It’s said the only sure things in life are death and taxes. There’s not a lot we can do about taxes, but it turns out we’re not completely helpless in the face of death – or even a significant breakdown in our health.
Immortality is not an option, but at least insurance exists to make sure your family won’t struggle financially if the primary earner is suddenly unable to provide.
Biggest Financial Mistake
Sophia Bera of Gen Y Planning once told the Financial Review that the biggest financial mistake made by young couples was to have inadequate insurance, especially if they have young kids and the couple is dependent on one income. Bera’s advice was to take out term life insurance (as opposed to whole life insurance policy, which is seen as too costly and complex to be good value).
Bera’s concern is valid. While many couples plan well to create joint prosperity in which to share a life and raise a family, it’s less common for people to discuss what will happen if one of them dies unexpectedly or experiences a serious health problem which may leave them unable to work.
What happens to all those plans if the primary earner is suddenly unable to work, leaving debts and inadequate income? It’s difficult enough to deal with the emotional impact of loss and severe health issues. The last thing you need is for your loved ones to have the added stress of worrying about money.
Family Income And Insurance
The key questions behind exploring what kind of life or income insurance will see your family through the worst of times are:
1. How will my family cope with the expenses of a major accident or death?
2. How will my debts affect them?
3. How will my family have an ongoing income?
ASIC’s Moneysmart site has a lot of advice on making sure your finances are always organised and sufficient to support your family in case the main breadwinner is no longer able to do so. Along with making sure you have a Will, and that you’ve discussed finances with your partner (and made sure they have access to your accounts) Moneysmart recommends you have both life insurance and total and permanent disability (TPD) cover. It also recommends you check whether any such cover through your superannuation is really enough.
We might feel that although death (like those pesky taxes) is inevitable but that insuring against disability seems a bet too far.
But we insure our homes and contents against some unlikely yet possible things – should we do less for ourselves when our family’s financial welfare is at stake?
Looked at like that, it seems simple good planning to cover yourself at least as well as the home you’ve worked hard for.
If you would like to speak with a professional investment adviser about whether your life, disability and income insurance cover is appropriate and sufficient, contact United Global Capital today on 03 8657 7640 or email [email protected] for a no cost, no obligation consultation.