The Roll of the Dice
I have recently been reminded of how fickle life can be. In one short moment, everything we know and assume to be normal, can be turned upside down.
I was with a client a few weeks ago, discussing his financial plan. He is a young man of 27, who had not done any form of financial planning before. So, armed with a full financial needs analysis and recommendations for his planning, we sat down to discuss things.
From the word go, he was quite adamant that he didn’t want any form of risk cover – disability, severe illness or income protection. He belongs to a good medical scheme, and is fit and healthy. He had some spare money to invest, and wanted to save, perhaps to travel oversees, or buy a property. Not an unusual perspective for a young single man to have.
So he decided to invest his spare cash – some into some additional savings for retirement, and some into a market linked investment, where he could access his money for that trip or property deposit.
Then the shock. He is diagnosed with a form of skin cancer that is malignant. He is in stage 2 and will have to undergo chemotherapy and other treatments. He is young, strong and healthy but who could have seen this curveball coming?
If he had taken severe illness cover, it would have paid out a lump sum, providing money that could be used to cover medical shortfalls and any other incidental costs. But he didn’t. His decision wasn’t wrong and it wasn’t right. He could not have foreseen the future, and he was no different from thousands of other people who feel healthy (and invincible in some cases) when they are looking at their financial planning. Taking out risk cover (which is insurance in effect) is often not seen as a priority.
Taking out cover for an unforeseen event (illness, death disability, loss of income, etc.) is a grudge purchase, in many cases. You are buying a promise – a promise that money will be paid out in the event of a specific event happening. It’s often very difficult to see that value when one is feeling top of the world and everything is going your way.
But as I have been reminded again, the challenges of life do not come when we dictate. They come to us at impossible times and without warning. We need to be financially prepared. It’s that simple.