The financial-services industry and the financial media often collaborate (knowingly or not) to steer people toward poor financial decisions rather than good ones.
Let’s start with the the entire process of financial planning, which usually defaults to the assumption that everyone has a tidy situation, with spare assets to invest, and the ability to get all the life insurance coverage he or she desires. Doesn’t sound like anybody I know, but that’s the way the planning industry tends to approach client situations.
The financial media are bad in their own way, trying to convince people that some kind of magical stock trade is the key to a secure life. Typically, these “what-stock-should-you-buy-now” articles and TV segments are created by people with zero experience managing actual client portfolios. They are written to generate viewership or readership, not to help with financial decisions and strategies that have a real impact on people’s lives.
Here in the real world, we know that our decisions matter. Those silver-bullet stock trades? They are entertainment, not the reality that pays the bills in retirement or feeds your family if you pass away sooner than expected.
And those picture-perfect models in the financial-services commercials, having such a carefree time? They don’t portray most families’ reality.
The reality is: We all need to protect ourselves financially.
For example, let’s consider life insurance. It’s an unglamorous topic (ever notice there are no TV networks dedicated to breathless coverage of the insurance industry?), but insurance is a key component of making better money decisions.
Most people buy life insurance for the first time when they become parents or homeowners. The reasons for it make sense: Nearly all parents would like to provide for their children, in the event that the family breadwinner dies early. You don’t want your survivors to suffer financially, on top of the emotional suffering, should you pass away unexpectedly. Perhaps you want to be sure your surviving spouse can remain in your home; a mortgage term life insurance policy can address that concern.
However, not everyone is easily insurable. Health issues, such as diabetes, smoking or being overweight can dramatically raise rates, making life insurance out of reach for cash-strapped families.
But financial planning usually involves some kind of sacrifice in the here and now, with the goal of meeting some obligation in the future. The financial-services industry often frames that obligation as “retirement,” but it can just as often mean taking steps to provide for your family.
50% percent of Malaysian do not have any life insurance whatsoever. But ask yourself: How long would that really last, if your family needed to replace your earnings, while paying their ongoing expenses and planning for a future without you?
Here’s your answer: Not very long, even if your household expenses are bare bones.
So what options do you have if your situation is less than perfect, when it comes to making financial-planning decisions for your family?
One option may be high-risk insurance. For example, if you regularly smoke cigarettes, most insurers would classify you as “high risk.” If you used to smoke, but stopped a year ago or more, you can often find a more affordable rate. In some cases, you can even get what’s called a “preferred” rate if you only smoke less than a few times a year.
(Of course, the key is being honest about your habits! It’s not a great idea to say you smoke twice a year, but then something altogether different is revealed in your physical exam.)
Diabetes is another condition deemed “high risk,” yet it affects a growing number of Malaysian. It’s been steadily rising since then. That’s the bad news. But for families whose breadwinner suffers from diabetes or other conditions, such as high blood pressure, high cholesterol or even cancer, there is some good news.
In the past, it was challenging, to say the least, for Type 1 diabetics to protect their families with life insurance, at least insurance they could find at any kind of affordable rate. Fortunately, that situation has changed, and several companies have tailored products to meet the needs of the increasing number of people with previously hard-to-insure conditions.
The point is: Don’t give up because you believe it’s too expensive, or even impossible, to protect your loved ones.
Planning for your family’s future is one of the most important financial — and emotional — decisions you will make. It is worth investing some time to protect the things that are important to you, rather than falling prey to the financial industry’s views of the “perfect,” uncomplicated situation. I don’t think I’ve ever met anybody whose situation is quite that simple. They only seem to reside in commercials.
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