Insurance: who really needs it?

Most people believe they are forking out their hard-earned money for insurance cover they may never need. But insurance provides you with the peace of mind and security and should not be overlooked when completing a financial plan.

Insurance is an important, yet often overlooked, component of a financial plan. The purpose of your plan is to enhance your financial security by covering all the variables, including taxation, interest rates and inflation. But one of the greatest variables is our own mortality. So it makes sense to arrange adequate insurance to protect your family or business, rather than risk losing everything you’ve worked for.

How much cover do you need?

To ensure that you have the most accurate understanding of the insurance cover your require, a "capital needs analysis" performed by a Prospero Adviser would be a good start.   The needs analysis takes into account your outstanding debts, last expenses, education and emergency funds and possibly even a fund to replace lost pension savings.  In addition, there may be the requirement to add a lump sum that can be invested to provide an income for your family.  By subtracting your existing life cover, (including superannuation),  the difference is how much insurance you need. Through the guidance of a Prospero Adviser all facets of insurance and risk management will be covered and as result you will have the peace of mind you desire.  For your free needs analysis click here.

What sort of insurance do I need?

It can be hard to convince a lot of people that life insurance is money well spent. In fact, the only thing more horrifying than the prospect of a spouse dying unexpectedly is someone trying to sell insurance on the pretext that it may indeed happen. However, one in seven people die before their working lives are over (before age 65), so life insurance is important to protect loved ones left behind. The good news is that most of us with life insurance will never need to claim on it, but nobody knows who future claimants will be, so the need for cover is more about common sense.

Like life insurance, Trauma insurance also pays out a lump sum amount. Trauma insurance provides a one-off payment when a person is diagnosed with or suffers a major illness (i.e., cancer or heart attack).

The other side of the picture is income protection insurance, which will pay you and your family an ongoing benefit if you’re unable to earn an income through accident or illness. Income protection is an absolute necessity if you have debts such as a mortgage or business loan. Your ability to earn an income is your most important asset — so don’t leave it unprotected! Most of us don’t hesitate to insure their homes, vehicles, or businesses as they see these as their biggest asset, but without an income, most people would lose all three

If you haven’t reviewed your cover recently, ask a Prospero financial adviser how risk and income protection insurance can enhance your family’s financial security.