professional wealth management advisers

Wednesday, March 21, 2012

Insurance - offload the risk!

Want to bet you don’t need it - insurance, that is? - That’s exactly what you are doing when you fail to adequately insure yourself (and your family)! You take a bet that your family that you will stay in great health for the rest of your very lengthy, healthy and safe life!

So why don’t we take adequate protection with an insurance company?   Some of the reasons we hear include –

  • Never thought of it;
  • Can’t afford it/ it’s too expensive;
  • Not yet.

What of those explanations?

Never thought of it1
Well, now you are at least in a position to read about it. The link below has a number of further links that provide many opportunities to broaden your understanding about the benefits of the different types of insurance protection available – and without promoting any one provider for any of them!

Australians are (almost) hopelessly under-insured: it’s almost cultural! Some ‘haven’t thought of it’ because they ‘haven’t heard of it’; some are too busy leading exciting lives they haven’t turned their minds to the matter; and some others don’t understand the implications of being under-insured – and so just don’t think about it!

If any of the following situations describe aspects of your life, you should be insured – and you should review the level of insurance you ‘carry’ – so as to be able to reassure your loved ones that their future is sound:

  • you have a spouse;
  • you have dependants (children, parents etc);
  • you have debt (mortgage, credit cards, personal loan, line of credit);
  • you are employed;
  • you operate a business;
  • you have employees who are key to your business;
  • you have business partners.
..and whilst the above list is not exhaustive, any one of those situations means you have people who are critical to your financial well-being and/ or who are dependant on you maintaining your financial well-being.

If you haven’t thought about insuring your life think about their position if you meet with an unexpected illness or accident, or worse if you die. Some Case Studies might heighten your awareness of the need for adequate protection: see links below2.

Can’t afford it/ it’s too expensive
Sometimes excuses can be justified, but when your mind is numbed by the message the doctor has just delivered about an unexpected illness or disability, the next fear by most victims of such circumstances is what financial position will they (and their loved ones) be in as the disorder/ disability takes effect?

A recent survey (from which we published some extracted statistics)3 shows that most of the people who make this statement don’t have a correct perception of the likely cost of the insurance in any event – in most cases, their estimates of what cover would cost in their circumstance was considerably in excess of the market average premium applicable!

When the need arises and there are education costs to pay, medical costs/ ongoing care to pay, mortgage costs to pay – and limited financial resources available at the desperate time, the cost of the protection that would facilitate the servicing of all of these financial obligations (and normal day-to-day living costs) – through an appropriate insurance plan – suddenly seems as though it wouldn’t have been so high after all!

Not yet!
This is the really scary one folks! This is the response of the person who knows they need to have the cover; they know they should have the cover – but they choose to bet that they can get the timing right! GOOD LUCK!

The facts are that –

  • insurance protection is more easily obtained for healthy applicants with no adverse medical history (i.e., no risk exclusions or premium loadings – and unlikely to be declined cover);
  • illness and disease can strike with short notice – and once that happens, the whole spectre of insurability can change; and
  • good habits formed early mean peace of mind for you and your loved ones over the longer term.
Don’t bet against the odds: Ensure that you are adequately insured.

2 (Who Do You Love? Case Study);

Disclaimer: The information contained in this article is general in nature and does not take into account personal circumstances, financial needs or objectives. Before acting on any information, you should consider the appropriateness of it and the relevant product having regard to your objectives, financial situation and needs. In particular, you should seek the appropriate financial advice and   read the relevant Product Disclosure Statement or other offer document prior to acquiring any financial product.

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