Are You Feeling Lucky, Punk?

Hey Scott,

When it comes to insurance, I am struggling to find the line between ‘necessary’ (like life insurance) and ‘unnecessary’ (like do I want to gamble my hard-earned money on whether my house will burn down?). If one of us were to die, I don’t think the life insurance money would console the surviving partner. Yet they may face financial hardship without it. So do I gamble, or bite the bullet and just accept it for what it is?

Fred

Hi Fred,

Playtime is over.

It’s time for you to put down your twinkies so we can do some adult-ing.

You need insurance.

Listen, I’m no shill for the insurance industry but, as someone who’s lost their home and contents to a fire (and two cars to rats!), I can tell you the only gamble you’re taking is not having enough.

Here’s my rule of thumb: only insure against things that will financially knock you out.

Example 1: You’re worried that your $30 Kogan hand wand blender could start smoking while you’re whipping up your famous fried twinkies. Should you pay $9 for the extended warranty insurance?

Answer: No.

Example 2: An electrical fault occurs and your $450,000 home, along with $60,000 in household contents (including your hand wand), burns to ashes. Should you pay $100 a month for house and contents insurance?

Answer: Hell, yes.

Final example: The average Aussie will earn $2.07 million over their working life ($2.9 million if they have a degree). What will life look like for your partner if you lose that income?

Answer: Bad.

So let me give the last word to infamous insurance salesman Dirty Harry:

“You’ve got to ask yourself one question: Do I feel lucky? Well, do you, punk?”

Scott.