(03) 9020 2905Life’s “X factor” is provided by the stuff that doesn’t happen everyday. The unpredictable.
As a percentage, probably 90-95 per cent of our time is spent doing mundane tasks – sleeping, eating, showering, driving, exercising, chatting, shopping and working. (Though Debt Man doesn’t waste too much of his life exercising.)
That means most of our lives are essentially an unfunny version of Seinfeld – a show famous for being about nothing.
Of the 5 or 10 per cent of the time spent outside the “ordinary”, half of that will be extremely positive experiences. And the other half will be on the side of, as Neil from The Young Ones might say, “real bummers”.
Crashing your car is a major inconvenience (and potentially career shortening – James Dean). Having your home burgled is no “barrel of monkeys”. And from my personal vault: Getting robbed of your passport and a stash of cash in Guatemala in a flash of backpacking stupidity won’t exactly make for the holiday of a lifetime.
All of these are things you can bounce back from. Insurance will generally cover the financial cost, leaving you with just the pain-in-the-rear organisation of replacement.
However, there are plenty of things that can happen in life that are far worse than having to spend hour after hour dealing with disinterested Spanish-speaking cops who don’t even pretend to care that another couple of dumb gringos have been fleeced.
We’ve witnessed far too big a tragedy unfold in recent weeks with the Victorian bushfires.
Thousands of homes are gone. More than 200 lives have been lost. There are tens of thousands of people whose lives have been changed forever.
The nightly news shows heart-wrenching stories of people whose homes were incinerated and tragic stories of death.
Most homes will be rebuilt. Some may not. And while the emotional loss is immediately obvious, the biggest devastation for many is yet to come.
And that is the financial impact on the survivors of having lost a father, a mother, a husband or wife.
“Where are you headed, Debt Man?”
Insurance.
But I’m not talking about general insurance. This is the weird thing: As a race, we insure the least valuable stuff.
- Most cars are worth less than $20,000. But 89 per cent* of cars are insured.
- Home contents are probably worth less than $50,000. But 87 per cent* have contents insurance.
- Most houses could probably be rebuilt for less than $200,000. And about 77 per cent* insure their homes to be rebuilt.
(* Figures from CommInsure)
But what would be the financial cost of your partner dying or having a debilitating accident or illness?
This could cost hundreds of thousands of dollars. If you count lost earnings over a lifetime, it could be millions of dollars. A 35-year-old on an average salary of around $60,000 will earn around $1.8 million in today’s dollars by the time they’re 65. But not if they’re dead or can never work again.
Most of life’s devastating events don’t make the papers.
Mothers and fathers, husbands and wives, are killed or permanently disabled in accidents every day, or struck down prematurely by illnesses (such as cancers, heart attack and stroke).
What’s your life worth? What is your good health worth? Or how much money are you going to earn between now and 65?
When it comes to personal risk insurance (also known as life insurance), people don’t get it.
- Only 14 per cent* of people have life insurance
- Only 6 per cent* have income protection insurance
- Only 2.5 per cent* have trauma insurance.
(Figures again from CommInsure.)
No doubt about it, life insurance is a grudge purchase. About as much fun as going on a blind date and finding Lewis from Revenge of the Nerds, or Esme Watson from A Country Practice.
Life insurance forces people to consider the thing that they least want to think about – their own mortality.
But life insurance doesn’t have to cost arms and legs (Black Knight from Monty Python and the Holy Grail comes to mind). Most people can get the protection their family needs inside their existing super fund. The younger you are, the less the cover costs.
But even if you can’t get it in super, you’d probably be surprised at how cheap proper protection can be.
How would your family cope financially if you or your partner weren’t alive tonight?
Bruce Brammall is the author of Debt Man Walking (www.debtman.com.au). Contact Bruce: bruce@debtman.com.au