Has Insurance Replaced God’s Assurance

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The following was presented at the GCF FINANCE SECTION – 18 MARCH 2011:

INTRODUCTION

A US Christian website poses these questions:

  • Would you fly a single-engine plane without a parachute?
  • Would you go white water rafting without a life preserver?
  • Would you travel the desert without a canteen?
  • If so, would that show a lack of faith in God?

Its closing message:

“You may say that is absurd, but many people consider insurance a lack of faith.”

Another website takes another tack as it seeks to promote a book entitled “Not by Chance: Devastating Times Are A Test Of The Faith”.  The book tells of how God revealed Himself in Lynn Cochrane’s darkest times and brought her through her most trying circumstances and severest illnesses – polio, devastating accidents, major depression, unemployment and multiple sclerosis.  I have not read this book but guess that the author must have overcame all these setbacks in her stride, probably with help, care and concern of others.

Another website starts with an arresting line:

“Just trust God and it will be alright.  Has anyone ever given you this empty advice?”

It identifies the so-called competitiveness to faith – job security, financial stability, medical insurance, disaster preparedness, retirement planning and asks:

“Are you saying it is wrong to seek a secure job and stable income, to prepare for the future?”

And his answer:

“No, not at all, but it is wrong to trust in these things.”

And he cited the example of the rich farmer who was called a fool by God in Luke 12:18-21 because he trusted in his material wealth.
I have just given a few examples of the wide range of views on the subject.

This serves as a warning that we should not take this subject lightly or flippantly.  Individuals and families and churches will be affected greatly by their attitude towards insurance.

I just read this heading:  “Mothers prefer changing diapers to looking at life insurance”

Two-thirds of the surveyed mums by a Sydney-based researcher admitted this, thus, leaving a lot of families uninsured.

If we were to ask for opinions here, we would likely also get a range and we may all end up more confused.  My approach is to look at what the Bible says and see whether we can construct a Biblical viewpoint.

WHAT THE WISE PREACHER SAYS

Let me start with the reputed wisest man only surpassed by Jesus – King Solomon.  He observed a few grievous evils under the sun.

  1. Wealth lost through some misfortune 

    Ecclesiastes 5:13-14 

    13 I have seen a grievous evil under the sun:
    wealth hoarded to the harm of its owner,
    14 or wealth lost through some misfortune,
    so that when he has a son
    there is nothing left for him.Christians generally agree that hoarding is a moral wrong, but here we have another grievous evil of a man who loses wealth through some misfortune and cannot pass it on.  The misfortune is not stated but does not refer to early death here, perhaps, seizure of the wealth by enemies or king, famine, etc.

  2. A stranger enjoys your wealth 

    Ecclesiastes 6:1-2 

    1 I have seen another evil under the sun, and it weighs heavily on men: 2God gives a man wealth, possessions and honour, so that he lacks nothing his heart desires, but God does not enable him to enjoy them, and a stranger enjoys them instead. This is meaningless, a grievous evil.Here, we see that God is directly behind the scene.  So, would preventing the things from happening thwart God’s purpose or, in any way, limit God’s power or freedom?

    But if God is almighty and has sovereign power over all of creation, is there anything man can do to deny His purpose and will?

  3. Time and Chance 

    Ecclesiastes 9:11 

    11 I have seen something else under the sun:
    The race is not to the swift
    or the battle to the strong,
    nor does food come to the wise
    or wealth to the brilliant
    or favour to the learned;
    but time and chance happen to them all.The general rule is that the race is won by the swift and the battle won by the strong, but time and chance can cause a different result.

    The word “fortuitous” is used as an important principle of insurance.  It means happening by chance, accidental.  It excludes anything that can be caused or orchestrated by oneself, e.g., self-inflicted injury which is a frequent exclusion in insurance.  Suicide is not fortuitous but allowed in life insurance as a concession if it takes place more than a year or two years after taking the life insurance policy.

    When we believe that time and chance can take place irrespective of the moral condition of the people, we have to ask, “What is the best way not to leave things to chance?”

    An example of an accident is the collapse of the towerof Siloamwhich killed 18.  (Luke 13:4)  Jesus said it is not because these were sinners more guilty than all the others living inJerusalem and were judged for their sins.  The earthquake atChristchurch would have affected thousands of Christians who could be in no worse spiritual or moral condition than the New Zealanders inAuckland.

    Under the overarching doctrine of God’s sovereignty, we must view chance as still within His knowledge and control and, if something does happen, it must be either directly caused by God or permitted to happen by God.

    The question for us is: “Knowing that there are fortuitous events, should not we adopt the right risks management which involves risks avoidance, risk minimization, risk transference and risk absorption?”  Insurance is under risk transference as we basically transfer the financial impact of risks to the insurer.

    If we accept that bad things do happen to good people, we have to ask whether God intends us to suffer our consequences or whether we should exercise God-given wisdom and prudence to avoid, reduce or mitigate the consequences.

  4. Evil Times 

    Ecclesiastes 9:12
    12 Moreover, no man knows when his hour will come:
    As fish are caught in a cruel net,
    or birds are taken in a snare,
    so men are trapped by evil times
    that fall unexpectedly upon them.Here, the Preacher speaks of death and tragic events which happen unexpectedly.

    The seven years of famine which came during the reign of Joseph as Prime Minister of Egypt and devastated a vast region, including Jacob’s area, would certainly qualify as evil times.  Joseph was given the interpretation of the Pharaoh’s dream in order to save the people in general and Jacob’s clan in particular.

    When we are blessed with plenty, should not we save some for the future which is anything but certain?

  5. Death 

    Ecclesiastes 7:2
    It is better to go to a house of mourning
    than to go to a house of feasting,
    for death is the destiny of every man;
    the living should take this to heart.Is this advice only for us to live with eternity in view?  Surely so, but should not parents knowing the certainty of death but the uncertainty of its timing, provide for their children in case of their sudden demise?

    Ecclesiastes 8:8 says
    8 No man has power over the wind to contain it[
    so no one has power over the day of his death.

    I find Proverbs 13:22 heartwarming now that I am a grandfather.

    22 A good man leaves an inheritance for his children’s children,
    but a sinner’s wealth is stored up for the righteous.

    It is a blessing of God when He enables us to provide not only for our family but to lay a good foundation for future generations, not only a good spiritual legacy, but financial inheritance as well, serving like the wells dug by Isaac or Jacob which continue to bless generations to come.

Knowing that there are at least five grievous evils that assail man under heaven, what should we do?  Would a modern-day wise Preacher addressing these evils give advice on how to handle them?

The wise Preacher concluded that the wise thing to do is to fear God and keep His Commandments for this is the whole duty of man. Ecclesiastes 12:13

The wisdom of this advice rests on the doctrine of God’s sovereignty.  God has power over every aspect of our life.  Even the king’s heart is in the hands of the Lord; He directs it like a water-course wherever He pleases.  Proverbs 21:1

There is no wisdom, no insight, no plan that can succeed against the Lord.  Proverbs 21:30

The Lord works out everything for His own ends, even the wicked for a day of disaster.

The point is that no man can protect himself entirely from God, whether by his billions in savings, insurance or bodyguards. Israelsought protection from making unholy political alliances but God still has His way.

So, even if the motive of taking insurance is to protect oneself for one who does not believe in God, God still has full power to work out His judgements.

My point is that no on can protect himself against God’s power and insurance should not be taken for that reason.

There are two fundamental questions to ask:

  1. What does it really mean to trust God and to live by faith?
  2. Is it pleasing to God for us to do well, not only spiritually but also materially?

Specifically, given that we fear God, is prosperity one of the blessings of God?

  1. TRUSTING GOD AND LIVING BY FAITH 

    Trusting God means to know deep in our heart that our life is from God, our times are in God’s hand; without Him we are nothing and can do nothing, and without Him whatever we do will be in vain.Psalm 127:1-2
    1 Unless the LORD builds the house,
    its builders labor in vain.
    Unless the LORD watches over the city,
    the watchmen stand guard in vain.
    2 In vain you rise early
    and stay up late,
    toiling for food to eat—
    for he grants sleep to those he loves.

    Trusting God as our provider, we do not need to be anxious about food, clothing or shelter.  (Matthew 6:31)  We learn to live in dependence on God in humility and prayerful dependence treating what we have as stewards, not owners.  We learn not to trust in men, in horses, or swift escape, or chariots (power).  We know we are powerless against our enemies unless God guards us.

    But trusting in God does not mean not having to work or plan or prepare or do training.  It means to enquire of the Lord and to have faith but David still fights Goliath. Israelstill has to enter the Promiseland to fight the enemies.  Paul said that he who does not work should not be allowed to eat.

    You still have to prepare the ground, sow, water and God gives the crops.

    Proverbs teaches the value of hard work, prudence, thrift, diversifications, being skilled, seeking counsel and guidance.

    It appears to me there are some Christians who are more Psalm Christians and some who are more Proverbs Christians.  Psalm Christians pay more attention to their walk and talk with God and like to meditate and pray.  Proverbs Christians like to concentrate on employment, business, financial matters, politics and seeking success and prosperity.

    The truth is that one needs to be both Psalm Christian and Proverbs Christian.

    Proverbs Christians would have no problem to take insurance to minimise the financial impact of risks like fire, disability, professional negligence or error and omission or personal and public liabilities.

    But what is the real intention of insurance?  It is to prevent losses of income, property, legal suits, and death of breadwinners.  So, the real motive is to remain in the financial position that you are presently at.

    It is not the purpose of insurance to make one rich, but to protect your present wealth or status.  This principle of reimbursement applies to most insurance.  The only exception is life insurance which seeks to protect you against the loss of your economic value, not your present value only.  For example, you have graduated and plan to work up to age 65 to provide an income to raise a family.  The total salary which you hope to earn is a measurement of your economic value.  If nothing adverse happens to you, the sum of money will be earned and goes to supporting your family.

    So, we ask the second fundamental question:

  2. Is wealth or prosperity a blessing of the Lord? 

    This subject requires a book, but for today, let me state that prosperity is one of the blessings of God but it can also be a cause of a man’s fall because the love of money is a root of all evil.Let me focus on wealth which is a blessing of the Lord and not from exploitation of others.  It is not ill-gotten gains or at the expense of your physical health and your spiritual health.

    Proverbs 10:22
    22 The blessing of the LORD brings wealth,
    and he adds no trouble to it.

    Proverbs 13:21
    21 Misfortune pursues the sinner,
    but prosperity is the reward of the righteous.

    Proverbs 28:20
    20 A faithful man will be richly blessed,
    but one eager to get rich will not go unpunished.

    But there is one important caveat for wealth to be a blessings – it must be used wisely.  Examples:

    a)   Proverbs 3:9-10
    Honour your Lord with your wealth

    b)   Proverbs 3:27
    27 Do not withhold good from those who deserve it,
    when it is in your power to act.

    Hoarding wealth is a sin.  There are also warnings against self-indulgence to the neglect of the needy – the parable of the rich man and Lazarus.

    My belief is that the super wealthy will not be concerned about insurance and the poor do not have the money to even think of insurance.  It is those in the middle who need to address the matter.

    How should a person above poverty line but not rich enough to self-insure treat the subject of insurance?

    Treat insurance as a relatively modern invention to meet certain needs just the way you treat other modern inventions like computers, cars, washing machines.  Perhaps, if we look at how insurance started, we would see what it is meant to do.

One American textbook claimed that the idea of life insurance came about when the church sought ways to provide for the full-time workers’ medical needs and retirement.  Funds were set aside and slowly the idea became applied to others.  Funeral societies were cited as the beginning of insurance in other societies.

The term underwriter has an interesting origin.  WhenEnglandsought products from abroad, ship owners looked for investors who were willing to share the cost and risks of the overseas venture.  Those who were willing to do so were asked to write their names below the named venture.  Hence, the term “underwriters”.

Insurance is built on a few principles.

  1. The pooling of resources and risks
  2. The law of probability or large numbers
  3. The contract between the insurer and the client

There were ways to take care of bereaved families in the past – the family, the clan, the church, but insurance is the modern equivalent partly because past ways had no pooling of resources, insufficient numbers and no certainty of contract.

The examples of events a person can insure against are:

For individuals

  • Death (premature death)
  • Disability
  • Sickness
  • Legal suits (professional indemnity, personal liability)

For Property

  • Fire and other perils
  • Theft or burglary

Motorcars

  • Fire, theft
  • Third party – injury to persons, damage to property

There are certain covers which are required by law, e.g. motor policy and workmen injury insurance.

For voluntary policies, why would a Christian want to insure even though he trusts in God who is sovereign and good?

  1. No matter how spiritual or moral he is, “bad” things still happen to good people.  He cannot prevent many things from happening but can mitigate the financial consequences.  For example, a person who is the breadwinner is run down by a car.  What will happen to the family?  There will be financial consequences and the family must provide for themselves or depend on charity.
  2. The early church gave instructions on the support of widows who did not have family members to support them and depended on the church to support them.  1 Timothy 5;

Churches should stand ready to do this.  The other way is to advise their church members to insure themselves so that the financial outlay can be defrayed by the insurance companies.

The basic building block of society and the church is the family.  If every family exercises financial responsibility, there will be less needy saints.  The church budget can then be spent on mission and evangelism.  Rarely will insurance be sufficient to cover all of the financial needs, so church members will still be able to exercise love and contribute to the care and concern for the bereaved family.

Will a person who is insured live in lesser dependence on God?  Food and clothing are basic necessities and we are commanded not to be anxious about such things.  So, having insurance to replace income is no different.

We still need to depend on God and pray earnestly for God’s blessings in many other areas – our health, our service, our teaching and preaching of God’s word, our witnessing, our relationships in families and in church, employment.

God can still shake the nation, and individuals, and families in so many ways.

The wealthy are commanded not to be arrogant and trust in their uncertain riches. 1 Timothy 6:17-19

God can still take away the source of our income.  God can allow us to go through many other kinds of hardships.

War is the ultimate that can happen to Christians besides persecution and Christians are thus placed on their spiritual tiptoes to look to God in dependence.

In what ways is insurance a better way than for the church to take care of her members?

  1. Teach members financial responsibility 

    For a church where everyone is just eking out a living, the church body can rally together to help the one who is in even more dire need.Where the majority of members are financially alright, it is good to teach them financial responsibility, or else they may spend too freely and the church ends up supporting their families in the event of a calamity.  Christians generally do not mind helping those who are truly indigent but will not be happy to help those who are freeloaders, or spendthrifts, or wastrels.

  2. Insurance is cost efficient 

    With proper advice, you can obtain the appropriate and suitable products which can cover the risks faced by individuals and families.Much time can be saved to raise funds for emergencies and valid questions can be avoided like rightness, fairness, and adequacy of the help extended.

    Not making use of insurance is like not making use of modern inventions like multimedia, social media, modern banking like GIRO.

    You can still wash your dishes or clothes manually or send letters by post but you will lose time and energy, and patience as well.

  3. Having sufficient financial resources at the time you need them enables you to free up your current resources.  Instead of relying just on your savings, you can use insurance as a safety net and use your savings for causes you believe in, e.g., giving to missions, giving to the needy.
  4. The law of large numbers, commonly called the law of average, is fundamental to insurance.  For a group of 200 people to bear the financial loss due to a premature death of one of its members is heavier than for a group of 200,000.  The spreading of risk is achieved more efficiently through insurance.
  5. There is more certainty in depending on insurance for long-term care and long-term financial needs.  Friendly giving is okay for immediate and short-term needs during the funeral and, perhaps, for a few months after.  It is not easy for friends and fellow Christians to give financial support long-term as it requires regular contacts.
  6. Insurance is a contract and can be enforced, whereas charity cannot be enforced.  Charity is not easy for the person of integrity to receive.  The recipient can lose self-respect, if he has to depend on charity, especially for the long-term.

State welfarism is not sufficient inSingaporeand will never be under the present government which promotes self-reliance.

Someone has to pay for inevitable expenses which result from life’s tragedies, emergencies and disasters.

God sees everything and oversees everything but He looks at how we use His resources to provide for ourselves and our families and others.

Our government established the Central Provident Fund and has implemented many useful schemes to help us provide for our medical expenses, our property ownership, and retirement.  The government does not think it is good to be a welfare state and we are exhorted to take care of ourselves.

APPLICATION AND CONCLUSION

How should individuals and families view events which can drain them financially, like surgery, long-term illness, death of a breadwinner, fire, legal suits, etc.?

Christians are exhorted to trust in God and acknowledge God and to honour God.

Proverbs 3:5-6
5 Trust in the LORD with all your heart
and lean not on your own understanding;
6 in all your ways acknowledge him,
and he will make your paths straight.

Proverbs 3:9
9 Honor the LORD with your wealth,

Proverbs 3:27
Do not withhold good from those who deserve it,

Proverbs 3:34
He mocks proud mockers
but gives grace to the humble.

Trust in God, however, does not exempt us from hardship, struggles, and sickness.  We learn this from Scriptures and experience.

Wisdom and knowledge and prudence teach us to walk with God and do good works for God and to love God and our neighbour.

It is said that insurance is an act motivated by love and responsibility to protect ourselves and loved ones from the financial consequences of events mostly beyond our control.

Good health and long life are blessings of God.  But we have to say with Job, “The Lord gives and He takes away.  Blessed be the name of the Lord”.

We are commanded to fear God and to keep His commandments to avoid spiritual and moral pitfalls and to do good works.

We are also taught to acquire wisdom, understanding, knowledge and counsel to be good stewards of God-given resources and to use them well, and to avoid financial pitfalls as well.  We should not be driven by fear and greed like unregenerate people, but by trust in God and godly contentment.

We should be both Psalm and Proverbs Christians.  Insurance is a neutral invention, much like other modern inventions, and the attitude and motive of the individual will decide whether it replaces trust and belief in God’s providence, or it is a means to prepare for possible eventualities and, in fact, enables you to use your financial resources better for God’s kingdom.

Families and churches should still rally round their members in times of need because the fact is that most people are underinsured.  Our love, care and concern for those who fall into bad or evil times is needed, whether the person concerned is insured or not insured.

On the other hand, we should not go to the extreme of insuring ourselves to the hilt out of anxiety and fear of the future.

We should also beware of storing up treasures on earth, which is tantamount to hoarding and self-insurance.

“Bulletproof Investing”?

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This catchy title of a book by Ben Stein and Phil DeMuth is full of bullet points and some silver bullets for investing.

Coming soon after the financial debacle of 2008-2009, the book is riveting not just for Americans.

To quote part of the introduction: “If we do nothing more than follow the dictates of our heart and our culture, it will lead us to financial ruin.”

As young people we spend every dollar plus whatever we can put on Visa to buy clothes, cars, cocktails, vacations, dinners and entertainment. Our pocket book is small but our wants are great. Why shouldn’t we have it all?

Then, as middle-agers, our wages increase but our needs expand even faster. We need McMansions and sports utility vehicles. We need designer furniture. We need to send our kids to private schools. We need significant, broadening travel. We also may have to kick in to support our own ageing parents.

By the time we retire, the piggy bank is empty.”

The first “problem” is how to invest our money so that it grows over time. Without long-term compounding of our investment returns, our savings will never grow enough to finance our long-term goals.

Jeremy Seigel’s classic “Stocks For The Long Run” examines US stock market performance from 1801 to 2001 and concludes that, after inflation, stocks have returned almost 7 per cent per year over this period.

But it does not work out. We invest for the long run but we still have to eat every day. J.M. Keynes said that in the long run we are all dead.

The investor’s paradox:

We need the maximum return we can get from our investment dollar in order to compound the giant sums of money required to support us through our retirement. However, if we go for the big returns, we inevitably risk taking a big hit that substantially wipes out our savings. On the other hand, if we forgo the high returns by avoiding stocks, our nest egg never grows. We need to find a better way of getting the returns we need without the risk that will destroy our savings before we get there.

But:

i) We have no control over the future direction of the stock market

ii) We have no control over the future direction of interest rates

iii) We have no control over the business cycle on the economy

iv) We have no control over the competition

We can only control the strategy.

We have to ensure it works for our long term good.

Longevity is a good problem to have, but it isn’t cheap. A lifetime’s savings need to last 30 to 40 years.

Firstly, we must know our “investor psychology”. Secondly, we must work out a specific investing programme which limits the downside risks and maximises our income and savings.

The best way is to seek good advice and good advisers. Unless we have the financial savvy and the time, it is better to pick specialists who have integrity and our interests at heart.

Pick advisers with experience too and the wide range of services and products at their disposal, not those who have limited experience and are tied to one firm whether it be an insurer, a bank or stockbroker.

Free From Work

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Born free. Live free. Retire free. Die free.

This wouldn’t be a bad way to live our life here on earth whatever comes after.

Born free – that’s the area of politics. Thank God if you are born in a country where there is political freedom.

Live free – this again is the area of politics and your personal responsibility, as well as to stay free from the law. It is also the area of economics in that you want to be free from want. Living free is not necessarily as a hippie, but being able to do the things you like and enjoy the things you find meaningful. If you have a good paying job or a profitable business, you would have the chance to stay free financially.

Retire free. This would be really nice. To retire from work, to have enough savings for a comfortable retirement, to be mentally and physically fit and free from illness, and above all, to be free to do the things you like but perhaps had little time for while working, and to spend time with the one you love – these would be “out of this world”. And in fact, it is out of this world and out of reach for many who do not realize that dreams generally don’t come true by themselves. Retirement years, far from being the best years, can be one’s worst nightmare. For the government, it is also a time bomb.

I was born free, have lived free thus far, and want to retire free, and one day die free.

Like most people on the verge of retirement, I am concerned about many issues, money included. As they say, money is not everything but everything is money. And the prospect of having another 30 years to live in retirement certainly spells money, and often money trouble.

I am more fortunate than many others because I’ve held good paying jobs and have run a profitable business for many years. But even more fortunate, it is my business to plan for my clients’ retirement among other things, and thus I was forced to look into my own retirement planning. It did not come easily or naturally. There is a saying that the 30s think it is too early to plan for their retirement, the 40s think it is too hard to plan for their retirement, and the 50s think it is too late to plan for their retirement. For the majority of people, if statistics is something to go by, retirement planning was never in their screen, until it exploded on them.

For Singaporeans, the CPF which was instituted primarily for retirement, is often the only savings accumulated for retirement. And even then, many will not have more than the minimum sum in their CPF at age 55.

Property bought with CPF money counts as an asset, but since a person has to live somewhere, owner-occupied property is not always cashable for retirement.

Property is a large investment especially for those living in cities where property prices are exorbitant. For example, the majority of Singaporeans would have almost the entire live savings in property. What is left for retirement for these people?

There are several social and demographic factors which make the retirement issue critical in Singapore.

One factor is the ageing population brought about by a declining birth rate and a longer life span.

The typical retiree is looking at 20 years of retirement. A good percentage of retirees would live to 85. It is projected that many in the post war generation can be expected to live beyond 100.

Demographic statistics in the USA show that the retirement age of 65 should now rightly be 75 based on the longer life span.

The second factor is the declining family size and increasing singlehood.

Children used to be the only means of support for their retired parents. With a family of four or more, parents can perhaps be assured of a roof and three square meals each day, and some pocket money to spend at the coffee shop and cinema occasionally.

The typical one-child or two-child family and growing adoption of changing values and ethos of the west no longer assures parents of lifelong support on children’s sponsorship.

Rising cost of living, especially in medical expenses, also makes growing old in Singapore a financial challenge. Yet another factor is that most parents are spending on, or hopefully, “investing” on their children, especially in education.

Many parents fork out thousands and thousands of dollars in overseas education for their children – often late into their working and retirement years as well.

Local education is affordable, but there are limited places in the local universities.

Such is the love of most parents that they are willing to extend their working life for the sake of their children.

To retire free from work is thus a worthy goal. It is not that working is a drudgery, which many make it out to be. As they say, some slog at their work in order to retire and then find they have nothing to do or to live for. It is that one must be financially free to choose whether to work and what work to do.

There are well-adjusted and highly motivated ones who don’t need to retire at all because “they retire every night”, and are fit and fresh the following day.

There are those who only need short breaks or work at their leisure and who retyre rather than retire.

But to retire free from having to work at a job which you dislike would be nice, and to do this you need to plan for your retirement. It will not come naturally or by just hoping for the best.

It will require working out your retirement goals like when to retire and how much you need each month.

It requires a regular savings plan for your nest egg, and to ensure nothing gets in the way, whether it is unexpected events like medical expenses or children’s education.

There are several important things to do which will free you from the financial worry. Good thing financial advice is freely available.

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