How much is up to us?
People believe different things about life events – whether they're things that happen to us, or whether they're consequences of our actions.
More spiritual folks may feel like God does 99 per cent and we just do our 1 per cent.
Others may think it's more like 50-50, and still others believe that the course of our life is all our own doing.
Debating this sort of thing is way beyond this piece, but I'd say most of us can agree: we all do "something" to influence our situation.
Most of us do not entirely sit back and passively allow everything to happen to us. Otherwise we'd all be sitting in a field waiting for a house to be built.
One active thing we can do, in the face of the many risks that life brings, is cover what's important to us.
Insurance is not the only way of doing this – some things are covered by the government, ACC, our community, or we can cover things ourselves – but it's one important tool.
Insurance allows us to pool life's risks with others and pay a company to carry it for us.
That way it's off our shoulders.
But what are we really buying?
Insurance is not the lottery. True, there are some similarities: many throw money in, and it ends up paying out to relatively few. And it can seem like a gamble at times, even when it isn't.
Like the lottery, insurance can also seem like a waste of money. Spend five or ten years paying premiums that step up consistently without making a single claim, and it can seem like it's all for nought.
So it may help to be clear on what we're actually buying when we put insurance in place: we're paying a company to carry our risks for us. We're buying the peace of mind that comes with knowing that if something happened, certain things will be taken care of.
Not everything, mind you – we still need to have a certain amount of trust in life – but at least some things can be covered. We can do our bit to sort things.
Where to start?
If you're shopping around for insurance or are reviewing what you currently have, there is help on hand to prioritise. The Sorted website has just evolved to include a new section on getting cover. It comes down to three things, in this order:
1. Cover your people.
2. Cover your money.
3. Cover your stuff.
Depending on the people and possessions in your life, you may need different kinds of insurance. And importantly, what often doesn't get said is you may not need many products yet, or you may be paying for some you no longer require.
Our relationship with insurance tends to lag: we typically wait too long to get the right insurance in place, then we hold on to it way longer than we need to. We may double-up some cover and pay for more than we need. A good insurance adviser can help tell the difference.
If insurance seems like a waste, it's important to remember that cover is one thing that is easy to get when you don't need it, and near impossible to get when you do.
That's because we don't realise what we were paying for all along: peace of mind.
To paraphrase Reinhold Niebuhr: "Grant me the serenity to accept the things I cannot sort; courage to sort the things I can; and wisdom to know the difference."
- Get Sorted is written by Sorted's resident blogger, Tom Hartmann (@TomHartmannNZ). Check out the guides and tools from Sorted – brought to you by the Commission for Financial Capability – at sorted.org.nz.
