Light travels at the speed of 2.99 X 10, to the power of
nine metres per second, in a vacuum, and information on the
Internet travels just a little bit slower. We can know what
happened at midday in China today, even before day dawns on
So in China, where there is exponential economic growth,
there is a phenomenal savings rate of 40 per cent per household
and Chinas life insurance market is the fastest growing
market in the world. The affluent and the mass affluent
in China live in coastal cities such as Beijing, Dalian, Shanghai,
Guangzhou, and Tianjin (Mc KinseyQuarterly, 2004 Special Edition).
But Chinas social security and public health systems
are deteriorating at a significant rate and these are reflected
in the spiralling increase in purchases of individual retirement
savings and income protection insurance.
Last week we spoke about the foundation blocks of the savings
pyramid, and noted that they comprised just these assets:
pension plans and income protection plans. The most recent
Central Statistical Office report on the leading causes of
death in T&T shows that heart disease, diabetes and cancer
are the winners, in that order, for all ages and for the age
group 15-34 it is HIV/Aids.
Further, the report revealed that some 1,632 people died
within the age group of 25 to 49. That is, in the prime of
their lives. The most common response to this statistic, in
my experiences, is: I will not be in that statistic!
However, in an information age, we must move with the times
and move away from such foolhardy risk taking and, for a few
dollars a day, we can establish an income replacement plan
to the tune of projected income for ten years.
Let us assume an income of $60,000 per year: projected for
ten years, that equates to $600,000.00. We live our lives
assuming that the income will pay our food bills, rent/mortgage,
vehicle loans, and send our children to school.
In an ideal social system, with ideal social security, there
would be no worry if you should become disabled and unable
to earn. Either the community will provide you with enough
charity to live out your dreams, or the government social
security payments will certainly realise your dreams.
But that is not the reality!
So, heres the plan: $600,000 of permanent life insurance
with protection for heart disease, diabetes related disease
(renal failure, blindness, etc) and cancer for the same amount
of $600,000, for a 31-year-old, non-smoker, female, requires
an investment in your future security of a mere $25 per day,
at average market prices.
Or, you can get term insurance to age 60 (different from
permanent insurance in that, term expires at age 60), for
$600,000 to cover both death and those same dread diseases
for an average market price of $12 per day.
For the price of a lunch per day, you can buy the foundation
blocks of financial security for a lifetime.
Not only would you buy income protection and disease funding
but you would contribute to your own household savings rate
if you purchase the permanent insurance option.
You see insurance premium payments are not consumed, like
a box lunch, but they create wealth for you and your estate!
If you do not die too young or become diagnosed with heart
disease, cancer, etc, with permanent insurance you will leave
an estate valued at $600,000another estate!
So when information flows are almost at the speed of light,
why do we continue to move so slowly?