I WAS reading an opinion column last week that said ‘happiness isn’t very good for the economy’.
What this meant is that we buy things because of ‘fomo’ – fear of missing out. Why do we buy the latest smartphone? Because we’re afraid of being left behind. Why do we buy anti-aging moisturisers? Because we’re afraid of looking older. Why do we vote for a particular political party? Because we’re worried about the EU, or immigration, or whatever big item they are pushing.
I wrote a few years ago that this is one reason why very few of us still own a black and white TV. The marketing industry works hard on pushing ‘fomo’, to ensure we’ll always want the latest model, the newest product, the new zippy brand. We can’t be allowed to be happy with our normal, non-upgraded lives.
However, the article then crossed the line, and made a statement that I believe was blatantly ridiculous. ‘How do we get people to buy insurance? By making them worry about everything’.
Today I’d like to show just how unreasonable that statement is, with a few hard facts based on proper scientific research.
First, let’s remember that insurances are also known as ‘family protection insurances’, which goes right to the crux of the matter: they protect your family, their lifestyle, and their financial wellbeing.
We’ll start with life insurance. Canadian humourist Stephen Butler Leacock once said: “I detest life insurance agents; they always argue that I shall someday die - which is not so.” And you can’t argue with that.
Even the most optimistic doctor can’t deny it: we’re all going to die some day, and alongside personal loss, our family also lose our income and financial contribution.
We don’t buy life insurance because we’re going to die – we buy it because our spouse and our children are going to live. Depending on the timing, our insurance could ensure that our children can still go on to college, or get help buying their first home.
God forbid, if something happened and we were no longer around to see our youngsters grow up, at least we can leave them some financial security on their onward journey.
(By the way, just an aside here: did you know you can provide an additional safety net for your children by opening a Child Stakeholder Pension in their name, no matter how young they are? I have a client who has opened two of these pensions for his kids, paying in monthly and getting the standard tax relief on those payments, and he’ll be leaving his children with substantial pensions for their retirement. That’s one thing they’ll have less to worry about, during their working lives!)
The other crucial insurance is critical illness insurance (CI). If life cover is what you have for when you die, CI is what you have for when you don’t.
If you suffer a major health event for instance, such as cancer, a heart attack, or a stroke, you could be off work for years – if you’re ever able to go back at all.
This could be disastrous for your family. The Association of British Insurers (ABI) says that most (60 per cent) working families would lose a third of their household income if the main earner had to stop work, and 40 per cent would actually lose half.
Cancer is the biggest critical illness by a long way, and MacMillan Cancer Support tell us that more than half of us will suffer some form of cancer during our lives.
Critical illness is not just an older person’s problem, either - the average age for claims is just 47.
Happiness may not be very good for the economy – but peace of mind through insurance certainly is, especially if you have a family to protect!
:: Michael Kennedy and Shaun Doherty are independent financial advisers and pensions specialists, and can be contacted on 028 71886005. Further information on Facebook at “Kennedy Independent Financial Advice Ltd” or at www.mkennedyfinancial.com
