For many this scenario will seem familiar:
Your super balance is intact, the global financial crisis is a distant memory, you have a good amount of savings, you own your own home and are planning for retirement in a couple of years. Life is great! Or so you thought…
You receive a call from your recently divorced daughter who has two young children and she has been given the news she has breast cancer. After a lengthy discussion and the shock of the news you find out she has no trauma cover and certainly no income protection cover.
Suddenly your non-dependent children are financially dependent again and your retirement plans take on a whole new dimension.
Amid all the activity of getting yourself ready for retirement, the possibility of this situation arising is overlooked – that either you or your children are under-insured and unprepared for an event out of the ordinary. Over the years you have been planning and saving for your retirement and whilst ensuring your finances are in order you overlooked the financial effect on your lifestyle if something happened to your children.
Most Gen Y and Gen X offspring have sizeable mortgages, childcare costs or private school fees. They usually need two incomes to meet their day to day expenses. If an event occurs that they are uninsured for, you may be left to support a relatively expensive lifestyle. The fact is, your children can become the biggest potential hazard on your happy retirement.
All of this potential grief can be avoided by talking to your advisor about your children and ensuring they have adequate cover. A simple but effective insurance plan for your children can alleviate the need for you to put your retirement on hold or to use up your well-earned savings to care for a loved one.
Even a small insurance policy in the case above could have paid for medical costs, childcare and any ongoing bills for a period of time. In this case the daughter could concentrate on getting the best treatment and not burdening her family. This would allow you to still have your retirement plans intact.
The cost of a Life/Trauma policy for $100,000 of cover for a female, 35 year old, non-smoking professional is around $22 per month.
The cost of a basic income protection policy for the same person with an income of $50,000 per year is around $60 per month (and is tax deductible). This is a small investment if you think about the potential consequences of not having such cover.
Thinking about your children and the impact they could have on you, your family and their family should an unexpected event occur should be a significant part of your retirement plans so you can retire with greater confidence and peace of mind.
If your children can’t afford the premiums for insurance, it may be a smart investment on your behalf to help cover it for them. If your children allow it, you can also consider owning the policy on their lives. Personal risk insurance is a perfect way to future proof your retirement lifestyle.
If you have any questions or would like to catch up and review your family’s insurance, I can be contacted on 08 8409 4333 or via email at email@example.com.
By COURTNEY PURL, RISK INSURANCE MANAGER, WEALTH ADVISORY | ADELAIDE
Courtney is a Risk Insurance Manager at William Buck, helping her clients protect their most valuable asset, themselves. She always goes the extra mile to assist, especially in times of need. Courtney is on maternity leave with a newly born baby boy, but she is available via email.