Givealittle is not a replacement for life insurance

The New Zealand Herald: Diana Clement’s Opinion

The charity website we love to give to is overflowing with good causes. It’s helping many a Kiwi fund treatment, funerals, or simply living costs when a personal disaster strikes.

The question of whether Givealittle is turning into a replacement for life and medical insurance has interested me for a while. Articulating it in public, however, is a good way to make myself public enemy number one.

Yet Givealittle has become a defacto safety net for some in our community. No insurance? Turn to Givealittle for financial support.

Each individual case is heart wrenching and every day around 780 people reach into their pockets and give $67 on average each to a cause. On Monday of this week all but one of the top ten “trending” causes by number of donations on Givealittle were personal causes of which the most common was cancer.

But isn’t that what we buy insurance for? The words “no insurance” are all too common among causes on Givealittle. I was left wondering if Kiwis think there’s no need to save for rainy days or insure themselves anymore because the public will pay for the treatment they need through Givealittle.

In almost all most cases life, income protection, trauma and/or basic health insurance would have paid for the care or income replacement needed.

Blair Vernon, director of advice and sales at AMP put it far more eloquently than I could. The Givealittle effect is something he discusses with AMP’s life insurance salespeople.

He views insurance as the pooling of money before the fact, and crowd funding such as Givealittle as pooling of money in arrears. By that he means that when you and I buy insurance we are pooling a sum of money each month in case we need a larger sum at a later date when we fall ill or die.

Those who don’t do this in advance are getting the same outcome by appealing to the goodness of others on Givealittle. Instead of paying for insurance they are choosing to spend their money in other ways and then ask for charity when illness, accident or death befalls the breadwinner.

Another issue pointed out to me by Vernon is that the appeals on Givealittle by people who could have obtained the money they needed from an insurance policy are crowding out other good causes such as appeals for research funding.

“Of course some people who don’t have insurance simply can’t afford it.”

The majority, however, choose not to afford it. It’s true. Several years ago Spark’s PR department decided cleverly to send Givealittle credit to journalists instead of Christmas cards.

It was an interesting exercise and I gave my donation to someone’s personal cause rather than the many research appeals such as those from the NZ Institute for Rare Disease Research or the NZ Multiple Sclerosis Research Trust.

Of course some people who don’t have insurance simply can’t afford it. The majority, however, choose not to afford it. They don’t think about the cost of the “what ifs”. If your other half dies slowly there’s a good chance you’ll need to take time off work – sometimes months – and may not be able to return full time if you have children.

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