Friends and Family as a Form of Insurance

by Mr. Cheap

I mentioned in a recent post how stories influence public policy. Social supports are sold on the idea of a poor downtrodden individual who has a run of bad luck, and putting a system in place to catch them before they hit bottom. It may be a woman with children trying to escape a cycle of abuse at the hands of her husband, a family just scraping by when a child is diagnosed with leukemia, or an immigrant family who runs a convenience store and one of the members is shot in a robbery (and they don’t have emotional support to deal with the aftermath).

You’d have to be pretty hard-hearted to say “screw them!” to people in any of these situations, and I think it’s VERY rare that anyone actually has that reaction. Most people I’ve known, from across the political spectrum, genuinely want to help people who are in a tough place. They often just differ on the best way to help them.

I often wonder how much the reality of the populations being served by these programs match the image they are sold on. I also wonder why none of these people have friends or family that can help them.

My personal “safety net” in order of desirability is: self-insurance, insurance, friends and family, and government programs. I’m fortunate that self-insurance takes care of most of the risks in my life (I’m single, so I don’t need life insurance, and as a grubby grad student disability insurance would be close to useless). The biggest risk for me currently would be liability involving my condo, and I have insurance that covers that (with a very high deductible).

If I ran into problems in my life that neither of these would take care of (say a prolonged serious illness that depleted my savings or that prevented me from taking care of myself) friends and family would be the next place I’d look for help. I have one friend I know for sure would take me in no matter what happened, and within my family there are two homes that would also put me up. Two other friends would certainly give me a place to stay for a short period (say a couple of months) while I got back on my feet from a temporary setback. When we talked about this once Mike jokingly said I could move in with him if I was willing to change dirty diapers.

So that gives me 5 homes I could potential depend on before I’d throw myself on the mercy of the state (and one place I could exchange diaper duty for rent). If an unpleasant person like me has that many options (I’d do the same for any of them, heck maybe *I’d* start wearing diapers if Mike moved in with me to give him something to do 😉 ) who I can count on if I fell into real trouble, who are these people who don’t have anyone? What kind of a SOB would you have to be to not have anyone to help you if you were living with abuse, an illness or the consequences of a criminal attack?

The purpose of this post isn’t to argue against government programs to help people in trouble. I often wish there was more transparency about who was being helped and how. The real point I’m getting at here is that your social network is one of the most valuable safety nets most of us have (and often we don’t considered it when thinking about “worst case scenarios”).

How many people in your life could you count on to take care of you if you fell into real trouble? How many people would you be willing to take care of?

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{ 8 comments… read them below or add one }

1 Bucksome

Great questions. I have a group of family members that I could count on to take me in and vice versa.

Even though, I pray life doesn’t take any of us down this road, it is comforting to know in the back of your mind that there’s a place to go.

2 Quietrose

This is a thought-provoking and profound post. It’s hard to think of ourselves as being so down on our luck or downtrodden that we would need to rely on friends and family, and possibly the government. But, it could happen. I have a very small social network but think that one friend would take me in with open arms, and one family that has two children would probably put me up for a few weeks, maybe a month. Between both of my parents, there might be one home I could crash at for a short while. I’d be willing to take care of 4 particular people (my best friend, my friend, and both of my parents), without question. I would take care of one sibling, with some reserve.

3 Mike Piper

Thought provoking post indeed.

To answer one of your questions:

My wife works as a court-advocate for domestic violence victims here in Chicago. From what she tells me, there are two primary reasons domestic violence victims seek shelter in temporary shelters (rather than going to stay with friends and family):

1) Sometimes, the victim is afraid that friends/family will side with the abuser rather than with her.

2) More frequently, the concern is simply that the abuser will know to look for her at, say, her sister’s house. So there’s not really a feeling of safety there. If the victim can make it into a shelter, the abuser won’t know where to find her.

4 Julie

While I think the points made about other sources social support are valid, the author himself points out situation which makes this impossible: the abused wife.

Abusers intentionally isolate their partners from all outside forms of support: jobs, family and friends. They do this with the intention of leaving them nowhere else to go.

I also think that only being able to depend on friends or family is perilous; in a small town with a large factory closing, for example, many friends or family could all be simultaneously affected financially. Or at the other extreme, family members may be spread all over the country, having moved where the jobs were.

With birth rates steadily dropping, people have fewer independent family members to depend on, particularly as lifespans increase. Your sibling may be unable to assist you or take you in temporarily, as much as they’d like to, if they are already stretched trying to care for your ailing parents in their home. Of course, they would be in a better position to help you if state-supported elder care was sufficient…

5 concernedaboutlifeinsurance

why do you say you don’t need life insurance b/c you’re single? does your “self-insurance” have enough savings to cover the cost of a funeral so you won’t be a burden to said friends and family after you are gone?

6 Mr. Cheap

concernedaboutlifeinsurance: Yes, actually my “self-insurance” would more than cover it.

Mike & Julie: I get where you’re coming from (and realized that mentioning spousal abuse would could lead to an emotionally charged post). Social support *IS* possible for an abuse survivor, just because the abuser tries to isolate them, it doesn’t mean we have to abandon them. If a friend or family told me they wanted me to drop dead and headed off into the sunset with an abusive spouse, I’d take them in in a heartbeat if they showed up 2 years later on my doorstep with a black eye.

And I’d welcome the abuser to follow them to my home. Things would get “interesting” (as concernedaboutlifeinsurance might say) at that point.

With modern economies and financial services, family and friends can (and do) support each other in different countries.

I don’t buy the “decreasing birthrate / increasing lifespan” argument as a reason for more government support. Having fewer people NEEDING help and longer (and healthier) working years would push in the opposite direction. I think both of us would be guessing at how these issues would impact the typical family.

7 Mike

Please don’t start wearing diapers (or even talking about it)…*shudders*….

My parents are my “safety net” although it’s pretty unlikely that I’d need them (but never say never).

8 frugalgrad

In my situation I think my parents and 1 friend that I could count on to put up with me if I ever hit rock bottom. The reasons are just at my age, most of my friends are still struggling to get by with school and loans and jobs. So no one has a permanent place or a stable job yet. I don’t too. I mean we do what we can.

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