The importance of personal insurance

Tomorrow is always an unknown entity… no one has a crystal ball to see what is around the corner.

But it is important to be prepared for any possibility and to have a safety net in place should something go wrong.

Personal insurance is an essential component of your preparedness, and we spoke with Roel Burghouwt, Financial Adviser, about just how important insurance can be to your financial future and peace of mind.

When something goes wrong, like you have an accident, fall ill or someone passes away, it can be a time of great stress. The last thing you want to be dealing with is financial issues. Additional pressure from mounting bills or money worries simply exacerbates your stress, when you should be focused on healing and recovery. Roel says,

“Having personal insurance can provide you with a lot of comfort. It gives you the opportunity to focus on the things that are really important to you… like getting better or how to look after your dependants… or maybe it just gives you the chance to not worry about money.”

Roel has his own personal experience with this very situation. In a bike accident last year he dislocated and fractured his shoulder.

He had income protection insurance which provided him with a lump sum payment under the classification of ‘specified injury benefit’.

While Roel wasn’t off work for too long, he was originally advised by his hospital physiotherapist that he would not regain full motion in his shoulder. Roel explains:

“Using the lump sum I received from my insurance, I sought a second opinion from one of the best physios in Melbourne for shoulder injuries… and he got me back on the bike in four months. I didn’t have to think twice about spending the money because of that lump sum which was provided to me under my income protection policy.”

Another insurance that offers peace of mind when your physical capability changes unexpectedly is total and permanent disability insurance.

This type of insurance will pay you a lump sum which can be used for medical expenses or to generate income to cover many of your day to day living costs… for example your mortgage repayments or education fees.

Roel recently worked with a client who had an accident and was unable to continue working. His insurance lump sum payment enabled him to clear all his family’s debts and allowed him to focus purely on his rehabilitation.

Once all the financial commitments were met, the family was able to reassess their future and, with Roel’s help, develop a plan that would enable them to continue living a fulfilling life.

As part of our service we help clients to determine what is important to them… we ask them what they want to be able to do in the future.

Answers to these questions enable us to outline a plan that can help secure financial stability and support them for the years to come.

“My client said, ‘Travel is important and we’d like to make some changes to our house.’ His wife was still working… so we put a plan together for them.

If they hadn’t had the lump sum from their insurance, it would have been really tough for them to make ends meet. And they certainly wouldn’t be able to do all the things they had on their bucket list.”

At First Financial, whether you are a new or current client, we always consider incorporating insurance within your financial strategy.

If there is a need for insurance, we will recommend the appropriate type based on your personal situation. Roel says,

“Obviously, there has to be a need for it. We don’t give insurance recommendations if someone doesn’t need it. But as part of the process we look at what insurances you have at the moment… then we review whether it is enough… or is it adequate? And if there’s a shortfall, or we believe we can find a better solution… we will suggest it to you.”

Insurance should not be ‘set and forget’ because individual circumstances are always changing. We regularly monitor insurance levels to make sure you have enough cover, that you aren’t paying too much for premiums and that it is appropriate for your lifestyle.

In addition to your own personal insurance, it is worthwhile considering personal insurance for your adult children. We understand that when people are in their twenties and thirties, they rarely think about the ‘what-ifs’ in life. But as a parent, it’s important to consider the ‘what-ifs’ for your adult children, as often parents are left to foot the bill if children are not properly insured.

Some parents may even take out an insurance policy in their own name, but which covers the life of the child. This means any claim would be paid to you so you can use the funds to provide financial support to your child and their family.

This can be highly beneficial as they can remain financially independent rather than relying on you to see them through their tough times.

To find out more about our full suite of insurance services contact our team today.