In thinking about our article for this month, I decided to write about a topic that most people prefer to avoid… personal insurance. I started in the financial services industry in 1988 when the focus was on selling financial products like insurance, superannuation and investments. I’m sure that there are plenty of readers who can remember the local insurance agent who was always ready to sell another policy.
Times have changed and today the emphasis of a financial planner is on providing advice and solutions to people’s needs. This is a much more professional and meaningful way of helping people but even so, insurance is not something that is embraced.
I felt compelled to mention this as we have just completed an insurance claim for a business owner who has been diagnosed with cancer. He is fortunate on two counts: his prognosis is good and he will receive $385,000 tax free as well as $13,500 per month of income cover while he recuperates.
Several months ago I also arranged a trauma insurance claim for one of my family members. This was stark reminder of the importance of insurance.
It seems that fire, theft, and even health insurance are perceived as quite different and most times necessary. Few people would risk taking delivery of their new header or other plant without arranging cover. The reason is because the loss is real since there is an understanding of what the impact would be. The physical aspect of the loss of a machine, car, house or stock can be visualised and quantified. This is quite different to a life because the impact is not so easy to determine.
You’ll note that I emphasised the word impact and for good reason. Once you understand the real impact of the loss of a person’s life or their ability to work, then it’s clear what the consequences are. The impact might mean getting outside help to work on the farm or in a business, having to manage debt without the efforts of the key person (lenders still want to be paid), being forced to sell assets at discounted values to realise the money needed, being reliant on family and friends for financial support or finding a way to payout family members who aren’t involved in the business. The list is almost endless and they all affect people in different ways. One thing for sure, the impacts are real and can be incredibly costly both economically and emotionally.
With the skill of a professional financial adviser in helping to identify these impacts and then quantify the level and type of cover that’s most appropriate, the reason and need becomes just as obvious as general insurance. Even the best financial plans can easily be unravelled very quickly without a backup. A sound insurance programme should form the foundation of everyone who has plans and aspirations for themselves and their family.
Planning for Prosperity