Opinion | Securing your family's future | Alex Myers

For many of us, providing for our family is a primary motivation that prompts us to make plans and set goals for both our personal and business lives.

But too many of us don’t give adequate consideration to the risks that could potentially derail the attainment of those goals and objectives.  Let’s consider some facts and their potential implications:

  • 83 per cent of people in Australia have car insurance, yet only 31 per cent have income protection insurance.
  • 20 per cent of all mortgage defaults are due to illness or accident.
  • If you are in business with a partner the chance of one of you becoming disabled or dying before age 65 is 52 per cent.

Generally speaking, the thought of losing your motor vehicle pales into insignificance when it is stacked against the potentially devastating impact of losing our capacity to generate income. Far more than just the motor vehicle is on the line if we are unable to generate regular income for six months, 12 months, two years or even the rest of our working lives.

The thought of losing one’s home is also sobering. Hence the second statistic is another important one that points to the fact that for every person who can’t afford the repayments on their home mortgage, one in five was not due to the fact they didn’t budget appropriately or earned insufficient income. Rather, it was due to them becoming sick or injured in an accident.

The final statistic is a side-step away from the importance of protecting income for an individual, to consider the likelihood that there could be a serious challenge where your business income is partly dependent on another individual.

This additional layer of complexity and risk prompts the question, “Why would I not insure my income, or my business’ income, as a priority?”

Too often, this is the missing piece of sound personal and business planning.

Many people give consideration to addressing their personal insurance needs but end up placing it in the ‘too hard basket’ after thinking: What cover do I need? What are the differences in the types of cover and policies? It’s too expensive.

Your insurance recommendations should also be co-ordinated with wills and estate planning needs, as well as with any business structures that your accountant has implemented or is recommending. An experienced financial adviser will provide guidance and assistance to ensure that you not only have an insurance portfolio tailored for your needs but that it works seamlessly with the advice you receive from other specialists who support you.

Don’t wait until it’s too late to put appropriate insurance cover in place.

Alex Myers, Financial Adviser, PKF Wealth