As we go through life, most of us will experience that even the most well laid out plans can come unstuck. Often, we mitigate the risk of unexpected loss with insurances. We generally don’t think twice about insuring our car or home. But your greatest asset is actually you. It makes a lot of sense to make sure that you are also protected in case something goes wrong.
As we move through life, find a partner, raise a family, get a mortgage, start a business, the importance of insurance in a long-term plan increase. That’s because insurance is all about providing a financial safety net that helps you to take care of yourself and those you love when you need it the most.
As a financial adviser, I have seen first-hand the crucial role that insurances play when the unexpected strikes. I have dealt with multiple medical professionals who have been on long term partial income protection claims due to health conditions affecting their ability to practice. I have assisted clients with income protection claims in wide ranging issues such as depression to grief over the loss of a spouse.
An example that highlights the importance of insurance, was a young client of mine who was diagnosed with cancer. Initially they received a trauma payout which assisted with paying for the cancer treatment. Unfortunately, there were side effects from the chemotherapy treatment which resulted in a subsequent total and permanent disability claim. This payout allowed the client to clear all their debt and make significant renovations to their home. They have also been on long term income protection claim which has enabled them to meet their ongoing living expenses. Even though they suffered an awful health diagnosis, this did not negatively impact their financial goals. They were able to pay down debt, pay for their children’s education in elite private schools and continue to grow their superannuation for retirement. This was all made possible by having the appropriate insurances in place.
Personal insurances form the contingency of any well thought out financial plan. By having the appropriate insurances in place helps to maximise your chances of achieving the goals addressed in your financial plan, even if you suffer an unexpected health event.
No one can predict the future and what lies around the corner. Unforeseen tragedies such as illness, injury, or permanent disability or even death can leave you and your family facing tremendous emotional stress, and even grief. With insurance in place, you or your family’s financial stress will be decreased, and you can focus on recovery and rebuilding your lives.
There are range of personal insurances, these are the main ones you need to consider:
You can find further information on personal insurances on the Moneysmart site.
Working out how much cover you need isn’t easy to work out, but engaging with an insurance professional can help you sort out your individual insurance cover. The actual amount of cover recommended will vary between individuals. There needs to be a discussion around what you want to happen in various scenarios such as inability to work or death of the primary income earner. These conversations are often raw and sobering but a necessary part of determining the appropriate amount of cover.
Several considerations that usually affect the cover required include:
An insurance professional can recommend the best way to structure the cover factoring in things such as tax deductibility, taxation of benefits, superannuation release rules, cashflow and erosion of retirement benefits.
Just like investment risk appetite can change based on age and life-stage events, personal insurance cover should be examined to keep up to date with your changing situation throughout your lifetime. Having the appropriate cover in place leads to another intangible benefit…peace of mind.
My clients who put in place insurance cover, hope that they never have to call upon it. But if they do, they are always grateful they took the time to set it up properly.
Any further questions on getting back up plan sorted with personal insurance, don’t hesitate to get in touch with an Oracle adviser today!
Written by Alvin Wong
Financial Adviser
Oracle Brisbane
Important information - Oracle Advisory Group makes no representation or warranties as to the accuracy or completeness of any statement in it including, without limitation, any forecasts. The information in this document is general information only and is not based on the objectives, financial situation or needs of any particular investor. An investor should, before making any investment decisions, consider the appropriateness of the information in this document, and seek their own professional advice. Past performance is not a reliable indicator of future performance. The information provided in the document is current as the time of publication.