How much is your life worth?
Filed under: Cost of living, General Budgeting, Property & General Investing, Retirement, Pensions and Kiwisaver
Yesterday we went to have a chat with our Financial Planner – Alan at FSB4. We really had to sit down and tackle our insurance policies: Life, Trauma, Critical Illness and Income Protection. None of which even I can consider exciting – but has to be done.
Now – generally when we have sat down with people about this – the conversation usually runs along the lines of the Sales person asking who much cover we want, and then getting us quotes for what it will cost us.
This one however –went a little differently (and I always like Different).
Alan asked us what we needed to cover.
So we had to go through all our mortgages, how we wanted to be “sent off” when we pop our clogs, how many people we wanted to supply flights for to send us off (Tough – you are on your own – pay for your own flights if you want to say goodbye!), any bequests, for how many years we wanted to not have to work if anything happened, and a really cool “Recovery fund” which is basically money we can use to help us “get over the trauma” of whatever goes wrong.
It was a VERY BIG NUMBER.
And – it’s going to COST A LOT.
How many suitcases stuffed with money we will need to spend to buy the level of cover we need – is being worked on. But I may have to add a shot of brandy to the coffee that Alan had better be buying me when we have that conversation.
Now – here’s an interesting thing: turns out we have “a lot” of investment properties (that’s 3!), and basically in times past – when people died – they just sell enough properties so that they can live of the rent. Only that ain’t gonna happen now – because prices have tanked. So one way or another – we actually need to make sure we can pay off those mortgages if Hubby is no longer able to earn.
We were woefully underinsured when we sat down and worked it out. At a rough guess – our Life Insurance is probably about half what it needs to be.
And also at a rough guess – we may need as much as an extra $500 a month to pay for it. As good as I think I am at budgeting – that is gonna be tough. We were due to do one of our Budget Reviews at the weekend, but I have decided that we may as well wait till we have some firmer numbers about the cost of this – and then at least I know what to aim for.
At that point – we have to prioritise our insurance requirements (because I’m not giving up my Coffee Budget for life Insurance – no way!).
Insurance and risk planning are things that tend to get forgotten about – but it doesn’t hurt to occasionally sit down and work out just how many $$$ your life is worth. It is probably an awful lot more than you think it is.
Related posts:
- “Made to make your eyes water” Life Insurance Premiums.
- Avalon’s Money Thread: Working out our net worth.
- NZ Life Insurance – just daft!
Comments
2 Comments on How much is your life worth?
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» How much is your life worth? on
Thu, 22nd Jan 2009 4:28 pm
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Hubby on
Sun, 25th Jan 2009 7:56 pm
[...] Read the rest of this great post here [...]
And the other thing to check is how much your policies may overlap each other. Insurance companies, being the nice sorts they are, will reduce their payment to you if another insurance company also covers the same type of risk. So you pay twice, get to pay two excess payments, both companies are sure to increase your premiums next year, and you still only get the smallest amount both companies can get away with paying you!
This is something that really gets to me, I pay insurance, I expect the insurance companies to pay out what was promised. Yep – I’m a little naieve like that sometimes.
So – check your policies, check if you’ve got duplicate cover, and kick the insurance companies into touch. Yes – it’s better to have duplicate cover than no cover, just be careful you’re not paying twice to only receive one benefit.
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