Insurance and Compassion
Wow. I thought "The Odd Couple" went off the air years ago. "Insurance and Compassion" might strike you as The Odd Couple redux. But read this with another set of eyes.
Insurance is, above all, protection. Yes, there are formulations of whole life insurance that can include a pot of mutual fund holdings or other financial products that look like investments. But despite that, all insurance boils down to protection. And don't forget it.
Let's get the business of insurance out of the way so we can get to the real gist of what I want to discuss. For the most part, insurance companies are either stock or mutual insurers. A stock insurer is one that is owned by shareholders that may or may not be insured by the company. Stock is issued and traded much like that of any other company.
A mutual insurance company has a different organizational design. The biggest difference is that it is owned by its policyholders. That is, having insurance through a mutual insurer makes the policyholder an owner of the company. One might argue that a mutual insurer is prone to greater "compassion" because it is policyholder-owned and therefore "works" for the insured. Sort of like a son or daughter working in a family business; but that could be a stretch.
All insurers must operate according to sound accounting and actuarial principles. All are governed by laws specifically governing risk-bearing entities. States promulgate statutes and other regulatory dictates applicable to many aspects of an insurer's operation. Therefore, even mutual insurers, which are "owned" by the policyholders, can't pay claims or do other things "just to be nice" or to expand the coverage provided by the policy. They must abide by the applicable law, one of the biggest aims of which is to ensure solvency.
Beyond the business of insurance, what I'm really talking about here is compassion. The dictionary defines "compassion" as sympathetic consciousness of other's distress together with a desire to alleviate it. For purposes of our analysis, that definition is fine.
Think briefly about insurance in that context; maybe it is the first time that you have. I've had numerous health travails. Once a trial and insurance regulatory lawyer, I had to become something else (the jury is still out as to what). For whatever the reason may have been, I had the forethought to buy life and disability insurance years ago before the onslaught of uninsurability.
The life insurance was a no-brainer and a bet I could not lose. The odds of dying, at some point, were greatly in my favor. Yours are, too. Buying it was a way to show compassion to my family. The house could get paid off at death, and maybe sooner if I met the requirements of the accelerated benefits rider. Not a happy thought, but arguably realistic. My wife and I are middle-aged, and once our son is on his own, and sadly when attrition starts among the multitude of canines, we won't need a house of this size. Therefore, proceeds could be used for a smaller house and the remaining (or replacement) canines.
So, life insurance on me offers her some options that would not otherwise exist. The same goes for her life insurance for me. And, if he continues to fly right, it could create a small legacy for our son (although I'd prefer that he worked for it). I can only hope that despite the pain-in-the-a*** that I may have been over the years (bad jokes, stubbornness ["No, I don't need my glasses"]; ["Do you know where my glasses are?"], the life insurance evidences compassion.
All of the foregoing, especially in my case, applies to disability insurance. A brain tumor made me stop practicing law. It was the only way I knew to earn a living. Who would have thought? Things like that only happen to other people. Hell, they do. Everybody in this house would have been SOL.
Some professions and individuals paint insurers as villains. All I can tell you is that was not my experience. Mine was that if you are honest and not greedy with an insurer, it will be with you. Are there jerks? Sure, everywhere and in every business or profession. Are insurers big with lots of money? Sure. Are they comprised of humans like us? Also, sure. Do they exist to give away money to which you are not entitled? No.
Don't make excuses. If there is someone in your life who will need help when you are gone, do the compassionate thing and get life insurance to help them. Hell, also get disability insurance before a disability occurs. You're being compassionate to your family and to yourself by doing that. Not to be crass, but life with a disability is easier if there is a substitute source of income.