Fast-forwarding through life’s horror scenes

That’s what forcing myself to investigate insurance and employer benefits this week felt like … having to sit through all the gory bits of the bad things that might happen to me.

Dismemberment, floods, lightening, cancer.

Sheesh.

So here’s what I found out:

  • The two cards I picked up were completely inter-related because almost all of the benefits I receive though my employer are indeed forms of insurance (totally obvious I suppose, I’d just never thought about this before)
  • The types of insurance I do and don’t have reflect the exact opposite of what the UK majority do and don’t have (more on this below).
  • Insurance proved one of those topics best demystified by a book not the internet where I was flooded with confusing and mostly commercial information. Turns out the 500 page textbook Personal Finance I bought at the start of the year is the better educational source for this topic.

Given that I’m not someone who has ever managed to master calculating and sticking to a budget, it’s no wonder that matters of insurance are way beyond my tendencies. In fact if my employer didn’t offer me a range of insurance products this could’ve been a very sobering weekly assignment.

The opening lines of the chapter on insurance summed up the need for insurance like this

A list of major life events that could significantly affect anyone and their position can be quickly constructed. For example, thinking about my own life, I might fall seriously ill; I might have my house burgled; I might have an accident — or to be more positive — I might win the Lotto.p. 378

Yes, well — the probability of these perils far outweigh winning the national lottery, everyone knows that! obviously the author is trying to be that little bit cheerful about this most gloomy of topics. For a moment the following sentence came as a huge relief: “The potentially major financial impacts of events like these can derail otherwise carefully constructed financial plans.” Maybe I’ve nothing to worry about because I have no carefully constructed financial plans to protect! Alas, no.

As I pressed on through the differences between probability, uncertainty (immeasurable) and risk (measurable) and how the actuaries run the numbers to guesstimate when I might die or get sick, I did learn a few helpful things. Like how there are only two sorts of financial perils — loss of income (e.g. loss of both eyes leading to loss of a job) and the threat of unexpected and massive expenditure (e.g. house blows up).

And how you don’t really need insurance if you can otherwise cope with these events through your own savings or if you’re part of a generous and loving community. In fact some groups — particularly religious ones such as the Amish and many Muslims, seriously frown upon insurance and instead believe that this why we have communities in the first place — to help each other in times of disaster.

In the beginning insurance was often tied to commerce. While insurance arrangements date back to ancient times, here in the UK the establishment of Lloyds of London came about in the 17th century to protect the booming maritime industry and in response to the Great Fire of London.

But in terms of what I learnt about myself, I was simply reminded of the following things:

  1. I have zero attention for fine print and insurance is absolutely littered with it, hence it’s best to delegate selecting insurance products to a trusted expert
  2. I am some version of Woody Allen on the hypochondriac front. Not that I visit the doctor much and not that I obsess about my health, but when I do feel unwell my first thought is the worst case scenario. I’ve been known to think Oh my god I have a brain tumour … when actually I have a headache and need to take an aspirin. And so being forced to read through stats like 1 in 3 of us will get cancer (which I double checked through various sources and am now freaked out about), was a reminder to me that almost nothing, except insane premiums I couldn’t afford, would ever talk me out of having private health insurance on top of the NHS. To me if you’re going to pay money for piece of mind and some extra help in bad times, the risks most frightening to me involve loss of health. And yet medical insurance is the least common form of insurance in the UK.

Instead people are worried about their belongings. Contents, motor and building insurances are the only types of insurance that the majority of people in the UK actually have and at least two of these are mandatory if you have a car and a mortgage. As for contents insurance … me, I’ve never bothered. I’ve always thought that if anything did happen to “my contents” money cannot replace the stuff I actually care about. However, I also now realise thanks to my homework that it’s worth finding out what this insurance costs; perhaps it’s reasonably small enough to be worth it? Maybe. It’s now on the to-do list. I’m going to ask all my friends whether they have it and what it costs them.

But mostly what I learnt this week is just how lucky I am. I have my health and thanks to my employer I have

  • Medical
  • Dental
  • Long term sickness protection
  • Travel insurance (when it’s for business)
  • Life insurance through my pension — I had no idea!
  • And of course, there’s also the matter of the pension itself which in the case of my employer is generously high (though as I’ll need to return to whenever I next pick up a pension card, not nearly enough to live on when the time comes.)

So in a nutshell what I learnt this week is that I’ve nothing much to worry about on the insurance front (except for all the horrendous things that might happen to me in the future and we humans have been shown to handle the bad stuff much better than we ever think we will.)

* * *

PS. Message for C: you asked me to tell you about the benefits our employer gives us. In addition to above there’s a rewards program I’d never heard of — we get discounts from places like Amazon and lastminute.com. Cool!

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