…..Will you be prepared?? Much has been said and written
in recent months about the possibility of a human pandemic
that could wipe out millions of people worldwide. Of course,
it may never happen but if we are wise we will take a few
basic precautions. I am not going to cover the medical and
practical aspects but as usual will focus on the financial
implications. Surviving an outbreak is clearly the top priority
but avoiding financial ruin follows closely. So what steps
can we take to protect ourselves?
Medical insurance the top priority
The H5N1 avian virus is unlike a conventional flu virus. To
date 50% of humans who have been infected have died from it.
All the known cases resulted from close contact with birds.
Should the virus mutate and pass from human to human, as is
feared by the WHO, there would be massive pressure on medical
facilities. The severity of the virus is such that hospitalisation
is going to be needed in most cases. Local hospitals may be
unable to cope; survival could depend on a person’s
ability to afford evacuation. Even if a person is able to
walk the airlines are unlikely to accept anyone with a highly
contagious condition. Which means a private evacuation flight
at a minimum cost of US$25,000 - unless of course you have
private medical insurance. Incredibly, many expats in Bali
still have no cover.
Can we wait to see how things develop?
We can, but it may be too late to obtain full cover once the
insurance companies consider the risk too high. Insurance
companies are not charitable organisations; they are in business
like most of us to make a profit. No profit and they are out
of business. Therefore if they perceive a potential for massive
claims on the horizon (as they did with AIDS) they are perfectly
free to decline cover or impose special conditions. In the
event of a possible pandemic those already insured would probably
remain fully covered but new cover may become difficult to
obtain.
Are your dependents protected?
Typically it is the elderly who succumb to conventional flu
epidemics. The current strain of avian flu however has proven
fatal to people of all ages, including the fit and healthy.
It is therefore the responsibility of any adult with a dependent
spouse or children to ensure that they are financially secure
should the breadwinner die. Life cover, if taken out early,
can be relatively inexpensive but the cost does rise steeply
with age. If the risk is perceived to be a fairly short-lived
one the cost can be minimised by taking out cover on a year
to year basis only. Again there is the risk that cover could
be difficult or more expensive to obtain once the insurance
companies determine there is a potential for increased claims.
Protecting your business
Many expats in Bali are in the travel and tourism business.
Once again they would be the first casualties in the event
of a pandemic. The large number of readers in this category
will be only too aware of the impact of reduced travel. But
thanks to their experience with bombings, SARS etc. this group
has also become resilient to the ups and downs of the industry
and people are now more prepared to face periodic setbacks.
The important thing is to budget for downturns in any business
plan. Some of the profits from boom times should always be
retained in reserve accounts to draw on in lean times and
to ensure long term commitments such as school fees and pension
plans are not disrupted. Businesses that survive crises are
those which can tick along for months with little or no income.
The positive side about Bali is that the good times always
return. The island has too much to offer to be abandoned for
long.
Bali would not be alone
If there were a pandemic it would likely affect most of the
world. Bali would not be singled out on this occasion. But
it is still just as important to be prepared. A little bit
of forward planning can make a big difference and provide
peace of mind. A bird flu epidemic may never hit humans on
a large scale but the precautions described above could prove
justified in the event of other unforeseen events. I personally
have full medical insurance and I am now off to enjoy a chicken
curry!
Colin Bloodworth is a senior adviser with Financial Partners
International. The opinions expressed are his own. If you
have any questions regarding personal finance you may contact
him at 021 520 8099 or colin.bloodworth@financial-partners.biz
