Net Worth Reduction

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Howard Rocket bought disability insurance when he started practising as a dentist in 1972.

But he let his policy lapse in 1986, when he left dentistry to start a public company, Tridont Health Care Inc.

"I was drawing about $30,000 a month from the business," he says. "So why did I need insurance? I had money and I could self-insure."

Certainly a rational thought.

However, there is nothing rational about sudden illness, accidents or economic set backs.

Tridont went bust in 1990, but Rocket kept a career as an entrepreneur. In 1995, while playing touch football with friends, he fell and landed on his neck.

Six weeks later, he had a massive stroke. He was in rehabilitation for years and still hasn't completely recovered.

"I paid about $1 million in hard costs – things like wheelchairs, canes, drivers, physiotherapy, occupational therapy, massage, chiropractic therapy and acupuncture," he says.

This is why self insuring is a foolish wager.

"To me, self-insurance is net-worth reduction. And insurance is net-worth protection."

Couldn't have said it better myself.