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Insurance in its many forms – a financial safety net

Personal risk management: insurance can protect you from the unexpected

Can you think of any act, any decision, any avoidance or choice that can be contemplated that does not involve risk?

The personal priorities of life, health, property and casualty insurance are among the biggest concerns followed by retirement, homesteading, and transportation.

It should not be too surprising which industry features strongly among the world’s top revenue generators, according to IBISWorld, whose top five industries by revenue are:

Global Life and Health Insurance Carriers ($4.27 trillion)

Global Pension Funds ($4.01 trillion)

Global Commercial Real Estate ($3.91 trillion)

Global Car and Automobile Sales ($3.6 trillion)

Global Direct General Insurance Carriers ($2.89 trillion)

This survey clearly demonstrates that insurance contingencies are astoundingly important to the world communities, placing ahead in rank of even financial industries.

Anticipating risk can be complicated, while an unexpected exposure to a catastrophe risk is even more unsettling and sometimes, completely life changing.

Certain types of insurance for various phases in life can help the more secure feeling, individually and collectively, for families, businesses, communities, governments.

However, as with everything in life, financial priorities of affordability, choice and personal beliefs, will be different for every individual, family and business.

A life cycle if risk planning


Juvenile whole life insurance

Parents or grand parents will purchase juvenile permanent whole life insurance for their children at birth. The choice of a child policy, at first, seems extraneous, but there are several very positive benefits. The policy premiums are very, very inexpensive remaining the same rate throughout, plus the policies can lock in coverage for life, a serious option if a child should later become health incapacitated with no option for additional life insurance coverage. The policy can accumulate cash value and maturation can help finance university or other goals.

Health, dental and eye insurance

Children are generally covered under parent(s) plan, unless family is uninsured where then a country’s social service system will have to fill in the gap, not always a certainty.


Health insurance

You are out from under your parents’ mantle. Now, self-supporting and self-determined towards your destiny and already at work building a career, you should have coverage through your employer.

However, it is up to you to monitor your health deductions and check routinely to be sure that your group health premiums have been paid.

Dental and eye care may not be covered under a Bermuda employer plan; however, if offered as an extra cost, seriously consider using that benefit. There nothing more important than saving that fabulous smile and excellent eyesight, given the exposure we all incur today from far too many processed food residues that stick to your teeth, and our eyes to too many hours of blue computer lights.

Disability insurance, short or long, is not always available in Bermuda. Again, some firms may offer it as part of a benefit package, a very important financial backstop if a long-term illness torpedoes a budget.

Vehicle: mandatory in just about in most “civilised” countries.

Group term life insurance is sometimes offered in an employer benefit package for the term of your employment.

However, you should carry your own individual term life insurance if you’ve had a parent or guardian co-sign for a vehicle, education, or even a home loan. In the event of your premature death, your parent(s) may be responsible for the unpaid balances.

Renters/tenant: not the same as say a homeowner insurance policy of a relative, so terms should be read carefully. It probably will not cover a lost security deposit.

Families and partners

Life becomes much, more complicated. Regardless of the legal relationship, insurance planning is a prerequisite. Children compound the current and future responsibilities relative to life insurance, guardianship, business planning, possible long-term disability, property, and estate settlement costs.

You will need to consider all of the above items listed for a single person including renters insurance, except if you / spouse/ partner own a home.

Life insurance: both spouses / partners should be insured. As a former international financial planning practitioner, I have seen cases where only the bread winner was insured in a two-partner family. The financial stress of coping alone – after losing a partner – with grief, small children, a job, daycare, and so many life challenges is overwhelming.

Guardianship event – an even tougher situation where surviving relatives are left to cope with the remnants of shattered lives, having insurance proceeds to care for survivors, settle the estate, etc. is so important.

Purchase what you can afford, term life if your budget is really tight, or whole of life to build cash value for the future if your finances are more flexible.

Mortgage insurance: the cost of which is calculated on the loan balance may be optional, or necessary depending upon the lender’s requirements. It is designed to pay down the mortgage principal balance, providing the title to the survivor homeowner, or relatives.

Keyman (of like kind) business insurance: Generally, this type of insurance is taken on key personnel and is financed by the business itself that can structured variously where the funds may buy out a deceased owner/partner’s share, or the surviving family, or both.

Property and casualty

While really considered a necessity in highly-affected geographical areas, the decision to purchase a policy will focus on cost, insurability, and insurance availability.

Close to or in retirement

Insurance decisions based upon personal situations in this classification can be quite different.

Retirees may continue to carry and fund life insurance to help manage their estate, or feel it is no longer necessary as a mortgage is rationalised, or have utilised the cash value.

They may no longer operate a business, or they may be looking at annuity-type placement for an income-producing component of their savings and more.

However, the insurance basics of health, vehicle, property will be continued.

Readers, we tend to think that we don’t need insurance. After all, those events won’t happen to us, or will they?

The standard answer: Insurance is a financial safety net. It is there in times of great stress, devastating natural catastrophes and personal tragedies to help you, your family, your business and community recover in the aftermath to a degree of normalcy.

More on these topics to come.

Martha Harris Myron is a native Bermuda islander with US connections, Author, YouTube Creator: The Bermuda Island Financial Literacy Network Channel, Google News Contributor, and a retired qualified international financial planner. Contact: martha.myron@gmail.com

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Published July 01, 2023 at 8:00 am (Updated June 30, 2023 at 5:42 pm)

Insurance in its many forms – a financial safety net

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