Thursday, April 12, 2007

Protecting the biggest asset

Did you see the news story about Eddie Griffin, a comedian from the U.S., who wrecked a rare Ferrari Enzo estimated to be worth NZ$1.69 million?

It made headlines around the world.

A person who owned something worth NZ$1.69 million would insure it right?


There are many people who will earn over $2 million in their lifetime and haven’t protected it with insurance. For instance, a 40 year old on $55,000 p.a. whose salary increases by 3% p.a. will earn over $2 million by the time they turn 65.

The biggest reason people don’t insure their income is the perceived cost. However, using a small percentage of the income to protect future income is a much smaller cost than losing future earnings due to sickness or injury.

Like the owner of the Ferrari Enzo, you never know what’s round the corner.

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