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risk for taking care of a disaster from herself to the insurance company, and the $42 a month premium she’s paying is the cost of the insurance company accepting that risk.

If Nathalie chose to self-insure and the harp broke in two years, she would have $42 × 12 × 2 = $1,008 saved in her self-insurance pool. How would she come up with the other $15,000?

Most people would just put it on credit. Credit has made insurance seem like a useless product because people have had, to a large extent, an endless supply of money available to solve any problems. But credit shouldn’t be used as insurance, since the cost in interest is far higher than the insurance premium.

So how long would it take Nats to come up with the full $16,000 if she were banking her $42-a-month premiums? Well, 381 months, or almost 32 years! So for 32 years, she’d be at risk, having to cover the cost of the new harp to some degree, when for $42 a month she wouldn’t have to think about it. Every time she loaded that sucker into the car she would be worried sick about what she was going to do to come up with the money to replace it if the worst happened. That’s a lot of worrying. And that’s exactly what insurance is designed to do: eliminate the worry. Insurance companies create peace of mind by offsetting risk.

Insurance has a bad rep. If you make a claim, insurance companies raise your premiums. They put you through the ringer because they don’t want to make a payout. There are even stories about life insurance companies not paying out when the body insured actually drops dead. There are reputable insurance companies that take their jobs seriously and make sure their customers receive the services they’ve paid for. Your job is to find the one that works for you.

If Nathalie never has the need to buy another harp, she should say, “Thank you” for not having to deal with that stress. In the meantime, her $42 a month has bought her years of piece of mind and a sense of safety. Money well spent.

WHY WE DON’T BUY LIFE INSURANCE

There’s no product in the financial world that’s been more maligned than life insurance. Part of the problem has been the heated and often vicious debate that’s raged between the proponents of term insurance versus those who favour permanent insurance. The other part of the problem is that people have been “sold” insurance—as opposed to making an informed buying decision—and that’s left a really bad taste in our mouths.

Some people believe if they don’t work outside the home they don’t need life insurance. With no paycheque to replace, premiums are a waste of money. So, answer me this: with the other guy at work all day, who will watch the kids, do the laundry, drive hither and yon, make dinner, do the laundry, vacuum, grocery shop, do the laundry? How much would it cost to replace you?

Young people know they are never going to die. And if they do, it’s a long way off. Since the odds are in their favour, life insurance premiums are a waste of money. This is a paradox because if you buy your life insurance when you are young and healthy, you’ll pay so much less for it.

If you’re a gambler by nature and choose to take your chances skipping life insurance completely, I have one more question for you: how come your stuff is worthy of insurance, but your life isn’t? Maybe it’s because you don’t have to deal with the ramifications of your own death so it’s easy to ignore them.

Since many people are covered by life insurance through their benefits packages at work, they believe that individual insurance is a waste of money. Have you even reviewed how much your work insurance provides and calculated whether it’s enough to support your family? And when you leave that job for the next, will you still be young and healthy enough to get the insurance you need because the next employer’s plan is pathetic or nonexistent?

Then there are the ostriches: the people who can’t bring themselves to think about their own demise. Ya know what? You’re gonna die. Yup. You’re gonna. So get over yourself and do what it takes to make sure your family isn’t left holding a Pot of Nothing when you’re pushing up daisies.

Almost everyone needs life insurance. Unless you plan to lead a solitary life and have no one that depends on you, you’ll probably need insurance at some point. The longer you wait, the more expensive insurance coverage will be, and the greater the risk that you won’t qualify because you develop some hither-to-unknown disease. Get coverage as early as possible so it’s cheap. And quit procrastinating. It’s not going to be any more convenient next Thursday.

DON’T MAKE THESE MISTAKES

One consequence to hating the very idea of life insurance is that we often don’t put in the time and do the research we need to do to make a good decision. Here are eight common mistakes to avoid when buying your insurance.

Don’t make the decision based on the amount of the premium. If you start from the premise that one kind of insurance is cheaper than another and let that drive your decision on how much and what kind of insurance you buy, then you’re going about it all wrong. You must first figure out how much insurance you need and for how long, and then choose the type of insurance that will give you the coverage you’re looking for.

Don’t think of insurance as an investment. It’s not. It’s risk mitigation. It’s just in case. It’s a necessary part of a sound financial plan. While certain types of insurance do build up money over time—products like whole or universal life insurance—that’s not the first reason for buying insurance. Insurance is about taking care of the what-ifs. So the amount it will pay