I used to work on a type of risk cover that covered your 'Own Occupation'. It covered more than 'Reasonable Occupation' cover. These are both forms of disability cover, which is actually more important than life cover. The cold hard truth, quite often, is that when you die the people around you will be more emotionally beat up than financially beat up... eventually. They can pick themselves up. Insurance is there to cover a disruption you couldn't afford to cover yourself. With disability, you are still around, you just can't 'bring home the bread'. Potentially your cost of living even goes up. You could move somewhere cheaper given you aren't working, but that depends on the other members of your family and your support.
The difference between 'Own Occupation' and 'Reasonable Occupation' is that the one covers your ability to do your job, the other covers the ability to do any job that you have the skill set for with a similar level of remuneration. 'Own' by being more specific, actually covers more. A little like Jared was talking about in 'Real Risk' - the chance of being killed by a terrorist is less likely than the chance of being killed by anything. In that case, being specific covers less. In this case, it covers more. It all gets very complicated.
The rule of thumb I have always used is 'Get insurance for anything that will blow you out of the water, don't insure anything that would just suck but is part of life'. So I didn't get cell-phone cover etc. I did get disability cover. A friend of mine is one of those Buffett like 'under cover capitalists'. Buffett says he spends so little because he multiplies every price tag by ten. That is what he could grow it into. It isn't surprising that some of the people who are best with money don't spend a lot. Conspicuous consumption freaks them out. This friend of mine is one of the best investors I know. He also happens to not insure his car. He drives a small car, and figures he can take the hit. When asked, 'what if you hit a Porsche?', his response is that it would have to be his fault. As a careful driver, this is an unlikely event and by paying his premium he is covering all the other drivers too. After years and years of no premiums, it's a risk he can afford.
The 'Own Occupation' I said I would love to cover is that of 'Sandton House Husband'. That is my dream job. I have never had any issue with having a partner that earns more than me. In particular, I have never had an issue with having a partner who earns ridiculously more than me. A Sandton House Husband could have all the chores covered. His job would be to read widely, be as good looking as possible (gym etc.), cook amazing meals, do creative stuff his wife could boast about (e.g. art), and keep a wide circle of friends so that he could introduce his very busy high powered executive wife to people. Basically, the core of his job would be their happiness. I could roll like that.
The one chink in that theory is that she would be at work. This idea that there needs to be a breadwinner and a homemaker is flawed. If you aren't extravagant, your money can become your own breadwinner. All those things that I listed as the role of the Sandton House Husband don't cost a lot. What likely costs a lot is having to live close to where the money is made. What costs a lot is having to pay other people to do those chores because you are busy. Keynes and other economists thought we would be working shorter work weeks by now. The reasons we aren't may simply be because we are simply scared of free time, and we define ourselves by our occupations.
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