As a fledgling financial journalist in the late 1980s, I was taught to view insurance as the bedrock of good financial planning
“Insurance is the foundation stone of family finance,” I was emphatically told by my first personal finance editor, a fierce and sometimes frightening individual whom you crossed – or disobeyed – at your peril.
“Jeffrey, never forget this. Insurance is an essential building block. First, a family should lay down insurance foundations and then later think about investments and pensions. Yes, insurance is boring. Yes, it’s unsexy. But it’s key.
"So beat the drum for insurance, Jeffrey. Now, get out of my office pronto and write me some words I can publish.”
I duly obliged, clattering away on my typewriter late into the night, delivering pearls of wisdom on insurance treats such as family income benefit policies (a cheap and cheerful form of life insurance, ideal for young families) and critical illness (paying out a lump sum on diagnosis of a serious health condition such as cancer).
Her message, delivered in a Margaret Thatcher-like tone, has never left me, although sometimes I have struggled to believe in it, given the insurance industry’s propensity to act as if it is the Cruella de Vil of financial services.
An industry that 30 years on still remains full of vices, whether it’s a result of a general reluctance to pay out on claims (or a perceived reluctance to do so), a refusal to reward customer loyalty (by reserving the lowest premiums for new customers) or running customer service centres where it seems picking up the phone is the exception, not the norm (I was kept waiting for 30 minutes the other day while Barry Manilow droned on about not being able to smile anymore without you (me).
How appropriate, I thought.
Indeed, the older I’ve got, the more I have been challenged about its merits. None are more so probing than my friends. Indeed, there are some who refuse to take it out unless it is a legal requirement (motor insurance, for example).
They see it as pouring money down a vast drain. They would rather save the money they otherwise would pay in premiums – and use that to address any emergency that comes their way (if indeed one does).
I often try to demonstrate the merits of insurance through real-life examples of people who have been financially rescued by having it.
For example, someone who obtained a five-figure sum from a critical illness policy as a result of a serious health issue. Money that steadied their financial ship while they took time off work to make a full recovery. Yet such individuals are hard to find.
Understandably, most people are reluctant to air their private business in public and do not wish anyone to know they have come into money.
So, in defence of insurance, I will tell you of three recent personal experiences that have refreshed my faith in it.
First, in September, I was meant to go on a cruise with my 83-year-old mother and younger sister – a week long journey that would embrace Malta, Athens, Souda Bay in Crete, beautiful Santorini and Rhodes.
But weeks before we were due to embark, my magnificent mother was diagnosed with cancer, which required major surgery.
Sadly, we had no choice but to cancel the trip.
Most importantly, mum (a formidable matriarch) is now in recovery mode (bar the odd hiccup) and has been told by her dishy consultant that she has at least 10 years of good life left in her. So I’m sure we’ll get to Malta et al at some stage.
Given we had to cancel the cruise late in the day, we were hit with stiff cancellation fees. But, thankfully, my annual travel insurance came up trumps because it covered a big chunk of the trip’s cost. So one cheer for insurance.
My second personal cheer for insurance stems from the private medical insurance cover I have courtesy of work.
It has allowed me access to a wonderful urologist (Dr Christopher Ogden) as I battle against prostate cancer. It means regular check-ups (so-called active surveillance) to ensure the cancer remains under control. So far, so good.
Finally, my dental insurance with BUPA meant most of the cost of a recent visit to my hygienist was covered. It didn’t dim the pain in my but it ensured there was no hole left in my wallet.
Give insurance a go.
As a fledgling financial journalist in the late 1980s, I was taught to view insurance as the bedrock of good financial planning.