Sometimes we are comfortable with the level of risk involved. In other situations we look to insurance to avoid significant financial impact. You don’t think twice about insuring your car or your home – do you?

Yet why do so few people place importance on insuring themselves? In most cases, YOU are your greatest asset. Unless you’re of retirement age, your ability to generate income is essential to your quality of life. Imagine if you lost the ability to earn. How would that change your life?

Without your ability to generate income you are unlikely to achieve your financial goals. You’re also at risk of losing everything you’ve worked hard to accomplish. When you think of it like that, it’s staggering that only 31% of Australians insure their income¹.

Here’s a hypothetical

A 30 year old earning $100,000 per annum today would earn over $6,000,000 by the time they are 65 (allowing for indexation) – and this doesn’t even consider inevitable pay rises or bonuses. What a huge financial risk to expose oneself to.

Why take that risk? There is a one in three chance you will be unable to work due to illness or injury for more than three months during your career. And 20% of mortgage defaults are due to illness or accident within a household².

Research indicates that 38% of working Australians could survive less than one month without their income.  This increases to 50% for people under 35 years of age³.

Clearly it’s important to protect yourself. But what if you are also the provider for a family? What would your family do without your support? How would you feel if you could no longer provide for them? Who would pay the mortgage, put food on the table, pay the kids school fees?

The emotional stress and toll on the family after an illness, accident or death is significant enough, without the worry of how the next bill is getting paid.

And what if you are a business owner? Consider how the risks are magnified between partners. In a two partner business the chance of one partner dying before the age of 65 is 35 in 100. The chance of one partner dying or becoming totally disabled before age 65 is 52 in 100. Increase to four business partners and the risk increases to 57 and 77 in 100 respectively⁴.

The use of insurance for buy/sell agreements and keyperson cover can be a highly effective means of ensuring the livelihood of a business beyond these events.

Australian’s are known for our ‘she’ll be right’ attitude but unfortunately it CAN, and DOES, happen to anyone, at any age, regardless of how healthy you are. Illness and accident rarely discriminate.

What can you do to protect yourself, your family or your business?

It can be difficult to navigate the world of insurance. There are hundreds of insurance policies – with different levels of cover, varying premiums and reputations for paying claims.

Insurance advice is a specialist field. You should seek professional insurance advice from an independent adviser who has access to various insurers, without being bound by any one provider.  

Hewison Private Wealth now have an experienced inhouse insurance adviser who can help you navigate the maze of personal insurance. We only use quality insurers who pride themselves on their claims history and ability to pay in the event of legitimate claims. And being an independent, fee-for-service advisory firm, we do not accept commissions and instead discount the premium to you, which is likely to see you pay less for your insurance.

Wealth Creation & Protection (Insurance) Forum

You’re invited to join us at our Wealth Creation & Protection Forum on 21 March at the Westin Melbourne. Click here for more information.

It’s never too early or too late to take control of your finances and build upon your wealth.

References/statistic sources

1. www.lifewise.org
2. www.lifewise.org
3. www.theloyaltyzone.com/ (for Zurich)
4. www.theloyaltyzone.com/ (for Zurich)