Welcome to the third Barefoot Date Night. This week is all about protecting your assets.

According to a reliable source (the English tabloids), Kim Kardashian has insured her arse for more than $US21 million.

For me, this raises a couple of questions:

Why does she even need insurance? After all, she's apparently worth $US150 million.

And why is she only insuring her arse? I mean, how do you even break your arse? (On second thoughts, I'm sure Kanye has rapped about it: ‘My wife got a million dollar boo-tay'.)

Yes, while other guys spend their nights watching her home movies, I lie awake analysing her insurance exposure.

Welcome to the crazy world of insurance!

For our third Barefoot Date Night I'm going to show you how to protect yourself against the bad stuff that could happen.

And of course when it comes to insurance, I've got form.

See, the day our house burned down was the worst day of my family's life.

But it could have been a lot worse. According to CommBank, for every family like ours that loses its home in a fire, four families lose their home because of the death of a breadwinner, and 48 families lose their home because of a breadwinner becoming disabled.

Don't think it will happen to you?

Well, according to CommBank (again), two in five Australians will suffer a critical illness by the age of 65.

The bottom line is this: you can do all the right things, you can have everything sorted, and something you have no control over can wipe you out financially.

Trust me, it does happen. This is what I do for a living. I'm the guy the young father calls when he's been diagnosed with a terminal illness.

Yes, this is uncomfortable, but it's not about you — it's about the people you love.

Heavy, huh?

Can't we get back to the Kimmy butt gags?

Don't stress — I'm going to give you a solid, no-fuss plan to protect you and your loved ones. I've not only got your back, I've even got tried and tested word-for-word scripts for you to follow when dealing with the insurance heavyweights.

The golden rules of insurance

Rule 1: Only insure against things that can kill you financially

Your iPhone breaking will not kill you financially, so don't take out extended warranty insurance.

But you should insure against:

• your house burning down (been there) or getting robbed (been there too)
• your car getting into a bingle (multiple times)
• travelling overseas and getting sick (once)
• going to hospital (a couple of times)
• death or permanent disablement (never, touch wood)
• being unable to work (not so far).

Rule 2: Choose a higher excess

In the event of a claim, you can choose to pay an initial amount towards your costs, which is known as an ‘excess'. The more excess you're prepared to cough up, the cheaper your annual insurance premium will be.

You now have Mojo, which means you can afford a higher excess. Do it.

Rule 3: Don't automatically pay your insurance premium each year

Insurance companies behave like douchebag cheating husbands. They sweet-talk new customers, showering them with discounts and gifts, while treating their faithful wives at home (that's you, the existing customer) like dirt. The easiest money you'll make is calling them each year and telling them you're thinking of switching.

Hang on, why are you still reading?

Why don't you have your phone in your hand already?

Okay, here's a word-for-word script that you'll use with your current insurers to lower your car, house and contents insurance:

You: Hello, I'd like to increase my excess to $750 per claim. How much will that reduce my annual premium by?

Insurance rep: One moment please.

You (googling ‘best offer' + the name of your insurance company): And I see you're offering a 15 per cent discount to new customers who join before the end of the month ...

Insurance rep: That's only for new customers, sir.

You: Well, paint me red and call me Randy — I'm your newest customer!

Insurance rep: I'll talk to my supervisor.

You: I'll wait.

Insurance rep: Good news, sir. You can definitely save 25 per cent by increasing your excess. And, because you're such a valued customer, we've also been able to give you the discount that we normally only give to new customers.

You: Thank you! Now just make sure it's backdated from yesterday.

Now, let's talk about the two types of insurance that are probably screwing you over.

Private health insurance — do you even need it?

If you're under 31, you probably don't need private health insurance. And if you're earning under $90 000 as a single person, or under $180 000 as a family, you probably don't need it either.

That's because Australia has one of the best public health systems on the planet. If you get sick or have an accident, you'll get five-star treatment in a public hospital and lump it on the taxpayer.

However, if you're earning over $90 000 as a single or over $180 000 as a couple, you'll get hit with an extra tax (called the Medicare Levy Surcharge), which is equivalent to the cost of private health cover. So you may as well pay it and get the private health insurance!

Another reason to pay up is that if you want your family to go to the front of the queue and choose your own doctor, you'll need to go private.

Right, so if you do need it, here are my golden rules to getting better private health cover for less than you're paying right now:

• Purchase top-level ‘comprehensive' private hospital insurance.

  I get the best hospital cover I can for my money.

• Don't purchase extras or ‘combined' healthcare cover.

  If I want a Swedish massage, I'll pay for it out of my own pocket. Most of the ‘extras' in insurance policies can cost you hundreds of bucks extra a year whether you claim or not. Don't believe me? Ring your fund and request an annual claim statement. Then ask, ‘If I switched to a comparable “hospital only” policy, how much would I save each year?'

• Stay away from iSelect.

  iSelect is Australia's most-visited health insurance ‘comparison site' (picture me doing the inverted commas with my fingers). But iSelect isn't a genuine comparison site at all. It's a sales page tarted up to look like a comparison site. Of the 35 health insurers operating in Australia, iSelect lets you pick from just 12. The big players, Bupa and Medibank Private for example, at the time of writing aren't on the list.

  Same goes for that crazy meerkat dude and all the rest. Instead, go to the government's search engine, PrivateHealth.gov.au, which lists every health provider.

Protecting your family

Your most powerful financial asset isn't your home or your car: it's your ability to earn an income.

If you have school-age kids and you don't have income protection insurance (also called income replacement insurance), you're normal: according to OnePath, 94 per cent of Aussie families don't have it.

AND THEY ARE COMPLETELY INSANE

Every day, 18 Australian families lose a working-age parent. Every year, 235 790 working-age parents suffer a serious illness or injury and more than 17 000 of them are forced to stop working, either permanently or for an extended time.

Thankfully, there's an easy fix, and it takes just one phone call.

So call your super fund.

Now, your fund will probably offer a (tax-deductible) default level of life cover (if you're dead), total permanent disability (if you're nearly dead) and income protection (if you're crook).

It's good … but not good enough.

So how much cover do you need?

A rule of thumb is 10 to 12 times your annual income, if you have young kids. And if you're a stay-at-home mum, you can and should get life cover and total permanent disability insurance as well, because if you weren't around all hell would break loose and your hubby would need to employ two people to cover all the work you do (childcare, cooking, cleaning, and so on).

Look, this is so important that I've written another script for you to use with your super fund:

You: Hello, I'd like to talk to one of your qualified insurance experts about my level of cover for life, TPD and income protection.

Super fund customer service: One moment, I'll transfer you.

Qualified insurance expert: Can I help you?

You: I'd like you to provide me with an insurance quote for 12 times my annual salary of combined life and TPD insurance. In addition, I'd also like you to provide me a quote on income protection for 75 per cent of my wage till I reach the age of 65. I'm happy to wait 90 days before I claim.

Qualified insurance expert: Yes, I can do that.

You: Also, I don't want my super contributions eaten up by the cost of paying for this insurance, so can you tell me how much more money I need to put into super to cover the cost of the extra insurance?

Qualified insurance expert: Of course.

You: Thanks. Can you put all this in writing and send it to me so I can look over it with my partner, just to make sure we're on the same page?

Okay, you've been doing a lot of heavy lifting in the past few weeks — setting up your bank accounts, sorting your super and being a responsible little Vegemite with your insurance — so up next I've got a real treat for you.

You're about to read the most important section in the entire book:

I'm going to get you to look at your ‘stuff' in an entirely different light.

See, if you're going to live a life on your terms — where you're totally in control — you're going to have to think differently from that insecure teenager in your old school photo.

This cuts to the heart of what being Barefoot is all about: I'm going to show you how to become conscious about what you spend your dough on.

No, that doesn't mean you need to become a stingy tight-arse who lives life with a clenched fist.

Hell no.

In fact, just the opposite.

I'm about to show you how you can live like a multimillionaire on a below-average income, today.

Plus, we're going to do something about your underwear.

Read on.