When life takes a turn, who is funding you?

Everyday I open Facebook.  Pretty normal, but recently I have been getting sad opening it up. I have been receiving heartbreaking invitations to help fund peoples treatment for cancer, or fund raising events and updates on their battles.  Every time I see one of these pages, it is sad because I know the pain they are facing, not only in their battle for health, but also the financial pain they face every day.  Unfortunately I can't take that physical pain away, so we all try to do our little part to help where we can and hope that it is enough, right?    

It got me thinking.  You see, I started out in Financial Advice quite a few years ago, and one of the first clients I helped were a family.  They were looking to set up their retirement and were doing great.  They had a couple of properties and we were helping them to get another through their super fund.  One thing I insisted on was that their insurances were brought up to date, as their borrowings were quite large.  If anything was to happen to the father then we didn't know how the family would continue to pay the debts, let alone how they would fund their future. At the time, I sat down with the mother and father and had a conversation on insurance, we discussed the costs, benefits and options.  I remembered thinking that the cover was expensive, that there was no way they would take this up.  But at the time I didn't have kids, I didn't have a mortgage, I didn't have perspective.  I didn't really have anyone to rely on me to ensure that the house was there, that school was paid for and that my family lived the life I wanted them to live.  In short, I was young and naive.  But they weren't.  They took out the cover and found the funds to pay for it because it was important to them.  It wasn't until a few months later when I was calling to finalise some things in the super fund that my life's perspective changed. I spoke with the mother and was told that her husband had been diagnosed with bowel cancer, that he had surgery and it looked iffy.  My heart sank, here I was going about my day and she was worried about whether she would have a husband, a father.  It was at that point that I got to say the one thing that I could to give her comfort.  'I can't help your husband medically, but you and he have insurance for this.  Let me come down and see you both and get this started for you'.  A few weeks later their claim was paid and I got to give them a rather large cheque.  Do you know what? It wasn't the money that mattered to them, It was the relief that he could keep fighting without financial worries. His home, family and lifestyle were financially covered and everyone could focus on him and the fight for his life.

What would happen to you and your family if you were put in the same position?  How would you pay the mortgage, bills, school fees etc?  This is why we MUST have insurance. I believe in it and I want you to as well. So lets sort some fact and fiction out.

  1. Insurance doesn't pay - Fiction -  In all my years advising I have only had one claim not paid.  The reason.  The client could work according to his doctor, but chose not to return to work. I have read the cases that haven't paid and I can assure you of one thing.  If you are truthful when you apply for cover, have a professional looking after your interests, you can be confident it will pay.  Most cases where the insurer won't pay is because someone did not tell the truth on the application.   You see insurance is about pooled risks.  You take out insurance and your premiums help fund other people claims.  If you need to claim the pool of premium payers, help to fund yours.  If you were in the pool would you like to fund someones claims who did not deserve it?  These claims, if they were paid out could put your payments at risk, so they aren't paid. 
  2. But I heard about these dodgy insurers - Fiction -  We all have, that's the news for you. It is such a small percentage of policies that don't pay.  The people who's policies don't pay however, are the ones that tend to jump up and down the loudest.  Did you hear the one about the policy that DID pay?  No. Because it happens every day and that really doesn't get people to watch the TV.
  3. But I have cover in my superannuation - Fiction - So do I.  There isn't anything inherently wrong with that, but..... there is always a but..... you need to understand when it will pay and when it won't.  There is specific legislation that deals with superannuation and insurance and it limits what you can be paid for.  For some people that will be fine, for others it can be quite a risk.  If you aren't sure whether it will pay out or not, ask someone like me.
  4. It will take a lot to make me not work - Fiction - It may do. Think of it this way.  You insure your house.  Would you prefer to have your house, or have your house burnt down and get paid?  We all prefer to have our houses.  We take out insurance just in case. You may be able to work through alot of problems.  But what if that problem leaves you a quadriplegic?  What if there is no way you can work?  What if that last for years?  
  5. I will just get the Disability Pension if I can't work - Fact -  Maybe.  If that is how you want to live?  For most people, payments are pitifully low, barely enough to survive.  What about quality of life?  What about your families quality of life?  What about if you need a carer? What will you need to give up then?  Insurance is all about choice.  It is trying to give you the resources so that you have a choice.
  6. I don't need any insurance - Fiction - I have no kids or my parents will look after me or my partner pays the bills etc etc etc.  When I sit down with clients I try to get them to understand that insurance is just a tool, it does something for you.  In most cases it only does two things.  It ensures that if you can't work, you can continue to have some sort of lifestyle and if you weren't here, the people that rely on you have the resources to continue to live a lifestyle. To see if you need some cover ask yourself;
    1.  If I can't work tomorrow can I still live a decent life?
    2.  If I wasn't here tomorrow, would my family still live a decent life?  

If the answer is no, perhaps you do need some cover.

As I write this I wanted to convey one Fact to you all.  That is that there are people that will help you work out what you need, will help you work out how to do it, and will stand by your side when the time comes that you need to make a claim.  I am one, my father is one, my brother is one.  We are all financial advisers.  We want to help you, we want to be the ones that gets to say to you 'don't worry about the money, we have that sorted'.

Unfortunately nothing in life is perfect, we don't have that elusive crystal ball.  I, of all people know that Insurance can be complicated.  The terminology can be confusing, the process can take a while.  But the likelihood is that you need it.....take the time to look into it and get it right.... after all aren't you worth it?

As always, feel free to get in touch and ask any questions.  

The information contained herein is of a general nature only and does not constitute personal advice. You should not act on any recommendation without considering your personal needs, circumstances and objectives. We recommend you obtain professional financial advice specific to your circumstances.