Insurance is not an investment, it is an opportunity cost. If you do not claim on your insurances (and we hope you won’t) you will never get your premiums back. What you get is peace of mind that should a significant health event occur, you and your loved ones are protected from a financial disaster.
Our approach to insurance is a safety net approach. It would be pointless to focus all efforts on wealth creation if you can lose everything in one hit because you have not secured your ability to earn an income.
At the same time, we do not believe in being better off after an insurance claim because you are insured for excessive benefit amounts. There is a much higher chance of not claiming on an insurance policy (and that is a good thing!), so the question is how much is needed for protection purposes, and not for ‘nice to have’ purposes.
The following four insurances comprise the suite of life insurances we will incorporate in our analysis for you:
- Life Insurance
- Total & Permanent Disability Insurance
- Income Protection
- Trauma / Critical Illness Cover
Generally, people with the highest insurance needs are families with young children and high levels of mortgage debt. The more you grow your overall net wealth and the less your children are dependent on you, the more you can generally start to reduce your insurance covers. However, there is no one size fits all approach as each client’s circumstances are different and will require a tailored analysis.