Insurance: Can You Afford Not To Have It?
I am similar to most people in that I look at each insurance policy and associated premium and initially think ‘gee, I wish I did not have to spend this’.
However, doing what I do for a job I have seen what life looks like when an insurable event occurs, and I certainly know the side which includes decent insurances is far greater in terms of financial and emotional impact.
Most people reading this would have things like their house, contents, car, boat, trailer and even wedding ring insured, but how many would have their lives insured? How many would have their income insured? The answer to that question is startling when you think that ones most important asset, their ability to earn income, is quite often the asset that is either last to be insured, or not insured at all.
Danny Archer
When we sit down with clients and plan out their goals over a 10 or 20-year period, it is an enjoyable and motivating conversation filled with opportunity. As Financial Planner’s, we take great pride and enjoyment out of being able to clearly map out a plan that enables our clients to achieve whatever they wish; it is why we come to work. The one constant throughout these kinds of chats is the assumption that the client’s income will always be there. Which, in theory, it is… until it’s not. You can insure your income in the form of Income Protection (IP) insurance, which effectively pays you a portion of your pre-illness or injury income, or you can protect it in the form of Life, TPD and Trauma insurance.
Take a moment to think about how your family would pay for the things mentioned above, if you did not have adequate insurances in place.
Life, TPD and Trauma insurance are what we call ‘lump sum’ cover as they are paid out in the event of a successful claim, rather than incremental monthly payments like IP. Typically, one would cover their mortgage, future school fees, expenses such as renovations, rehab and medical costs and also future income that would have otherwise been earned.
What’s more is that through clever planning and strategy, you can have each insurance work in conjunction with another. We recently had a client (who I will refer to as Bill) diagnosed with Parkinson’s Disease, which is obviously horrible. However, under our advice, Bill took out Trauma and TPD insurance policies that include Parkinson’s as something they cover. Therefore, Bill was able to claim on his Trauma policy, which recently paid out a healthy six-figure sum that will enable Bill and his family to pay for early treatment without the need to worry about how they are going to pay for it.
Furthermore, in the future the TPD cover will be claimed, further reducing any stress around the financial cost to treatment. This will allow Bill and has family to focus their efforts on enjoying life with each other, knowing that they are financially secure. For us, this result is another reason why we come to work.
While a bittersweet situation, the role of Bill’s personal insurances cannot be underestimated and I now ask if insuring your life insured is worth the cost?
Please do not hesitate reaching out to a Mulcahy & Co Financial Planner if insuring your life is important to you.
Episode 36
Can you afford not to insure yourself? Danny Archer (Financial Planner) takes host Gavin Nash through the ins and outs of Personal Insurances and why they are very important to consider for your peace of mind and financial security.
Danny also runs through some real case studies to help our listeners understand these important matters.
Available on Apple, Google Podcasts, Spotify and on our website.
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