Is Insurance too costly to buy? Here are 5 ways to afford different policies… even when you can’t
One of the most popular lies that we tell ourselves (and that well meaning Insurance Planner across the table) is: Insurance is just too expensive for me right now.
Different variants of that line are:
My budget is tight, I need to work it out properly first
I will wait for my bonus before committing
I have other commitments right now, maybe they will be gone in 2 – 3 years time
We’ve used those line a fair few times ourselves, and it is perfectly natural. Insurance deals with the intangibles – and it is always harder to justify a purchase when it does not entertain, shine, or provide immediate gratification.
But being the responsible people we are, proper coverage can make a world of difference. In fact we wrote about it here, here, and here. And we will probably continue writing about it for as long as we can.
In this article, we examine 5 different avenues that many of us actually spend money on, which could be better used to finance different types of policy cover.
Once you are mentally ready to have excuses blown out of the water, read on.
1. Watch your daily Starbucks fix
We love our coffee. Artisanal coffee to be exact. But at $7 dollars a pop, it isn’t exactly cheap. But should that get in your way of getting cover?
Here is the breakdown:
Assuming I drink one (just one!) cup of coffee a day for each work day, over the course of the year , that works out to be $1,680.
Just how far does $1,680 a year take me, in terms of insurance?
Pretty far, all things considered. A 30 year old man can get 400k of Death, Terminal Illness and Critical Illness cover till age 65 via a Term plan…. for $1,200 annually.
That still leaves me with 68 cuppas to spare.
2. Reconsider your cable TV subscription
We get it. Flat screen TVs are all the rage. And to fully enjoy the utility of all 72 inches of your plasma screen, you need to have some top notch programs to view. Cue cable TV subscription.
How much does that work out to, in terms of a dollar amount?
Assuming you go for a modest subscription of $50 a month (some plans can go up to $80 or more a month), over 12 months that works out to be $600.
Well it ain’t so bad, considering the amount of entertainment it could provide. But guess what else isn’t so bad?
For less than $470 per year, a person can get a pretty comprehensive Personal Accident plan that covers:
Accidental Death: 250k
Accidental Total and Permanent Disability: 375K
Accident Medical Reimbursement: Up to 3k per accident
Not to mention daily hospital cash, emergency medical evacuation and even disability income benefits.
That still leaves me with $130 cash in the pocket. Maybe a subscription to Netflix?
3. Ironman needs to stay updated on his gadgets. You don’t.
Unless you are a billionaire – playboy – philanthropist with a calling to save Earth and look cool doing it, there is absolutely no need to upgrade your gadgets every chance you get.
That is to say, you need not switch to a new iPhone or Google Pixel 2 just because they are out there. Ditto tablets, laptops, headphones, and all manner of electronic equipment.
But ok, I hear your point about Tony Stark being a genius. Maybe that applies to you as well. Here’s how I would demonstrate my own genius when it comes to gadget upgrades:
Estimated Yearly Cost: $1,500. (Half the cost of a phone and a laptop, assuming we only upgrade them once every two years instead of yearly)
The genius in me found that for that money, you can enjoy the most comprehensive shield plan out there that covers every single dollar of your medical emergencies – even in private hospitals. The cost? Less than $1,200 for a guy aged 30.
This leaves me with $300 to indulge in state of the art speakers. Yippee!
4. Cut back on Movie Nights
Chilling out in front of the silver screen is always a treat. There is something to be said about watching The Avengers with dolby surround sound that gives me goosebumps each time Captain America makes an entrance.
But just how much are we giving up in exchange for such a treat, twice a week? For a duo who watches 2 blockbusters a month, that comes up to $1200 a year. (Tickets + Snacks approximated to $25 per person each visit)
After checking with Vision, who scanned the globe for alternatives, he shared with us that a 30 year old male could get Disability Income insurance for less than $500 a year. And it is no slouch of a plan, giving up to 5,000 a month in compensation if the poor guy is unable to work due to a disability.
What shall we do with the $100 remainder? I would get the Blu-ray version of Avengers. But that’s just me.
5. Think before you puff
We saved the best for last. If you are a smoker, then this might be a yet another good reason to reconsider your position.
Say as a smoker, you consume a large pack every 2 days. At $12 a pack, this translates to $2,190 per year that goes up in smoke. Lets call it an even $2,000 for simplicity.
Instead of puffing all that money away, imagine it being put to a long term good use: Retirement Planning. 2,000 a year may not seem like much, but if we started saving that money from age 30 till age 65 – while growing it at a rate of 3.5% per annum – it would snowball to over 138k.
You can play around with the power of compound interest here.
This is just the financial upside of not smoking – and we leave the health benefits to be stated by the good folks at the Health Promotion Board.
If you are aren’t a smoker, that’s good to hear. So you don’t have an excuse not to plan for your retirement. Gotcha.
Stand back to admire your handiwork:
Without earning a single dollar more, here is what we’ve manage to squeeze out:
A great Hospitalization Plan to ensure you can always stay in any hospital and any ward you choose, without paying for it
Death, Terminal Illness, and Critical Illness Cover for 400k till you reach the age of 65
Comprehensive Personal Accident cover that compensates you for any mishaps
Disability Income protection for up to 5000 a month if you am unable to work
And last but not least, you also can start making significant headway towards retirement planning.
Not too shabby.
This article is not about being Scrooge McDuck. It is not about scrimping and saving. We all have our indulgences, and as well we should. They keep us sane and happy.
But our aim was to dispel the notion that insurance is expensive, and hence un-affordable. Especially when we are already spending so much more in other pursuits. (Sometimes without knowing it)
We don’t necessarily have to give up what we like to do, eat, or buy, but we neither should we stand behind the “explanation” of not having enough money for insurance.
Rather than focusing on an excuse, why not find a solution?
Because whatever reason you have for not buying insurance now, will only sound ridiculous later. When you need it the most.
Trust us on that.
www.ClearlySurely.com aims to eradicate the knowledge gap between consumers and Life Insurance. Our Vision is that one day, every Man, Woman, and Child will be properly insured.
Yes we do enjoy coffee, going to the movies, and watching cable TV. The key caveat: we are already very well covered.