I usually write these articles in Jakarta and e-mail them
to Bali. On this occasion I am writing it in Bali where I
have had to extend one of my twice monthly visits due to the
severe disruption in Jakarta as a result of the floods. Those
of us who have seen this situation before are totally perplexed
as to why the city was not better prepared. Everyone knows
the rainy season comes once a year and can often cause devastating
floods. Yet rivers and drains are allowed to clog up with
mountains of garbage throughout the year, forests for miles
around have been cleared to make way for housing estates and
commercial developments are allowed to grow unabated in water
catchment areas. When the inevitable occurs there is no master
plan or command centre to take control.
But are we any better prepared?
It is easy to criticize, but are we any different? Bali has
had its fair share of natural and man-made disasters but I
wonder how many people are stocked up right now with adequate
drinking water, emergency rations, torches and candles in
case of another one occurring. With global warming there is
certainly a pattern emerging of greater storms and extreme
weather conditions. The recent frequency of earthquakes and
tsunamis is another reason to be prepared. The first priority
in all these situations is survival. Next comes preparing
for recovery and that is where we look to insurance to get
us back on the rails. Without it, survival could be followed
only by prolonged misery. It is unfortunate that the people
who suffer most in nature’s disasters are usually the
poor and they are the ones who can least afford insurance.
If they are lucky they may be helped to survive and recover
through charitable organizations. An expat without insurance
however is unlikely to attract any sympathy or support. So
all the more reason to check that your home, belongings and
business are adequately covered. When disaster strikes it
is too late to ask for quotes! Cover for some items is optional;
while the chance of loss or damage through flood or earthquake
may not be high, it may be worth paying a small additional
premium.
What else should be covered?
The loss of homes and property is uppermost on our minds when
we watch tragedies unfolding on TV. But there are even more
important things to protect, namely ourselves and families.
For an expat living in Bali I would say the first consideration
is standard medical cover, including evacuation to a centre
of medical excellence if needed. This can be a life or death
issue. I have always said that any foreigner who cannot afford
medical insurance should not remain here. There is no national
health service and consulates do not have funds to repatriate
their citizens. An exception may be the case of older expats
as the premiums rise very rapidly after 60. An 85 year old
shouldn’t even think of asking for a quote! In such
cases a large reserve of savings should be available for emergencies
and the treatment of serious conditions. The other options
are a return to the home country where you will at least receive
the bare minimum treatment that your country can afford or
just accept that you can manage with the same treatment an
average Balinese would expect and adopt a philosophical acceptance
of the inevitable.
Not every expat is poor
Much of the article so far has focused on the plight of the
poor, including ‘poor’ expats, often consisting
of those who come to Bali on holiday, love it and do everything
they can to stay, even though they have no secure job, profession
or business. I believe the majority however do follow a purposeful
existence here. This includes those who worked hard all their
lives, have accumulated a significant amount of wealth and
have chosen to retire to Bali. Some expats have modest incomes
through teaching or running small businesses, some have well-paid
jobs in the hotel industry, others run large and extremely
successful businesses. But no matter what their position or
level of income they all need to look at protecting their
families and their way of life. Few breadwinners take the
trouble to calculate how much their families would need to
maintain their standard of living, complete the children’s
education etc. in the event of his or her death. A housewife
and mother’s financial value is also generally underestimated.
Why do financial advisers go on about life insurance?
Surprisingly, not just to sell policies, but in highly regulated
countries now a financial adviser could be sued for not recommending
life insurance where it was clearly a need. A penniless widow
could hold an adviser responsible for not alerting her late
husband to the fact he was underinsured. How the world has
changed! But the fact is, there is no point in having a great
pension plan building up if death or a critical illness put
an end to all the plans and dreams. Yes, this is another wake-up
call to review your level of cover. For a young head of family
a million dollars is no longer excessive cover. Such a figure
will only generate an annual income of $50,000 if we assume
a return of 5%. That may be a comfortable sum for a family
now, but inflation will erode that value every year. For those
with stretched budgets, cover of a million dollars may still
be possible for just a couple of hundred dollars a month if
term assurance is taken out. For those running large businesses
that would likely fail in the event of their death key man
assurance may be appropriate. When you enter the realms of
ten million or more the insurance company will also work with
you to maintain your health and lifestyle to a degree that
minimizes the likelihood of their having to pay out!
But whether it comes down to keeping a torch handy for power
cuts or taking out life cover, the adage you learned in the
boy scouts or girl guides still applies – be prepared!
Colin Bloodworth is a senior financial adviser with Financial
Partners International. The views expressed are his own. If
you have any questions you may contact him at 021 520 8099
or colin.bloodworth@financial-partners.biz
