amount rather than the proper type, term insurance is often used because the proper amount of whole life is unaffordable. In that situation, the term insurance should be converted to whole life as cash flow permits, but it is right here that the instant gratification can kick in.
Many people have much more palatable uses for the several hundred dollars a month that I am suggesting they allocate to their whole life program. But by neglecting to convert while they are young, they are (unconsciously) making their retirement a bit more unstable.
Looking over my client list, the ones that have life insurance cash values in the high five and low six figures have created tremendous flexibility for themselves. By delaying gratification, they have put themselves in a position where they have many options. All of those clients started their programs in the 1980s or early 90s, so it didn’t happen overnight. It was, as I mentioned above, the result of slow, steady, consistent action.
Additionally, I’m quite sure they could have envisioned more enjoyable uses for that money at the time. But by delaying gratification, they put themselves in a much better position later. Those who didn’t are now looking at buying more term insurance in their late fifties or early sixties, as the whole life premiums start to become prohibitive at that age.
So while foregoing instant gratification has many benefits, I believe the primary one is that it provides us, later on, with the choices, options and flexibility that we wouldn’t otherwise have.