Most of the people we talk to do understand that having insurance in place is important.
What’s not widely understood however is the importance of getting good cover in place early, before it’s too late.
Personal insurance is put in place to maintain your independence, if you can’t physically provide for yourself, or to look after loved ones, if you’re not able to provide for them because you’re gone, or because you’re too unwell to do so.
Particularly if we haven’t seen it happen to somebody we’re close to, we can’t imagine ourselves suffering from an accident or ill health, but it does happen and sometimes understanding what it’s like to be in that situation means talking about the scenarios we’ve seen.
I recently spoke to Janice (not her real name) who has thankfully survived a very serious cancer scare. She has been in remission for the last three years so has been given the all clear by her medical team.
Because of the scare, Janice is naturally a bit more concerned than most people about ensuring she and her loved ones are looked after. But because of the risks of further complications Janice isn’t able to get any new cover.
Janice does have an old policy that was put in place in the 90s, possibly to cover a first mortgage but as you can imagine the size of the mortgage was much smaller back then and the cover only goes up with CPI each year.
There’s also some insurance that was picked up by default through Janice’s work superannuation fund. Unfortunately many default insurance arrangements are set up under what’s called a unitised structure. This means that in Janice’s case she will always have 4 “units” of insurance, but as she gets older the insured value of each of these units. Janice can’t swap over to fixed cover because of her medical history, and over the next 5 years the value of her cover will decline by 34%.
Stories like these are why we talk a lot about putting in place good cover and doing it early. It means that if the time comes when you have a health scare of your own, you can focus 100% on your health and know that if the worst does happen, you know that you will still be able to be financially independent, or if you have passed that your family is able to go on without having to go through any additional financial stress.
To make sure you have your own cover in place give us a call on (02) 6247 1233