Why do wealthy celebrities insure their body parts?

30 May 2016

When a wealthy celebrity like Kim Kardashian reportedly insures her butt for almost $30 million New Zealand dollars1, it begs the question ‘if wealthy people have so much money, why do they bother with insurance at all?’

It’s not like any of these celebrities and countless others would be out of pocket if they suddenly lost the capacity to earn cold hard cash off their assets.

Other celebrities2 who have insured their assets include Jennifer Lopez whose butt and voice is understood to be insured for almost $40 million and David Beckham apparently has a huge $278 million New Zealand dollars covering his body parts.

 

 

"Many Kiwis between the ages of 18 and 39 would rather take a $1,000 gift card over a year's worth of life and income protection insurance."

 

"Half of respondents would rather have flights and accommodation for a mystery break (55%) or $1,000 gift card from their favourite store (54%) instead of a year’s worth of life and income protection insurance." - Therese Singleton

But those who need insurance prefer gift cards

Contrast that with research findings3 that suggest that many New Zealanders between the ages of 18 and 39 would rather take a $1,000 gift card over a year’s worth of life and income protection insurance.

In fact, a recent AMP survey of more than 600 Kiwis aged between 18 and 39 ahead of the launch of AMP Essentials4 reveals that 55 per cent of respondents would rather have flights and accommodation for a mystery break, instead of the year’s worth of free insurance.

Why do people who don’t need insurance have it?

The answer for why the wealthy insure and the majority of average people (certainly in New Zealand) do not, could be the difference between smart money managers and those with a bit to learn.

One reason for some rich people might be that they have made a lot of sacrifices along the way and they don’t want to lose all their hard work gained - and that makes them good money managers.

“Rich people5 can be bad money managers too, and those that are usually lose everything - the bankruptcies of Mike Tyson, M.C. Hammer and Burt Reynolds have been widely publicised. People like Kim Kardashian however, remain wealthy because they understand that protecting wealth is as important as accumulating it.

“In short, insurance is not a cost or an expense or a waste of money. It’s a financial tool to help ensure that the progress you make in life is not set-back or lost due to misfortune such as a serious illness that keeps you from being unable to earn the income you need to pay the mortgage”.

The irony is that the people who need insurance the most, don’t buy it, which suggests that lack of insurance could be an indicator of money management skills that need improving.

There are some ‘asset essentials' that the Kim Kardashian’s of this world won’t go without, like foundation, concealer, lipstick… (Kim is famous for using economical drug store make-up6) - all of them low cost, economical and accessible.

The same principal can now be applied to the financial essentials no one should do without. Called AMP Essentials, it’s New Zealand’s first combined life, trauma and temporary disablement insurance product. Linked with KiwiSaver, AMP Essentials is easy to access and makes it easier to protect your life and income for less.

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1http://www.belfasttelegraph.co.uk/life/fashion-beauty/kim-ks-butt-insurance-30024335.html
2http://www.suggest.com/celebs/5822/14-celebrities-with-ridiculous-insurance-policies-on-their-body-parts/#page=1
3606 participants completed the AMP Essentials survey. Margin of error+/-4% at the 95% confidence of interval (considered an acceptable margin of error).
4AMP Essentials is available to existing AMP KiwiSaver Scheme members only (members as at 21 March 2016. The offer is only available from Monday, 11 April for 60 days).
5http://www.hollywoodreporter.com/gallery/madonna-michael-jackson-fantasia-nicolas-cage-263189/15-mc-hammer
6http://www.marieclaire.com/beauty/news/g3677/kim-kardashian-favorite-drugstore-products/

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