Here in Colorado this week, we are experiencing unprecedented flooding that has crippled parts of the city, shut down schools and businesses and caused a great deal of damage.
So what does this have to do with disability insurance?
Insurance is insurance. Whether it is life insurance, disability insurance or property insurance, the purpose is to pay benefits in the event of a disaster.
This morning I spoke to some people who were discussing the disaster. Some of the people said they didn’t carry flood insurance since they live in the landlocked state of Colorado. “I just assumed that the chances were low so why bother purchasing that type of insurance.” What they don’t realize is that if chances of a certain type of event are low, the premiums are probably less as well. This explains why juvenile life insurance is so inexpensive.
Disasters, tragedies and illness strikes at any time with no rhyme or reason. People purposely always think that something terrible will happen to someone else. Even victims of a disaster never thought it would have happened to them.
I’ve had clients tell me “no one in my family has ever had a disability so I’m not that worried.” Or, “people in my family all live to 100 so I’m not sure I want to waste money on life insurance.” Or, “what happens if I pay premiums all these years and never have a disability claim?”
Do we make our insurance purchase decisions based on probabilities or our own experience?
No one ever expects to file a claim. But when disaster strikes, you will be glad you purchased your disability/property/auto/whatever insurance. Without the insurance, the disaster becomes magnified.