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Don’t believe in insurance?

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Don’t “believe” in insurance? Believe in being prepared: a four-step approach to risk management.
Bruce Palmer, Managing Director, OMA Insurance Services
10/1/2013
For those who don’t “believe” in insurance, OMA Insurance Services offers a four-step approach to managing risk through both thought and action: understand your goals, build a foundation that minimizes risk, create a platform that enables your goals, and update your plan as circumstances change.

​I don't believe in insurance." Not the usual reaction I get from people when I tell them what I do. And yet, here was this business owner sitting beside me on an airplane using this opening line as a way of saying hello. It was going to be an interesting flight. And it was indeed interesting — and far more pleasant than the opening remark might indicate.

It turned out that this individual — let's call her Katherine — did not believe in insurance because she had no dependents (and was not planning on ever having dependents), had plenty of savings (registered and non-registered), owned companies that churned out income for her regardless of whether or not she worked, and generally felt she had no chance of ever becoming financially devastated because of an illness or accident.

While I did not agree 100% with her conclusion, at least I felt better knowing that she gave some thought to the matter. For someone who did not believe in insurance, it turned out that Katherine herself was actually carrying out the main function of insurance: she was managing her risk through both thought and action.

Talking with her, I got the impression that she had been managing her risk for her entire life, but she also told me this was in part due to the concussion she incurred two years ago, from which she still suffers (she wears sunglasses all the time as fluorescent light flicker bothers her, has trouble multi-tasking, and does not like rapid movement, such as airplane turbulence).

As our flight progressed, I learned that this self-proclaimed "insurance atheist" actually owned some insurance policies. In fact, Katherine's story demonstrates an approach to managing risk that mirrors, in many ways, the OMA Insurance four-step approach to risk management: understand your goals, build a foundation that minimizes risk, create a platform that enables your goals, and update your plan as circumstances change.

1. Understand Your Goals

Many of us have heard the expression, "If you don't know where you are going, any road will get you there." This notion is simply wrong. In truth, if you don't know where you are going, no road will get you there.

Setting and understanding goals, and their inevitable implications, is crucial if you want to get somewhere with your life. For example, a goal as seemingly straightforward as "I want to be able to travel on a regular basis throughout my life," has many significant implications.

To achieve this goal, you'll likely need several things, including some money, reasonably good health, free time, and, if you have a partner, someone who is either willing to travel with you, or is comfortable with you travelling on your own. These factors all have profound implications for many life decisions, including the type of employment you choose, where you decide to live (being near an international airport might matter), the fitness and diet activities you engage in, the people you date, the life partner you select, the number of children you want to have, etc.

Wanting to travel is a fairly simple goal, yet there is much to consider. Imagine, then, if your goals are more elaborate or far-reaching. Now, imagine if some of your goals actually contradict each other. For example, you may want to travel, but you may also want to retire by the time you are 60, be a good parent and spend lots of time with your children, and be a top physician in your specialty. Which goals are most important to you? What type of life do you want to live? And which goals are you willing to forego (even if only "for now") so that you can create a life that is not full of deep contradictions and irresolvable tension?

To fully understand your goals and their implications, you also need to think about what your time horizons are for accomplishing different goals — which goals are "now," and which are five years from now, 10 years from now, etc. Looking at your capabilities and limits, and what you can do to alter or expand your goals, is also important.

For Katherine, one of her current goals is to get back in control of her life. To achieve this, she is seeking professional help, learning about her brain and how it functions, and staying active in her businesses to the extent that she can. I am sure these goals are different than what Katherine would have told me two years ago. But right now — based on her capabilities, her needs, and her desires — they are the right goals at the right time.

For OMA Insurance, "Understanding Your Goals" is what our Check-Ups and Needs Analysis are all about. Part of this process is for us to be able to offer you informed and relevant advice, but the real power in the process comes from you taking the time and effort to really understand what it is you are working to achieve, what and who you care about, and the timelines and trade-offs involved.

2. Build A Foundation That Minimizes Risk

A foundation of minimal risk allows you to take on the bigger challenges in achieving your goals without worrying about sacrificing everything you've worked so hard to build.

As I mentioned, my plane companion owned companies that churned out money even when she was not involved in the business. For her, this was her insurance policy: a safe, conservative operation that would meet the financial needs of her life no matter what. She called this her "boring, conservative safety net."

Most of us do not own companies that churn out money regardless of whether we are there or not. But we still do need those "boring, conservative safety nets" that provide us with financial protection so that our goals can be realized.

At OMA Insurance, our Group Life, Disability, Critical Illness, Professional Overhead Expense, Home and Auto policies probably fit into most people's insurance "foundation" (and although I might call them conservative and safe, I would never call them boring!). These programs enable you to get on with life in the wake of a serious illness or accident, and ensure that you are able to look after those people and things that are important to you.

3. Create A Platform That Enables Your Goals

Most of us have goals beyond just "being safe." We want to accomplish something: own a nice home, raise a family, build a business, and so on. Whatever your personal goals, there are costs and risks involved.

For Katherine, one of her goals was a beautiful high-end downtown condominium, complete with some original artwork and a wine collection. Entertaining is important to her, and her condo goal supported her social goals. And this is where I discovered that not only did Katharine buy insurance, but she actually bought "superior" insurance: her condo had been renovated using an architect and designer, and her art and wine collection were not purchased from the local furniture mart and grocery store.

Katharine did not have a regular condo, nor did she have a "regular" insurance policy: she had a policy from one of the specialty insurers that specifically looked after her type of high-value property. It has a higher premium than a regular policy but, as Katharine said to me, she was not prepared to have it rebuilt as a regular condo: if something happened, she wanted it fixed with the same high-quality materials that were initially used.

At OMA Insurance, we have both regular and specialty home and auto insurance — and our advice is customized to meet your needs and your goals right now. Whether you choose The Personal's group home and auto package or the more specialized coverage available through our broker, the idea is always to match the right solution with your needs and goals. Our group and individual life and disability solutions are also designed so that you can add coverages and other features that are most appropriate for your situation and goals.

4. Update Your Plan As Circumstances Change

We know that change happens, and that sometimes change enhances or modifies our goals. And that should mean that the tools we use to support those goals — the savings and risk solutions we have in place — get updated to reflect those changes. But this is often easier said than done.

For Katherine, her concussion forced her to update plans. One of her companies went on a bit of a hiatus, and she hired a manager at the other. She also told me that she stopped spending on "luxuries," and started beefing up her savings as best she could.

At OMA Insurance, we work hard to make it as easy as possible for you to address your changing needs. We know that physicians go through various stages in their lives and careers, and so we offer Guaranteed Insurance Benefits (GIBs) on some of our policies, opportunities for you to enhance your coverages without providing medical underwriting.

Our annual renewal cycle is geared around reminding you to review your needs and limits, and our Advisors try to keep in touch and provide the tools and support to stay current. Online tools and resources are intended to help you stay informed on your own time, at your own pace.

I Don't Believe in Insurance, But I Do Believe In Being Prepared

No matter what process you use, no matter what advice and support and direction OMA Insurance can give, the ultimate responsibility for your goals lies with you. Katherine understands that. She takes the steps necessary to meet the level of protection she feels is right for her. She buys insurance when she thinks it is needed. She even admitted to me she thinks about it more now than she used to, and is kind of annoyed she didn't think about taking action on the life insurance side before she had a medical condition.

Goals give us direction, risks affect our chances of success, and insurance can be a powerful tool to improve the odds of us getting what we want for the people we care about based on our goals and plans. That is about as simple as it gets.

For information on OMA Insurance products and services call 1.800.758.1641 to speak to a non-commissioned OMA Insurance Advisor.