Life is like a box of chocolates, as actor Tom Hanks memorably said in the movie Forrest Gump; you can never be certain what types you’re going to get until you open the box. Life can indeed be full of surprises, but unlike a package of sweets, not all of the components may be pleasant.

To live to the fullest, the irony is that you must accept the various risks which life can bring. Risk is simply the possibility that your plans may not turn out in the way you hoped. Instead of obtaining the positive results that you expect from your efforts, you can actually receive a negative outcome.

To be financially secure, you must find ways of spreading the risks that life may bring so that you don’t have to absorb them all by yourself. To do this, you need to put in place certain strategies which will prevent you from having to deal with the full financial cost of undesirable life events.

Life can be a smooth cruise

Let’s take the case of the Millers, an average middle-class Jamaican family. Mildred manages a local fast-food restaurant, while her husband Milton operates his own auto parts store. Their two children attend preparatory school and they live in a family home inherited from Mildred’s parents.

The Millers’ joint income is more than sufficient to meet their regular bills, as they live simply and are prudent spenders. They save for their children’s college funds and their retirement plans; since they have no major debt, the Millers are confident that their financial future looks rosy.

Mildred’s workplace provides a basic health insurance plan which usually covers the regular doctor’s visits for the family. Although he owns his own business, Milton does not consider buying more comprehensive health coverage, despite the advice of his best friend, an insurance agent.

Milton and Mildred have a common aversion to squandering their money. They take pride that they have been able to save a tidy sum over the years by making smart spending choices, and believe that putting a lot of money into insurance policies is not the best use for their hard-earned funds.

Sailing into stormy seas

Then one fateful day, the serenity of the Miller household is destroyed forever. Mildred receives a frantic call from an employee at the auto parts store advising her that Milton has collapsed in his office, and that an ambulance has been dispatched to take him to the nearest hospital.

As Mildred drives to the hospital where Milton has been admitted, anxious thoughts race through her mind. She hopes that her worst fears have not been realised and prays that Milton will recover. As Mildred’s vehicle pulls into the hospital gate, Milton’s assistant runs over to meet her.

“Gloria, what happened to Milton?” Mildred cries to the distressed assistant. “Oh, Mrs Miller!” sobs Gloria, “I think Mr Miller got a heart attack because he just grabbed his chest and fell to the ground! He was complaining about indigestion all morning, but we never took it seriously.”

Inside the hospital, Mildred is greeted with the news that Milton is stable, but in serious trouble. Preliminary tests indicate that several arteries in his heart are blocked; major surgery will be required to correct the problem. Milton is alive, but he will need a lot of help to continue living.

The financial ship capsizes

The next days and weeks go by in a flurry of tests, surgeries and therapies. Although weakened, Milton pulls through and is expected to make a full recovery. While giving thanks that Milton has a second chance at life, the Millers realise that their financial situation is in serious jeopardy.

The cost of the treatment for Milton’s heart condition is staggering. Mildred’s health insurance only covers basic services, so they are personally responsible for the majority of the expense. After depleting all their investment accounts, Mildred is forced to take out a loan to pay the hospital bills.

While the Millers thought that they had done everything right to secure their family’s finances, they made one critical error by ignoring the need for adequate insurance to cover health emergencies. They believed that their savings could provide enough funds to deal with any eventuality.

Building a safety bridge

One important aspect of maintaining your money is to prepare for emergency situations by buying insurance. When you invest in insurance policies, you are transferring a portion of your life’s financial risks over to the insurance company, so that you don’t have to bear all the costs by yourself.

Given the increase in lifestyle diseases such as hypertension and diabetes, and serious illnesses such as cancer and heart attacks, it’s advisable to purchase critical care health insurance. This will provide a financial bridge that can allow you to survive the turbulent waters of a medical crisis.

The cost of critical care insurance varies according to the coverage provided, so you can start with a plan that fits your budget right now. As the Millers found out to their detriment, you cannot afford to be without insurance to help you cover some of the costs of a major health challenge.

Copyright © 2015 Cherryl Hanson Simpson. No reproduction without written consent.

Originally published in The Daily Observer, October 15, 2015.

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Cherryl is a money coach and business mentor, and founder of Financially S.M.A.R.T. Services. See more of her work at www.entrepreneursinjamaica.com and www.financiallysmart.org. Contact Cherryl