It’s Groundhog Day – so heed Ned’s advice
“Phil, Phil Connors?!”
An exclamation which chilled Bill Murray to the bone as annoying insurance salesman Ned Ryerson sprinted across the road desperately trying to sell a life policy to his old school pal in Groundhog Day.
Nerdy Ned was an hilarious Hollywood cliché and despite getting laid out in the street by a jaded Phil, Ned was right.
Taking out life insurance is essential. It’s what we in the profession, class as the most basic element of financial planning.
Those in the professional finance industry know that life insurance is a product that generally people need to be ‘sold’, and is not bought.
Buying insurance to guard against the unforeseen that life can throw at you seems an obvious choice to make.
But, surprisingly, many people don’t bother. They are quite prepared to insure a phone, tele, car or the latest device from Curry’s.
But what about yourself?
This was brought home to me with recent crowdfunding stories of people raising money online to help those injured or the families of people killed in tragedies.
The very best of human nature at work, at a time when it’s needed most.
It emphasised to me that people need to protect their most valuable asset – you.
A great analogy quoted in the financial profession is -‘if in your attic you had a goose which laid a golden egg every month, would you insure it?’
‘Yes, of course I would.’ ‘Well you are the goose and the golden egg is your salary every month.’
Life insurance doesn’t cost a lot of money and it’s so readily accessible. A click of a mouse online or phoning up your bank and it’s sorted, whether it be with Tesco, Sainsburys or HSBC for example, it’s so easy.
The average policy costs about £5-10 per month depending on the level of cover, which as a percentage of monthly salary isn’t very much.
The reason you take it out is so if the proverbial does hit the fan then you are covered.
It’s also worth drawing the distinction between life insurance and life assurance.Life insurance is for something that may not happen, life assurance is for something that will happen.
We generally to tend to talk about insurance as if you’re 30, and you’re married and you have two kids, then you want to buy some insurance to cover you until the kids are 20 – so it’s a fixed term.
With assurance you would take out the same policy say when you are 30 and when you die, it pays out. So when you are 100 it pays out, it pays out when you are 90, it pays out if you die when you are 31 – that’s assurance.
It’s definitely going to pay out but we just don’t know when.
Even Phil Connors eventually saw the light and took out a full life insurance package with Ned – with the optional dismemberment policy!
A wise move on his part. It’s unlikely that you will bump into a Ned Ryerson in the insurance business – financial professionals like to think they are far better dressed and much more customer savvy than Ned.
But you could do worse than listen to his sage advice and take out life insurance if you haven’t done so.
It won’t cost a king’s ransom and will give peace of mind to you and your loved ones.