Thread: Are you prepared?

I do have some very basic (and old) life assurance and insurance, but I've always found those products to be, well, a scam at worst and taking advantage of the lazy at best.

If I lose a leg, I get, say, $50k. If I lose two legs, $120k. If I lose sight in one eye, $X. If I get AIDs, $Y. If I'm incapacitated and out of work for more than Z days, I get $Q every month for 1 year. Etc. Etc. It's trying to put a value on how accidents and disease might reduce your future earning potential and therefore how you can legislate for that eventuality. The problem is, it just ends up reading as how much your eye is worth, how much your toe is worth, etc. And it just drums up irrational (or perhaps I should say disproportionate) fear of such eventualities.

I prefer to do my own planning. I don't need full-on comprehensive and expensive cover. The people flogging me these products quote me rates which, frankly, I don't think are worth it. If I'm lucky enough to be able to afford regular payment into these financial products, then personally I think I can do a better job of safeguarding my earning potential.

I see pensions differently (for a start, they're not about mitigating risk in the future -- it is a certainty that I will retire!).

As for health, I'm fortunate to live in a state with free access to healthcare. But more importantly, I still took control of that issue myself....



I married a GP.

Insurance is a form of gambling. And like all gambling you should understand the possible outcomes, know the odds, and decide if it's a good bet before laying down your stake. The companies offering insurance know the odds, that's for sure.

Pension schemes in particular are becoming increasingly risky. Many people here in the UK took the "responsible" option of investing heavily in good pensions only to see companies go bust, leaving them with nothing.

And now the global economy is in serious trouble. This is in no small part down to the "virtual economy" nature of the financial services industry. Financial services don't create wealth like a real manufacturing base does, they just move it around, with invisible numbers being bounced back and forth between the computers of institutions around the world. Today's credit crunch came about because people started asking "where are the Emperor's clothes?" and there was no answer.

Here's some sound financial advice: stop squandering money. You'd be amazed how your savings grow when you stop wasting money. Most of us when employed throw our money away on the silliest things. The more we earn the more we spend, on stuff that gets used or thrown away shortly after. Learn to only buy things that you need or give you lasting enjoyment. Trust me, it works.

Originally Posted by Rajagra

Here's some sound financial advice: stop squandering money. You'd be amazed how your savings grow when you stop wasting money. Most of us when employed throw our money away on the silliest things. The more we earn the more we spend, on stuff that gets used or thrown away shortly after. Learn to only buy things that you need or give you lasting enjoyment. Trust me, it works.

The thing that we've found to work very well is to put money into a savings account in the beginning of the month, and then put enough of the rest in the household checking account. The rest (if there is any) can be used either for personal use or to pay for incidental stuff.

That way you can plan in the beginning of the month. And by saving money in the beginning, it is easier not to spend it.

well my parents prepared for themselves. i use all the basic things, 401k, ira, regular ongoing stock investments, cash and metal holdings, rental property, death insurance, pre-paid funeral arrangements, home and car insurance.

the only thing that annoys me is the car insurance... i would like to be able to self insure. as in post a bond to cover me in an accident and not have to always pay ever higher auto premiums. 2 claims in 25 years... 8k they paid out... i paid in so far a bit more than 60k... poor rate of return for me.

and my long term care policy is back to a simple .45acp in the head, self-administered.

Originally Posted by Rajagra

Here's some sound financial advice: stop squandering money. You'd be amazed how your savings grow when you stop wasting money. Most of us when employed throw our money away on the silliest things. The more we earn the more we spend, on stuff that gets used or thrown away shortly after. Learn to only buy things that you need or give you lasting enjoyment. Trust me, it works.

I agree. It's funny how quickly money can accumulate by doing this. Something I used to hear out of SWMBO almost daily was "I bought this and it was only $1-5". Then when I ask why she's throwing it away, isn't wearing it, or not using it, "well, I don't like it/it doesn't fit, but it was only $1-5". I finally had to show her what all those $1-5 purchases looked like at the end of the month.

Syslight, way to self insure! I hate car insurance. I wish it acted like a life policy and actually grew some cash value or something for repairs, etc. However, I'm glad that it's required. I don't have any on my actual vehicle, but I've got a ton for un/underinsured bozos and a bunch in case I'm a bozo.

Majurey, it seems cold, but that's exactly what dismemberment is for- putting a price on your parts. If you lose your left arm, how difficult in dollars/pounds/euros will it be for you to provide the same standard of living for your family? It's all a numbers game. X number of people this year will become disabled in some way- it's just the facts. Unless they self insure, they need to place the risk of that occurrence somewhere else, otherwise risk financial ruin. I personally know several people that ended up that way.

Originally Posted by Rajagra

Insurance is a form of gambling. And like all gambling you should understand the possible outcomes, know the odds, and decide if it's a good bet before laying down your stake. The companies offering insurance know the odds, that's for sure.

I argue that insurance is the opposite of gambling. Insurance is a known and available risk transfer method. If you meant that it's a gamble as to whether or not the money you pay for insurance will be "worth it" in the end, I'd argue that point as well; since insurance PROTECTION (24/7) is intangible, focus is often misdirected at claim time being the only time a policyholder would benefit from insurance. Actually, the main benefit separate from a potential claim payment is the continuous protection a policy provides.

Yeah, I'm have a Life and Health license and have been in the insurance industry for for 14 years but selling Life and Health is not my focus (Commercial Property and Casualty is).

The only thing I'll say as a PSA to my fellow SRP members that have debt and a spouse or a spouse and/or children and you don't already have any life insurance: PLEASE PLEASE PLEASE at least buy some level term life insurance ideally from someone in your community. The death of a family member is a tragedy. The death of a breadwinner when the family has no life insurance to pay off a mortgage, car loan/s and have the means even if they're temporary, to figure out life without you is a DOUBLE tragedy. I've seen it. And in my position, knowing that most guys can get a good policy for $1 per day or less, the times I do see that type of tragic scenario, it really leaves a dour sick feeling in my stomach in a huge way.

A single guy? Not really necessary.
Retired, debt free? Not as critical and you probably wouldn't want to pay the higher premiums for your age anyway.

Really, for me it's about the families when a breadwinner dies without life insurance leaving a gaping financial void that all the spaghetti benefit dinners your church, friends or community can't even come close to filling. Big bummer when this happens. Familymen, get life insurance. Term life is the least expensive. Level Term is preferrable.

Chris L

Originally Posted by Chris L

The only thing I'll say as a PSA to my fellow SRP members that have debt and a spouse or a spouse and/or children and you don't already have any life insurance: PLEASE PLEASE PLEASE at least buy some level term life insurance ideally from someone in your community. The death of a family member is a tragedy. The death of a breadwinner when the family has no life insurance to pay off a mortgage, car loan/s and have the means even if they're temporary, to figure out life without you is a DOUBLE tragedy. I've seen it. And in my position, knowing that most guys can get a good policy for $1 per day or less, the times I do see that type of tragic scenario, it really leaves a dour sick feeling in my stomach in a huge way.

bears repeating

Originally Posted by Chris L

Familymen, get life insurance. Term life is the least expensive. Level Term is preferrable.

Chris L

Though once you max out your 401K it might pay to look at transferring some of the money you would put there (if you still could) into a whole life cash value policy, as a tax favorable investment vehicle. At a minimum cover your final expenses with one, funeral costs are insane.

My parents also started for me a whole life policy when I was a child and it was really cheap, the dividends now cover the premiums and the payout is nearly enough to completely protect my family if something should happen to me. I truly thanks them for their foresight, as they have saved me a boatload of money and worry by doing this for me when I was young.

I agree with you Tim about Whole Life being one good option for investment. I didn't go into that in my previous post because my biggest concern is for the family guys that have no life insurance. That's a critical situation that needs attention. It's hard enough to convince some guys to buy even term life if they don't have any let alone talk about how Whole Life can be insurance protection for the family AND an investment vehicle.

Another tip for guys thinking about term life: ask an agent in your state if they have a life company that offers a "return of premium" rider. What is it? Listen to how crazy but cool this is:....

Picture a 20 term life policy. You're paying premiums each year for 20 years. If you're still alive at the end of those 20 years.....the company that offers such a rider will literally write you a lump sum check of every single dollar you paid in for that insurance and give it back to you, returning every dollar of your premium. Sounds crazy but some companies offer it. They make money off the interest during those 20 years. The catch (if you'd consider this a catch) is that the premiums are a bit higher than a term life policy where the company keeps your money.

Chris L

No joke on the funeral expenses. With those alone, most people are looking at around $8-12k!, and someone has to pay that.

I would like to be able to boast a healthy insurance portfolio but I own a very old boat that has the habit of sucking all available cash right out of the wallet. This being the case, I suppose life insurance would be a thing to consider I'll do it after I have paid out on all the up and coming mooring fees etc

PuFF