Am I too young to be thinking about Insurance?
Another article from OzPlan Financial Services Authorised Representatives: AM I TOO YOUNG TO BE THINKING ABOUT INSURANCE?
By Samantha Cordy, Wealth Creation, MB+M
Well, here is my personal situation. I turned 26 in February and I work 4 days a week in the Wealth Creation team. I have been in the industry for the past 6 years & I am surrounded by a group of individuals who have a wealth of knowledge & industry experience. I am a mum to a beautiful 4-year-old girl and a second one on the way.
There are so many important things to think about other than insurance. Right
Well, I say WRONG!
My biggest asset is my income. In the event I was unable to work how would I take care of my 4-year old daughter and her sister when she arrives & all the other financial commitments? In the event of a tragic event how would my children’s education & everyday living expenses be met until they become independent? After considering these scenarios the answer became very clear – I need insurance. But what type of insurance cover & how much cover do I require?
As we keep reminding our clients, the first thing we do when we purchase a motor vehicle or house is that we apply for insurance to protect the value of the asset in the event of theft or damage, however we often neglect to insure our biggest asset – ourselves.
SOME COMMON REASONS & TYPES OF INSURANCE
I have detailed below some real- life situations that you may require cover for:
- Purchasing a car or house
- Getting a job or promotion
- Marriage separation
- Starting a family
- Heredity medical history
- Young & healthy without medical issues
There are four main types of insurance: Life, Total & Permanent Disablement, Trauma & Income Protection and each are as important as the next.
Life Cover is paid out at the time or your death. However, some policies will allow a payment should you be diagnosed with a terminal illness.
Total & Permanent Disablement (also known as TPD) is paid when you are deemed permanently disabled and can no longer work.
Income Protection covers up to 75% of your income. You can choose a waiting period defining how long before you receive some payments and you can choose how long you receive those payments for – these choices can affect the cost of the cover.
Trauma Insurance covers medical scenarios such as cancer, heart attacks, strokes, plus others and are paid out when something happens. Some policies will allow you to reinstate the cover after a certain time period once they have paid you your claim.
The two biggest types of insurance cover that is more frequently claimed on are Trauma & Income Protection.
COMMON INSURANCE MYTHS
Myth: Insurance Companies Don’t Pay
In 2020 the average percentage of claims for trauma cover that were accepted was approximately 87%.
The average percentage of claims in 2020 for Income Protection that were accepted was approximately 95%.
These numbers clearly illustrate that insurance companies do in fact pay out the majority of claims that they received.
Our Recent Client Insurance Claim Experience
Let me share with you an example of an insurance claim that I have recently looked after for one of our clients.
A middle-aged woman diagnosed with Breast Cancer. After her doctor conducted numerous amounts of tests, her doctor recommended that she have surgery to remove the cancer and underwent other treatment.
After completion of her treatment, she came to us and advised us of her situation and asked if there was a possibility she could claim on her existing Trauma insurance policy.
She provided us with her insurance information, her medical reports, and her claim form that the insurance company had sent her. We assisted her with the collection of her medical records, liaised with her specialists, and helped her complete the claim form provided by her insurance company. Within two weeks, we received confirmation that her claim had been successful, and she received a payout of $100,000 directly to her bank account.
Our client and her husband were ecstatic! It eliminated the financial burden as they could meet medical bills & not eat into their savings. They can now focus on recovery & plan a well-deserved holiday.
Myth: Insurance is Expensive!
A second common myth about insurance is that it is expensive & meeting the premium payments can be a challenge, especially when cash flow is tight.
Honestly – it can be. However, insurance companies have made some creative changes to help with the funding with insurance premiums, for e.g. your superannuation can be responsible for paying a part or all of your insurance premiums. This means some of your insurance policies don’t need to be funded from your personal bank account
Your Life Cover, TPD Cover and Income Protection Cover can be paid by your superannuation fund with no payments coming from your bank account directly (depending on some of the additional cover you can choose to have).
Our Recent Client Insurance Claim Experience ….
We recently had a client who 12 months ago wanted to cancel their income protection insurance as they felt they didn’t need it and it was too expensive.
We convinced the client to retain their policy given their age and working status.
Unfortunately, the client suffered an injury during a sporting match which required surgery and 8-12 weeks off work.
The client contacted us, we started the claim process and his claim was successful. Within a month, he was receiving his income protection payment from the insurance provider.
Myth: It won’t happen to me!
Often us young people think ‘I need nothing like that – it won’t happen to me!’
But truthfully, we all know of someone that has had cancer, a heart attack, or passed away too young. This is a reminder that traumatic illnesses and events do not discriminate based on how old we are.
So yes – it can happen to you.
MY INSURANCE DECISION
So, what did I do?
I sat and thought. I reflected on all the above information that I know about and asked myself some other questions – what if I couldn’t work anymore? What if I couldn’t bring in an income and support my life anymore? Support my little girl’s life anymore? And the one answer I kept coming back to was, I don’t know.
And that scared me.
So, I got insurance. I got the 4 main types of insurance with an extra. I got trauma insurance for my little girl so that I could ensure that she too would be looked after and I will get cover for our next daughter when she is old enough.
Now, no one ever wants to think something can happen to themselves let alone their child.
The thing is with insurance; you get it; you pay for it. Then you cross your fingers, your toes, your arms, your legs and everything in between that you need not use it. But on the chance that you need it, then you have peace of mind knowing that you & your loved ones are protected & catered for and you can focus on the important thing – your recovery.
WHAT YOU CAN DO NOW
Sit back and reflect on your life now. Look around your house and see everything you have worked for. Hold your kids nice and tight and ask yourself some questions – Do you want your hard work protected? Do you want your kids and family protected? Do you want that peace of mind?
If you answered yes to these questions, then you can book an appointment with one of our team. We will then do our best to ensure you, and your family have the protection you all need.
AM I TOO YOUNG TO BE THINKING ABOUT INSURANCE?
You are never too young!
Samantha is an important member of the team having been at MB+M for close to 3 years now but the knowledge she has gained in her industry experience in the past 6 ½ years doesn’t prevent her from providing our clients with a caring nature and determination to treat their needs with the utmost importance.
Samantha’s two biggest interests inside the Wealth Creation team are para-planning and insurance.
Outside of work Samantha is a busy mum to a little girl with another on the way and has a keen interest in the netball community including playing, umpiring and mentoring junior players to reach their full potential.
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