Why life insurance isn’t living a plan b life

I read an article recently that I found somewhat offensive. I guess I can kind of relate to the gist of what the guy was trying to say, but saw it from a completely different stand point.

The idea behind the article was that you shouldn’t get any form of life insurance (ie. Death, Total and Permanent Disability, Trauma or Income Protection insurance) because you don’t want to ‘fall back’ on insurance and live your ‘Plan B’ life. Apparently the only way to live your ‘Plan A’ life, was to do it without insurance.

To me, insurance is not a Plan B. It’s not like you can choose to give up and say ‘cool, well that didn’t work out, I may as well get my income protection insurance and settle into retirement’. It just doesn’t work that way. Claiming on insurance is not really a choice.

One of the reasons that I find this offensive is that most people in their right mind would not choose to become ‘totally and permanently disabled’. That does not sound like a holiday to me, what about you? For someone to claim on TPD insurance, 2 doctors must sign a document saying that you are totally disabled and never likely to return to work, and/or a normal life again. If that is someone’s plan B, I find that disconcerting.

From my point of view, the reason I have this insurance is so that I don’t have to rely on anyone else. The insurance that I have in place, allows me the comfort to know, that if something were to happen to me and I could no longer work, the lump sum payment we would receive would completely pay off our mortgage and have left over to pay for medical treatments, so that my husband doesn’t have to shoulder the full responsibility of the finances. It also ensures lower financial stress so that I could focus on getting better if that is an option.

As an example, if I were single and became totally and permanently disabled, who should have to look after me? I don’t come from wealth, so my parents definitely cannot afford to help me out, do you think the government should continue to pay my mortgage?

Of course they are not going to do that. In that situation I would need to sell my place, move into a very cheap rental and live off the disability support pension for the rest of my life. The maximum benefit a single person can get from the Disability Support Pension is $766.00 per fortnight. That doesn’t even touch on the fact that if I were in that position, I may not be able to do anything for myself.

I see insurance for what it is, assurance that if anything bad happens, my life doesn’t completely fall apart and hopefully there is some spare money hanging around to focus on what is really important. I don’t want to burden anyone, financially or otherwise.

These tragedies occur every day and we all probably know someone who has been affected by health misfortune, but unfortunately, life still goes on. You may be unwell, but the bills still keep coming and you still need to put food on the table.

As weird as it sounds, Life insurance actually helps me live the Plan A life. I don’t mind taking a few risks. Not the kind of risks that see me riding sharks or base jumping, but the kind that will lead to a fulfilling life.

I would be really, really happy if I had insurance for my whole life and never used it. Do I think it is a waste of money? Absolutely not. Do you drive your new car around without insurance? Most people would say ‘of course not’. Well that is how I feel about my life. It is more precious to me than a car or the contents of my home.

Clearly I feel quite passionately about this, so there is my 2 cents worth. I’d love to know if anyone else has different viewpoints about the effect that having or not having insurance has on your life and the way in which you live it.

– This post is from our resident senior financial planner, Cara Brett. Check out her details in our about us page.

Posted in: Insurance and Cara Brett