SME owners who are busy acquiring symbols of achievement – cars, homes, jewelry for the spouse, expensive schools for their kids, yachts, golfing, vacations, and the never ending list of a good life. How did you manage to accomplish all of this in a shot span of time? It wouldn’t have been possible unless you inherited money or won a lottery, and if it’s neither of the said circumstances, then, it is your human capital. They drive your income and help you in building your financial assets. You have earned this money deploying your human capital. You have to agree that your human capital is critical to your overall success in building financial wealth and achieving life’s goals.
Effectively, managing human capital is a key component to avoid pitfalls along the path we call, life. So what is human capital? Management books define human capital as your talent pool, skills, education and experience. Let me ask you, do you get your expensive car, boat, other expensive equipment/machinery serviced, and do you have maintenance records? Have you got the correct insurance often at a higher premium because the car is expensive? You have done research on the cost of neglect, replacement parts and thus, you are alert while using your precious possessions. Just as the car, boat, etc., have a wear and tear cycle, so do you. Accept it or not, your life is full of stress that leads to a lot of illnesses, which includes hypertension, diabetes, cancer, heart attacks etc.
Economic impact of heart attacks, cancer and diabetes: direct medical costs after a heart attack include: ambulance, diagnostic tests and hospital charges. On the other hand, a possible surgery could lead to long-term maintenance of heart disease is also expensive. The costs include: drugs, testing and cardiologist appointments. The largest indirect costs are lost productivity and income, though many people may be able to return to work a few months after having a heart attack. The financial costs of cancer are high for both the person suffering and his/her family on the whole.
One of the major costs of cancer is the treatment. No health and critical illness insurance and other barriers to health care prevent many from even getting good and basic health care.
Uninsured patients are more likely to be diagnosed with cancer at a later stage, when treatment can be more extensive and more costly. In fact, this leads not only to higher medical costs, but also poorer outcomes and higher
cancer death rates.
Cancer costs us billions of dirhams. It also costs us the people, we love. Reducing barriers to cancer care is critical in the fight to eliminate suffering and death due to cancer. About 35 per cent of the Diabetes cases in the UAE remain undiagnosed, which increase the medical costs and complications arising out of a largely preventable disease. In the UAE, the prevalence of type 2 diabetes is among the highest in the world. About 13 per cent or one in eight of the adult population in the UAE are diabetic, more than double the global average of 6.4 per cent.
Validating the observation, Dr Alfons Grabosch, consultant for disease management at Daman said, “Everyone who’s a payer (patient and government) will end up paying more for diabetic related conditions than ever
before if the condition is not tackled immediately.”
Medical cost due to diabetes and pre-diabetes in the UAE is forecasted to rise to an annual $1.04 billion (Dh5.14 billion) by 2020, and this will come from your pocket if you are a part of this group, as Diabetes is not covered or costs more by many medical insurers. Covering people with pre-existing conditions is more expensive, as it will be at a higher rate than healthy people, a rate that would protect the insurance company from the greater costs of their coverage.
Who is Uninsurable? Mostly those who are sick to begin with: They have heart disease, diabetes, cancer, and other pre-existing conditions that set off alarm bells for insurance sellers.
Ask why the already sick can’t buy insurance and you get an immediate and seemingly obvious answer—their health costs are too high. Imagine if you had to foot those bills! So you are an asset, and one that is critically important to your overall success.
While much time is spent with advisors on the financial components of one’s life, it is equally important to focus on your human capital. It is your human capital asset that drives your financial asset accumulation. So, can you change the way you view yourself? Because you are your biggest asset. It’s called labour capital, which is often underestimated by your accountant/financial advisors. Perhaps your numbers guy will understand this!
According to Larry Swedroe in The Only Guide You’ll Ever Need for the Right Financial Plan, co-authored with Kevin Grogan and Tiya Lim: If you’re self-employed, you’re a stock. If you enjoy the stability of your position by the stability of an earned income, you are a bond.