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3 Crucial Things about Insurance I wish everyone knew

Posted 29 December, 2016 by Clearly
in Stellar Guidance

It’s that time of the year again.

To say what is necessary.

To get things out off your chest.

To make your peace with the world and move on.

 

“Listen all ye who may be within earshot, for I have much to say and little time…”

 

For our final post of 2016, we thought of stripping it down to the bare essentials, so if you don’t bring anything else into the new year, these are the 3 things we desperately hope you might.

 

Life Insurance is a Need. Not a Want.

 

Otter knows what he needs. Do we?

 

We automatically know some things are crucial in life. Those things we cannot do without.

Food is one such example. So is accommodation. One can’t stray too far off Maslow’s hierarchy of needs, which starts off with the physiological requirements.

Next is the safety aspect which includes personal safety, and financial security. This is where Life Insurance sits.

 

But all too often it gets ignored. Pushed aside for something else. For a meal in a Michelin Star restaurant. For the condo upgrade. For the lavish wedding at Fullerton. For the holiday in Paris.

 

This is all too baffling, and even children know that between the goose and the golden eggs, it is the goose that must be protected at all cost.

 

Which is really more important now?

 

So why prioritize a new car over a new policy and claim that you have “no money”? Once people start placing the proper emphasis on Insurance, there will be far fewer financial catastrophes and more stable, happy families.

 

Even the government know Life Insurance is essential and put their money where their mouth is. Cue the Dependents’ Protection Scheme and Medishield Life.

 

Being over-insured is actually a thing. So is being under-insured. Both are not ideal.

 

Too much? Nah, not possible nom nom nom.. not possible!

 

it may sound strange but there are actually people who are over-insured. They collect Life Insurance policies like it’s a hobby and claim that they are worth millions dead than alive. One sure sign of over-insurance: your beneficiaries start encouraging you to take up “interesting” past times like sky-diving. Without a parachute, even. (Heck, I’ve heard it’s possible – but only once)

 

Dark humor aside, there is the other end of the insurance spectrum which many people fall under.

“I don’t need insurance, I bought 2 policies already lah”. That is basically decoded as: “I want to think that I have already discharged my obligation by purchasing cover. The amount covered for is redundant as I do not wish to know the truth and choose to bury my head in the sand and hope that nothing happens.”

 

Yup, right there. I see it, everything I need is right there.

 

That is basically decoded as: “I want to think that I have already discharged my obligation by purchasing cover. The amount covered for is redundant as I do not wish to know the truth and choose to bury my head in the sand and hope that nothing happens.”

These people are possibly under-insured. It’s not the number of policies but the amount of cover provided that matters.

 

People who are over-insured are wasting their money buying insurance they do not need. It delays their financial freedom unnecessarily.

People who are under-insured risk financial ruin if something unexpected happens to them. Likewise, it is not an ideal situation to be in.

Always speak to your advisor regularly to determine if what you have is adequate or otherwise.

 

Find out if you are properly insured: Use our nifty Insurance Discover(y) tool!

 

Buy Term and Invest the Difference: Does not work for everybody

 

Disappointing, but true

 

The holy grail of DIY investors everywhere! Personally, I practice it myself. I applaud the concept.

But don’t make the mistake of thinking it is suitable for everyone. Why?

We are all born with different talents, inclinations, and risk adversity. This also means that while some of us are consummate DIY investors, others lack the discipline, the market know-how, and the investment instinct.

Sure, there are tons of programs out there that claim “Everyone can make 7 figures by trading at home” or “Become a savvy investor in less than 30 days” or some outlandish promise. To that, I claim BS.

 

  1. Real traders/investors will never share their secrets. When the whole market knows, their gig is up.
  2. If they made so much money investing, why bother to teach others? Out of the goodness of their hearts? (those course fees don’t come cheap)
  3. Most of the income that these “traders” earn is actually through teaching others how to trade. Enough said.

 

One simple example I like to use is Warren buffet, arguably the world’s most successful investor. Ever see him run a course?

 

Making money since 1957. And, still not running courses.

 

In theory, buying term and investing the difference makes absolute sense if you:

  • have the discipline to stick to your investment plan
  • have an investment plan in the first place
  • are not swayed by market noise
  • can keep your calm and stay invested in the right time
  • know which investment vehicle you prefer and you excel in
  • are willing to spend the time and effort to monitor your investment

If this doesn’t sound like something you like, there is nothing wrong with buying Whole Life or Endowment plans, as required. Perfectly fine to leave the investments to other people.

And yes, even though I do my own investments, I do have separate Whole Life Policies as well.

 

Closure

 

Life Insurance isn’t all that complicated. Most people think it is.

We’ve spent yet another year bringing you articles that (we hope) help, encourage, inspire, and inform you about Life Insurance. With luck, we will be continuing to that for years to come.

With that, here is ClearlySurely.com signing out for 2016, as we look forward to another year.

Happy 2017 everyone!

 

www.ClearlySurely.com aims to eradicate the knowledge gap between consumers and Life Insurance. Our Vision is that one day, every Man, Woman, and Child will be properly insured.

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