The Most Interesting Post In The World – Contemplating Insurance

Want to read the best post ever? 

You might think this is a subjective question, but it’s not.  It’s a fact.  It’s probably already carved in stone somewhere far up north in the arctic circle. 

Mermaids whisper about it to jaywalking peacocks while they toast unicorns with Dandelion wine. 

Yep, it’s that fucking epic! 

So what is this mind-blowing post going to be about?  Hold your breath… 

Insurance.  Sexy, enticing, smooth criminal talking insurance. 

Nothing more and nothing less.  

Whoa whoa whoa, hold your horses, you might be saying… hey Q-FI zippidy doo.  What the fuck is up with this bullshit teaser?  Why are you going to waste our precious time on boring, tedious, exacting insurance? 

Well, let me tell you. 

Insurance.  What a despicable word.  We hate it on the surface.  We treat it like the hooker standing on the street corner.  But when alone in the darkness, when no one’s watching, we realize that we need it… and it needs us. 

Yep.  Fucking insurance, bro.  That’s my bottom line.  Hahahaha. 

Alright, so let’s get to the juicy meat, that beautiful medium-rare glistening rib eye steak that is iiinnnsssuuurrraaannnccceee!  Boom! 

If you couldn’t tell, I drank a lot of coffee before typing this bad boy intro up.  I still get my caffeine fix since it is one of the last chemicals on Earth I can safely imbibe.  But, putting all joking aside, most people probably look at insurance as the boring sloth-like entity that it is.  Yet, it’s essential and understanding it is even more important.  Because like your FI situation, everyone is different in how they live their lives and what they need. 

Let’s preface first, as everything on this blog, this is not a how-to or advice post.  I don’t tell you how to improve your life because I have no fucking clue.  I tell you what I’m doing in my life and maybe it helps you… or maybe it doesn’t. 

Back to the task at hand and my recent insurance story… 

As I mentioned in an earlier post, “2019: A Year in Review”, my goal for 2020 was to employ a new tax/financial advisor who is both a CPA and CFP, which I accomplished at the beginning of this year, and when reviewing my portfolio, he made a few insurance suggestions that I had not previously thought about. 

The first was to obtain a $1M umbrella policy to cover my wife and I.  My advisor said it would only cost about $200 per year so I thought, yes, that’s a good idea.  Let’s get covered for some liability at a cheap price.  However, my current car insurance at the time was with AAA (this is very expensive car insurance, but they had won me over in the past with exceptional customer service on prior claims so I never minded paying more – I believe in price relative to value).  But when I asked AAA to add an umbrella policy to my current auto insurance, they advised I would have to first, max out the liability on my auto policy which would probably cost me an additional $1K a year. 

Shit!  I thought.  That’s not good nor cheap.  

This led me down the insurance-bundling rabbit hole, that at first, I thought would be simple, but it turns out that a simple thing like a $1M umbrella policy, is not quite as straightforward as one might think (even for someone with solid income, no debt and a bundle of assets).  So, after significant time and research, I ended up moving all my business to Geico in order to bundle my car, renter and umbrella policy together.  I am not a homeowner nor have kids so including home and life insurance weren’t applicable (though I do plan on purchasing a home and fostering children in 6-9 months – more to come on these adventures soon). 

So, if bundling is something you are thinking about doing, just know that all companies are different on their stipulations and what they will require you to do – however, investigating all options is never a bad thing.  And although researching all these policies actually ended up being considerably more work than I had anticipated, I now enjoy increased coverage at a lower premium cost.  Overall – effort well spent for a win/win in my book. 

The second insurance suggestion was to max out my disability insurance (short and long term) through my employer’s benefits. 

I’ll be frank, this is something that I never gave much thought to before.  I am still relatively young at age 38 so I had always checked the box with the cheapest options for disability – figuring I already have assets to rely on in an emergency.  Plus, what are the odds that something would really happen to me?  However, after further discussing with my advisor and acknowledging that I am the high-earner in my family, I realized that I was naively thinking more about myself rather than my wife.  So, I agreed to increase my disability benefits as well. 

However, I had already selected my open-enrollment option with the lesser coverage (October 2019) and told him that I would wait until next year (October 2020) to apply the changes.  He said that was fine, but do I want a one-year bridge policy to cover the difference until the new one would kick in?  I said, no, I don’t want to pay for that, I’ll just wait until next year and take the risk. 

And then less than a month later, the pandemic hit… which made me think… and wonder… in a way I never had before. 

Now, I am not sick, I still have a job and plenty of assets, but the timing of all of this was eerie.  What would happen if I did get sick and had health complications and could not work and needed long term disability?  Was this possibility really so far-fetched now? 

Unprecedented things are happening that I had never envisioned before.  Two months ago, I would have sworn that I would never see a pandemic or oil prices go negative in my entire lifetime.  And now two impossibilities had occurred within a month’s timeframe. 

Holy fucking shit!  Maybe my sense of risk had not been accurate? 

What saves me $50-100 bucks a month in premiums doesn’t seem like such a good trade-off now.  I find it interesting how quickly things can change, and what that means to me from an insurance perspective.  And I’ll be honest, right now, I’m not sure.  I am covered well for what I need, but as I mentioned before, home ownership and adoption will be on the near-distant horizon, and more intricate assessments will be needed. 

Just like how your investments are determined by risk, so is your indemnity, security and surety to our small sliver of existence.  

Life is funny.  Funny how it works, twists and winds through forested trees of possibility and then down into the potholes of tragic reality.  Either outcome is an option, and the only determinant is time itself.  But how we face that chasm of time, and on what terms we construct the bridge of our choosing, is up for us to decide. 

So, insurance, that elephant in the room that we like to sweep under the rug and pretend that catastrophe cannot happen – like in our sparkling youths, when we danced on this earth envisioning blissful futures of heroes and heroines and claimed invincibility while ignoring our human frailty, maybe a penny saved is not the same as a penny insured. 

Because time has a way of sobering us and shifting our vantage point.  When we begin to look back more than forward, have acquired our assets and burgeoning families and offspring we are responsible for, how we manage risk… becomes the new priority. 

And what this new future will look like, I am not so certain as I was before… 

-Q-FI 

— 

P.S.  Has the new normal shifted your view on risk and insurance at all?  Or is it still full speed ahead, business as usual?