Home' Trinidad and Tobago Guardian : June 8th 2014 Contents SBG4 NEWS
SUNDAY BUSINESS GUARDIAN www.guardian.co.tt JUNE 8 • 2014
The concept of insurance is as
old as civilisation itself. The
financial Web site Investopedia
sets the beginnings of what we
understand as "insurance" in
Babylon, where it was literally
written in stone in the Code of Hammurabi.
The code made provisions for anyone who had
taken out loans, but was unable to repay because
of some unexpected event, namely, an accident,
natural disaster or death.
Elements of the code would travel and evolve
in Europe s Middle Age, but the concept would
only reach full maturity in the 1600s when
trade and travel extended to the New World.
Then, insurance was for the relatively wealthy
who could afford it. Today, the average citizen
can access a variety of insurance products,
from those covering their lives, to those designed
to replace items as mundane as laptops and
televisions in the event of a burglary.
At its basis, insurance is supposed to guard
against the future s uncertainties. It has been
the cornerstone of many generations of citizens
financial planning. The most recently available
Central Bank figures appear to support this as
the number of policies bought increases from
year to year.
In 2010, total number of policies in force
(life and annuities) was 670,421. In 2011, the
figure was 668,149. In 2012, total life and annu-
ity sales equalled 702,925.
In some cases, insurance is unavoidable. The
laws of this country mandate that drivers must
at least have third-party insurance. But is there
a subtle shift happening?
Only last week, the Central Bank Governor
Jwala Rambarran, referred the ongoing eco-
nomic crisis as "constantly mutating." In this
new financial reality of instability and collapse,
are people choosing to forego what may be
termed "traditional" methods of securing their
financial future, with insurance being one of
them? And, are there alternatives to the prod-
ucts that insurance companies provide and are
people accessing or creating them?
The Sunday BG set out to have these ques-
Just a regular, average family
*Mario holds a junior managerial position
at a financial services firm. He has been at the
company for 14 years since leaving university.
Heading into his forties, his expenses and
responsibilities have expanded significantly
over time. They now include a wife and two
young children and a small house that Mario
is hoping to renovate. Theirs is a two-car
household, since their respective schedules do
not permit Mario and his wife to share a vehicle.
They do share the bills, chores and the parenting
of their children. However, Mario considers
himself "old school." Even though his wife
works, he thinks he is ultimately responsible
for his family s financial well-being and the
maintenance of their lifestyle, which includes
extra-circular activities for the children, regular
outings and annual vacations.
"This was the way I saw my father do it
and my grandfather do it. I couldn t see myself
not doing it. This is what family is and we are
just a regular, average family."
His upbringing led him to purchase life insur-
ance for himself. He related a story to the Sun-
day BG, an incident he said would stay with
him for the rest of his life. He witnessed the
death of a neighbour in an accident one morn-
ing as he was driving to work.
"I remember thinking that I had only seen
him 15 minutes ago as he was coming out of
his driveway. I told him good morning. Only
to drive down the highway minutes after and
see his vehicle totally written off. I realised it
was him because I saw the license plate. I called
his wife to tell her."
The most chilling thing about the experience
to Mario was that it could have just as easily
been him. Having life insurance gives him a
sense of security. His feelings are that if some-
thing like that were to happen to him, his family
would be at least be covered.
Understanding risk and the need for
Lloyd Ince, president of the Caribbean Finan-
cial Planners Association and a financial con-
sultant, said, acknowledging the dangers one
was exposed to in the course of life was key
to understanding why insurance was necessary.
He said there was always a chance that these
dangers or "risks" could occur. If they did,
there needed to be some way to indemnify or
replace the financial loss that would occur,
should something happen to a family s main
breadwinner or to property. Regarding human
life, Ince said risk could be categorised into
three general groups: premature death, disability
"When something does occur, someone or
something has to replace income loss. That
could be a savings plan, it can be a relative
who steps in to support a family, but very few
self respecting people wish to depend upon
charity to support themselves in case of risk.
Insurance becomes valuable. Medical insurance
will cover healthcare cost, it can cover income
replacement. Life insurance will cover the loss
arising out death of a person. A pension plan
will cover loss of income arising out of retire-
But protecting against risk to life is only part
of the equation.
Barry Thomas, is a financial consultant and
an enthusiastic supporter of the concept of
life insurance. An adviser and trainer with over
20 years experience, some of which were spent
in insurance sales, Thomas told the Sunday
BG that creating a legacy was important as
"You could make one payment on an
$800,000 policy, or a $4 million policy and
on the way to do the medical, get run over.
A case for life insurance
Continued on Page 5
To insure, or not to insure
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