Insurance agent told me I am a valuable piece of art.

Agent:
"We should do a review. Your salary is higher now. You should need bigger insurance coverage."

This was what one of my insurance agents said to me many years ago.

I was wondering why did she say something like that. 

Wasn't I financially more secure by then? Why would I need to increase my insurance coverage?

Agent:
"You are worth more now. Your life is more valuable. It is like insuring a valuable piece of art. More valuable the artwork, the higher the coverage."

OK, at that point, I think most people would have just bought into the argument.

I didn't.

I decided that the agent was only interested in lining her own pockets with more of my money.






Read this conversation I had with a fellow blogger on the need to buy insurance and how this need correctly changes with our circumstances.

AK:
We should look left and right before crossing the road. In some instances, we should look back as well to make sure we are not in the way of some speeding motorized scooters.

Risks have to be managed and having insurance helps to manage risks.

Since we are talking about risks, actually, insurance companies could go bust too. What then? OK, I am being a little perverse. ;p

So, even if we have insurance, it is still important to have a meaningful emergency fund and I do maintain a very large emergency fund well beyond the 12 to 24 months of recurring expenses that I usually suggest.






The need for certain insurance products in life diminishes if we have a large enough emergency fund as well.

Insurance is most relevant when we want to transfer risks which could result in catastrophic financial losses or hardship.

So, we have to insure ourselves against events which we or our loved ones might find hard to cope with on our own.

The financial ability to cope will, of course, differ from person to person and from family to family.






la papillion:
I think it's a important to know that everything we do runs a risk. Even if we buy insurance, it's also possible for the company to close down, as u had mentioned. (that's why don't buy all your policies from one single company).

That's not the only risk of buying insurance. These days, even if u bought a plan, u might not be able to claim because of some disclaimers laid out but u didn't know about.

So, I agree that we should progressively take the risk ourselves as our financial situation improves.

When we just started working, the insurer should bear a big part of the risk because we don't have the means to shoulder the risk. It should be inverted when our situation improves.






Don't think of ourselves as a valuable piece of art that needs insurance coverage.

We should become more valuable as a person because our wealth has grown.

As we become wealthier, we shouldn't need to have more insurance coverage.

How to become wealthier?

What?

Make more money and buy more stuff that we need to buy insurance for?

OK, maybe, I will ask that insurance agent who said I was a valuable piece of art to give you a call.

Related posts:
1. Emergency fund.
2. Best insurance.
3. Become wealthier.

CPF and public assistance are not the same.

Reader says...
do u remember what the PAP garment says about targeted help? 

Can remember right? 

Basically it means when it comes to helping the poor, must have targeted help, thats why cannot set poverty line blah blah. :)




so applying the garment's logic (not my logic hor) which u so happily agrees with, when it comes to the CPF the garment should also intervene in a targeted manner only on those individuals who cannot (in your words) act responsibly. Correct?

So why all a sudden when it comes to the people's CPF instead of targeted intervention, the garment now intervenes in a blanket manner on everyone?

so do u see the double standards and failed logic that the garment and u hold? :D

.....
AK says...
The CPF is about helping us in saving for retirement. 

The CPF Life is, in essence, an annuity but better. 

We are not asking for financial aid here. 

It is different from the poor requesting for help.

However, more importantly, how can we determine if someone is able to act in a financially responsible manner? 

This is a difficult thing to determine which is why a minimum universal safety net that covers everyone works.

(Ironically, it is probably the people who are financially more responsible who might not need this safety net but they want it whereas people who need a safety net the most might clamor for earlier release of their CPF money.)




We must bear in mind that in helping the poor and the needy, we are talking about providing aid using public resources. 

There is very little or almost no emphasis on self-reliance.

When using public resources to help individuals, I appreciate the targeted efforts the government make to ensure the best use of taxpayers' money.




You might think that there are double standards here. 

However, I think you have misused the phrase "double standards".

If there are two sets of standards applied to the matter of the CPF, one set for the rich and one set for the poor, then, I would say that double standards existed.




However, helping us to save money to ensure retirement adequacy is a different matter compared to helping the poor and the needy using public resources. 

The approaches have to be different because these are two separate and very different issues.




Related post:
So near and yet so far.