It never ceases to amaze me in my job as a financial adviser how many people I come across who seem to think they’re bulletproof when it comes to sickness or accidents.

“Oh no, those things happen to other people but I’ll be just fine” or what was a classic comment I heard from someone recently that I was arranging a large home loan for and who had absolutely zero life insurance???…”I don’t have any intentions of getting sick or dying any time soon?

Not only was this said in complete seriousness (along with arrogance) but also that particular person had a young dependent family who he seems to think will be able to cope financially if something happens to him.

I’ve also had numerous finance/home loan clients who borrow as much as they possibly can, stretch their income to pay for the home loan and make payments for house and car insurances without giving even a thought towards insuring their lives and their ability to earn an income through something like income protection insurance.

Then when I happen to mention they should take out life insurance cover to provide financial protection to their family, they say they can’t afford it because of everything else they’re paying.

Go figure??!!

My question to people is this; if you can’t afford to have some life associated insurances in place to protect the debt you have, then you really can’t afford to have the mortgage, can you?

So many people will insure their house and contents, their cars, boats and caravans but completely neglect their own lives and income earning capacity, which enables them to have these things in the first place.

For my mind, unless a person has some health related reason why they simply can’t get life associated insurance in place, then these insurances are the absolute first priority to consider before taking on debts such as home loans, investment loans, car loans etc.

Lets face it; we all will suffer some type of illness and/or accidents in our lives and a little bit of forethought about the financial consequences this will have on our family and loved ones will go a long way towards providing much needed financial protection for them.

So, what are life-associated insurances anyway?

Life-associated insurances generally consist of four main types of insurance cover being; life insurance, which pays a lump sum if you die. Trauma insurance, which generally pays lump sum if you suffer traumatic health setbacks such as cancer, heart attack, stroke etc.

TPD (Total and permanent disability), which also generally pays a lump sum if something happens that, renders you with an ongoing disability and then there is income protection cover, which, as the name implies, covers you for sickness and/or accident to protect your income.

Now of course, a person can have all of these insurances in place for a comprehensive financial protection package or just one or two perhaps if affordability becomes an issue.

So what would be the best insurances to have in place if you couldn’t have all of these four?

Lets look at statistically what insurance covers are claimed on the most and it what order; Apart from life cover which should be fairly easy to determine; i.e. if you dead, then you’re dead!

After that in order it goes income protection claims followed by trauma claims then TPD claims.

So, if you have some debt such as a home loan for $500,000 lets say, then it makes sense to have at least $500,000 worth of life cover to pay out the amount of the home loan if you were to die.

Then it makes sense to have your income protected doesn’t it, as it’s your ability to earn an income that enables you to pay for the home loan repayments in the first place?

After that of course, we come to trauma cover and TPD. One would suspect that if you’ve made an income protection claim for a sickness and/or accident event then it flows on to making a claim for a trauma event and maybe at a later stage TPD.

When you look at it like this logically then, you should have income protection, life cover and trauma in place if nothing else.

Hang on a minute; I can hear you saying that life cover was supposed to be the first priority followed by income protection and so on.

You’re right, I did say that but it’s also important to take note that statistically when we die, 9 out of 10 of us die slowly not quickly so there’s a big chance you’ll probably need income protection and/or trauma claims before you’re estate will rely on a death benefit to pay out all of your debts including your home loan.

I’m not for one minute saying we should go through our lives focusing on how mortal we really are, not by any means.

But it is important to be realistic about how life in general really is and that none of us is bulletproof and when (not if) something unfortunate happens, then you want to be sure your family can at least not be burdened by additional financial problems that you may have inadvertently left them with.

Get the right financial protection in place and get peace of mind as well.

* The author of this article, Gary Fabian, is the Principal of Precision Advisory; Licenced finance broker, risk insurance and superannuation adviser.

Is it just me or maybe I’m just a boring old insurance agent from the 80’s, but I just can’t imagine why people think that having life insurance covers to protect themselves and their family is somehow boring. It never ceases to amaze me that people (mainly men) will readily insure their beloved cars, boats, bikes and of course, their house and the thought of having insurance cover on themselves just doesn’t cross their mind. I say to people that if they had a money-tree in the back yard they’d sure as hell insure that, wouldn’t they? Well, you’re the money-tree so why NOT insure yourself?????

It’s a fact that Australians are one of the most under-insured Western countries in the world when it comes to personal risk insurance. And, don’t think for one minute that you should just insure the main bread-winner in the household. Why not the one who stays home to look after the kids? After all, it something does happen to the house-wife, or house-husband this can put an enormous financial and emotional strain on the entire family as the main bread-winner (aka, the money-tree) still has to go off and earn a living whilst taking care of the other home duties including of course, the kids.

Granted, the premiums we pay for insurance can sometimes be viewed as a grudge-payment for something we don’t seem to be getting any benefit from, or should I say, immediate benefit from. But, and here’s the big but, somewhere along the lines we all face a health crisis of some sort and more than likely this particular crisis will have a financial impact on the family in some negative way.

So, looking at personal risk insurance cover should be viewed as insuring yourself against Murphy’s Law…that Murphy was such a pessimist! Personally, I’m a big believer in bundled insurance covers being typically life insurance (for the obvious), Total and Permanent Disability (TPD) Trauma (living cover) and to top it all off, Income Protection. With the right insurance plans in place for these 4 covers you and your family will be fully protected for any unfortunate illness and/or health challenge that life (Murphy) throw’s at you.

It’s all about priorities isn’t it? We want to protect those that we love but sometimes we don’t want to discuss the very things that can bring harm to us or them for fear that talking about these things will bring those events on. But life doesn’t work that way. We need to plan to get somewhere and this includes planning for the not-so-nice outcomes as well. This is the smart way to do things and the best way to protect the ones we love. Because one day when something does go wrong with a health or injury issue to us, we can be sure that the financial side of things will be taken care of. Because whether we like it not, money can and does provide protection and some comfort in the face of adversity such as the loss of a loved one. It won’t replace them, but the proceeds of a well structured insurance policy will definitely help with keeping things afloat financially at home.

I know only too well how the benefits of risk insurance have provided financial assistance to families when they really needed it. Insurance may very well be a boring thing, but it’s a necessary boring thing that none of us can really do without.

The writer of this article, Gary Fabian is a financial adviser who specialises in risk insurance and superannuation, and also has insurance on his own life to protect his family.

A NerdWallet survey of more than 2,000 couples has revealed that roughly 1 in 3 couples do not have any life insurance at all and 43% of those adult who actually do have some life insurance say they would not be financially prepared or capable if they were to loose their spouse.

And, it also revealed that women would be more financially affected than men…so take note of this, thoughtful husbands out there every where.

Here are 5 things couples can do to be prepared in the event of the loss of a spouse:

A will is a legal document that outlines and designates who gets specific belongings and assets after you die. It’s a very important document and needs to be kept up to date. You name an executor (aka personal representative to manage your estate) and you can also name a guardian for your children. There is plenty of DIY will kits out there that you can use and frankly, they’re better than not having one in place at all. However, a solicitor can assist you with preparing a will in a little more detail than a DIY will kit will do but in any case, you need to have a will.

As I always say, no one is bullet-proof, so don’t take this issue of life insurance for granted. We all die, that’s an indisputable fact!

And it usually happens when you least expect it. Most people just rely on whatever life insurance their employer provides them through their default super fund but this is usually never enough.

And don’t for one minute think that just one of you should have life insurance and not the other, because death doesn’t discriminate.

Both spouses should have life cover, even if one is a stay-at-home parent.

There are a few different ways to work out how much life cover is enough and a professional (Risk) Adviser will be able to guide you in the right direction for this.

Even if one of you is more involved in the day-to-day financial management of the household, the other spouse should have at least a basic understanding of what is what…this should make sense, doesn’t it?

It’s amazing how many people, or couples just don’t know where their important financial documents are kept or worse still, many people don’t even keep them and end up, for whatever reason, loosing them. It’s hard enough having to deal with the emotions of loosing a loved one and then having to ferret around and find that person’s important financial documents such as a life insurance policy is usually the last thing you want to do. So keep all of your important financial documents in a safe and secure location that both of you know about and are able to get too if a tragedy does happen.

The NerdWallet survey also found that a large number of people simply do not know anything about their spouse’s final wishes, including their preferences about burial or cremation or even if they are listed as an organ donor.

Some people have very specific wishes but like a lot of things, we’re afraid to communicate these types of things and talk about them to our spouses.

Especially today with so many blended families it’s so important to get instructions right about our belongings and assets and exactly what we want to happen when we die.

The problem is that most families don’t look into estate documents until after the funeral and conflicts can, and often do arise about what someone thought, or expected would be left to them.

This is a sad and very true fact unfortunately and talking about the end of your own life, or harder still, the end of your spouse’s life may not be a very nice topic of conversation but it’s the responsible thing to do.

This way there is no uncertainty and it’s all about managing expectations at a time that is usually extremely emotional and painful for the surviving family members.

So, even if you consider yourself not to be one of those people who is all that organised, make an effort on this subject for the ones you love.

There are many gifts of love you can give your family and the gift of security is one of the best!

* The author of this article, Gary Fabian is a financial adviser and principal of Precision Advisory and specialises in risk insurance and superannuation. 

I bet that headline got your attention, didn’t it??? More to it than what you might think though. If rich rock’n’roll stars use risk insurance to protect themselves, then why don’t the rest of us mere mortals?

Australia is one of the most under-insured countries in the world when it comes to personal risk insurance. You know, life insurance, income protection and the like.

Yet the worlds top singers and bands are embracing it like never before, and most of us would think that rich and famous rock stars wouldn’t need it.

Take for example Dave Grohl from the Foo Fighters who broke his leg on stage in Gothenburg in June. This type of accident could severely impact on the band’s ability to continue on and hinder their future income placing a great deal of financial strain on what the band may have planned coming up.

Does this sound just a little bit like what could happen to you with your income and home mortgage, school fees etc. etc???

Everything is relative and regardless of being a rock star, or just an everyday normal person, we all have financial commitments and families to consider and protect, and this is where a tailored risk insurance plan comes into play.

As a nation, it’s great having that old Australian attitude of  “she’ll be right mate” but when it comes to accidents, illnesses or worse still, death, “she’ll be right mate” just doesn’t cut it in anyway!

None of us is bullet-proof (seems that rock stars know this only too well) or perhaps the people who manage them know this and make sure their prized acts are insured just in case they fall off stage or loose their voice and can’t sing.

Then at least the risk insurance can kick in and take over and ensure some financial security for their large entourages, as well as their families.

So the next time you’re singing in the shower and pretending to be your favourite rock or pop star, think long and hard about your insurance cover, and either get some ASAP or if you’ve already got some, have it reviewed and up-dated.

If it’s good enough for the rock stars, it’s good enough for the rest of us!