Like many Americans, I spent a portion of today reflecting on the events of 16 years ago. I was working in Manhattan at the time, although in mid-town, far enough away so as to not be in any imminent danger, but frightening nonetheless because of the uncertainty.
To a great extent, our behavior controls the amount of danger we are exposed to, but the events of 9/11/01, when juxtaposed with hurricane Irma (and Harvey) show the amount of danger we are subject to that is totally out of our control.
While it is certainly prudent not to engage in reckless behavior, it is impossible to insulate ourselves from all potential danger. Accidents and disease can strike anyone at any time and hence the concept of life insurance.
Just as opportunities are seldom labeled “opportunity,” disasters also mostly come unannounced. Sure, hurricanes have advance warnings, but more often than not, disasters strike out of the blue, so it is up to each of us to devise our own plan, in advance, to deal with disaster.
The problem with disaster planning is it’s easy to avoid, as disasters are uncommon. It is easy to rationalize that as an individual, we won’t contract a terminal illness or be the victim of a terrorist attack, and that’s right. In all likelihood, we won’t.
But the people who died as a result of the 9/11 attacks probably weren’t thinking disaster would strike them either. Most healthy people don’t. But the statistics tell us that 2,976 people perished on that day. I couldn’t find the number of dependents that those people left behind, but whatever the number, they (the dependents) probably needed financial help.
I worked with an individual who had taken an application on and individual who worked in the WTC a few weeks before 9/11. The underwriting wasn’t completed by 9/11, but all the requirements (exam, lab work, etc.) had been completed. The company subsequently approved the application and issued a check for the full face amount. While everyone else offered the widow condolences, my colleague gave her a check for $1 million.
There was speculation and concern that the claims from 9/11 would bankrupt the life insurance industry, but that obviously didn’t happen. I read that the life insurance claims directly attributable to 9/11 totaled $1.2 billion, while the total claims the industry paid for the year of 2001 amounted to $52 billion. While 4% is significant, it was nowhere near enough to bankrupt the industry.
So while it is unlikely that any of us will be the victim of a terrorist attack, it is a cold hard fact that we will die. What is your disaster plan?