“Sometimes the best path to success is reducing the risk of failure.”  – anonymous.

If you are not sure if insurance – life, disability and critical illness insurance in particular – is of any value to you, this article might help you.  This is a discussion that applies to families with children with disabilities and those without.  Normally, the stakes are much higher where there are children or family members with disabilities because their financial needs are greater.

First and foremost, insurance is about managing risk.  The better you manage your risk, the better your chances of continued success.

I know the owner of a catering business that manages upscale, large events.  He says he prepares for every event by trying to anticipate anything and everything that could go wrong.  He then has a strategy to prevent things from going wrong and another strategy to deal with any errors, miscalculations or sudden changes if things do go wrong.  This means he prepares more that others might do.  Bring extra equipment, devise contingency plans, have additional people on standby.  For this caterer, reducing risk paves a smoother road to success.

Of course he is glad (relieved?) he is prepared when things start to go off the rails, but why doesn’t he see the extra effort, time and expense as wasted after an event that runs without issue?   While he knows he can’t predict when issues may rear their ugly heads, he fully believes they eventually will.  Some days will go ahead without issue and others won’t.  If we are prepared for rain and all we get is sunshine, we should feel lucky, not regret.

Regret is something felt when catastrophe hits and no plan is in place.  People on a secluded camping trip do not regret bringing that bulky first-aid kit even if everybody on the trip returns without injury.  Regret hits when there is an injury and the first-aid kit was left at home.  The injury is bad enough; not being able to respond to the injury can leave you helpless and in far more danger.

Maintaining a standard of living requires similar thinking.  As people pursue the life they want to live and the life they want to provide for their families, many are proceeding without strategies to deal with the financial impact associated with premature death, illness and injury.

As unpleasant as it sounds, illness, injury and death happen.  Sometimes they happen prematurely, when it is not expected, and “at the worst time”.  If you or your family relies on your income to the point where you would suffer financial hardship without it, a contingency plan in the form of insurance should be a serious consideration.

We do not expect to die prematurely, become disabled or be diagnosed with a critical illness, but that does not mean we shouldn’t be prepared in the event that is does.  Some of us will die early in life, become disabled and be diagnosed with a life threatening illness.  30% to 40% of people between the ages of 30 and 50 years have become disabled for more than 90 days where the average duration of disability ranges from 2.3 to 3.4 years.

The questions to ask yourself are, “If I die, what will be the financial impact on my family and is that something I am willing to accept? If I become disabled or face a critical illness, how will my family and I manage financially? Will we have to re-mortgage the house, use money set aside for retirement, borrow money from the bank, family and friends, and will we have to resign ourselves to a much lower standard of living?”

The purpose of most insurance policies is not to help you achieve success.  The purpose is to make sure unexpected events don’t push you and your family right off your path to success.

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You can contact Ron Malis at rmalis@monarchwealth.ca