It wasn't luck. It was someone's decision making that he was subject to with no recourse.
How exactly do you think this would work? What jurisdiction is all this in?
So basically my idea is that to have some of my assets (insurance and some savings) with the same company that holds the mortgage, I have a hedge against the credit risk associated with my assets. If the bank goes bankrupt and cannot repay its obligations to me, I can refuse to pay my mortgage back to them, and demand that any net asset the bank would owe me would be subtracted from the liability I have with the bank.
If my assets were in another company, and that company were unable to pay, I would still be stuck with the mortgage, potentially even if the value of the property were to be lost.
As a side not, I remember working on a credit risk (Basel 2) project back in 2005-2006. Until then, inter-bank lending was (by regulators) considered to have zero-none credit risk, but from around that time, banks (at least in Europe) had to allocate regulatory capital when lending to each other. Then came 2008.
I like this logic.
My only concern would be that, in many cases an insurer might have a clause to pay cash or rebuild, their choice. Or some other conflict which may cause issue with the mortgage holder (many mortgages can force sale in certain circumstances).
But I like your premise, and will poke at it here.
stocks are also diversified (different segments of the economy and geographies)
but yeah, unlucky at that time!
Under normal circumstances, would be easy to fly back within 3 months
You are never 100% safe. You could be killed by a car, a falling plane or a meteorite an hour from now. Or an artillery shell or nuke just after the start of an unexpected war. Or that painful spot that you have could turn out to be terminal cancer, which could kill you within 3 months.
Also any currency and any set of stocks can go to near-zero faster than most imagine. A natural disaster can happen that simultaneously wipes out your house (if you have one) and your insurance company. (This is actually the reason I'm insuring my house with the same company that holds my mortgage, so at least I don't have to pay the mortgage if they're wiped out in such an event.)
The real question is how much risk are you willing to accept, and what costs are you willing to pay to mitigate the risks. And of the above, I think the main risk driver was to go abroad (paired with being unlucky about covid's timing).
Going abroad while depending on a domestic bank with a log-in method that would soon expire was adding to the risk.
The combination of the above put you into a small subset of the population, meaning you and people like you didn't have leverage when the disaster struck.
But you _were_ unlucky. And if luck is bad enough, you're never completely safe.