There is an adage ‘Insurance is like a parachute; you better have it when you need it’. Yet, we tend to think that insurance is too expensive and not worth it. However, anything which is valuable to you, be it a painting, a house, life etc., you must have it insured. In the unfortunate event of a claim, the premiums paid becomes irrelevant and a small fraction of the benefit the actual insurance policy will provide. Thus, the cost of premiums paid should not be viewed as a waste, but rather as your way to complete peace of mind.
Paying premiums regularly as a cost in return for peace of mind is prudent. Who would have ever imagined that a pandemic such as COVID-19 would put the whole world under lockdown and trigger a worldwide disruption in our very way of life?
The Championships Example
A live example of Wimbledon can illustrate the farsightedness in ensuring that the most valuable is protected and paying premiums regularly for cover in place. Wimbledon, or commonly known as The Championships, is the oldest Tennis Tournament in the world and is regarded by many as the most prestigious. It has been held at the All England Club in Wimbledon, London, since 1877. The Tournament’s risk and finance subcommittee insisted on a pandemic clause 17 years ago. Wimbledon reportedly paid $ 2,000,000 a year for the Pandemic clause for 17 years a total of $ 34 Million paid in premiums. For this year’s cancellation due to COVID-19 Pandemic, Wimbledon is set to receive around £114 million ($141 million) from the policy, according to the Action Network, a figure in line with The Times’ reporting last week, which estimated the payout to be more than £100 million.
Paying insurance premiums is a commitment. You protect your most valuable, be it assets, loved ones or your health by paying regularly. It is wise to continue to pay the premiums and treat it as a fixed cost in return for the peace of mind that one day when you need that parachute, you have it in an immaculate condition.