Are you a young couple with a family?
In this chapter of your life you may have taken on more responsibilities and begun to use debt to buy your first home.
Some significant events may have already taken place, so you’ll need to reappraise your insurance needs. These could be:
- Getting married or committing to a long term relationship
- Having children or trying to grow your family
- If you have children one member of the couple might have chosen to stay at home to help raise the children
- You have mortgage repayments to meet or are madly saving to buy a house
- You have car repayments and running costs
- There are credit cards to repay
- You likely have mobile phone and internet service costs
- There may be important social and professional clubs memberships
- You may be saving and/or paying for your children’s education
And the list goes on.
Did you know?
According to the Australian Institute of Health and Welfare, “Australia’s Health, 2008′, an average of 2,650 Australians, aged 30-39 die each year from:
- Motor vehicle accidents,
- Cancer for females
- Heart diseases for males
- Intentional Self-harm.
The top 3 causes of disability in the same age group are:
- Injuries from road accidents,
- Self-inflicted injuries, or
- Anxiety and depression.
From a NATSEM study of Australian child costs in 2007, the total cost to raise two children from birth to age 21 is $537,000. Worryingly, 60% of those with dependent children haven’t got enough insurance to look after their loved ones for more than a year if they were to die.
What have you got to lose?
A lot … your family, home and way of life could be at serious risk if you’re underinsured or uninsured. Your partner may have to give up work to care for you if you’re sick or disabled as well as look after the children. As a result, your income could shrink to next to nothing, because you can’t afford to repay the mortgage.
IFSA Research shows that only 4% of families with dependent children have life insurance to levels in line with accepted industry norms. What have you got to lose when for a little more than the cost of a daily coffee you can protect yourself and the lifestyle you would like to lead now and in the future?
Insurance products that could suit your needs are:
- Income Protection – If you were on an annual salary of $60,000 and have another 35 years of work, you have a future lifetime earning capacity of over $3.6 Million. Isn’t that an amount worth insuring?
- Critical Illness – If you suffer a critical illness such as cancer, this pays you a lump sum so you have choices. Choices to reduce any personal debt have an extended holiday to aid your recovery or fund things such as modifying your home.
- Total and Permanent Disability – This also pays a lump sum to provide you choices in modifying your home or paying for special medical needs.
- Life Cover (possibly) – This pays your family or a beneficiary a lump sum if you die so they can pay off any of your outstanding debts or provide whomever you bequeath the proceeds choice to do things which you may have done together if still alive.
We have commented upon this topic before:
- http://plan2prosper.com.au/articles/2007/10/protecting-whats-important-to-you/
- http://plan2prosper.com.au/articles/2008/07/is-insurance-an-expense-or-an-investment/
- http://plan2prosper.com.au/articles/2006/11/life-insurance-and-the-financial-planner/
- http://plan2prosper.com.au/articles/2009/03/maximise-opportunities-from-personal-events-to-further-protect-whats-important-to-you/
And we’ll comment on it again because protecting yourself and your future earning potential is one of the most important things that can affect our families.
Money, as we all know, seems to slip through our hands in the shortest possible time, no matter how good our intentions to save. Somehow, the dream of the long awaited holiday, or new car, or paying off the mortgage, seems as far away as ever. The reason is often painfully obvious – people work hard for their money and then ignore the essential step of applying sound financial planning to those hard earned dollars.
Financial planning sounds simple – and to a large degree it is. But too many people ignore it. Most Australian households have no financial plan. A sustainable wealth protection strategy is the very foundation of any long term financial plan.
Where to from here?
- Contact us
- Get more information about an Educational Forum for you and your friends
- Register and receive regular email updates
Dan Smith is self employed and is for many families their trusted Financial Planner based in Rockhampton. He has clients in various locations throughout Australia but predominately in Central Queensland and specifically the geographic area encompassed by the Rockhampton Regional Council.