Mortgage News April 22, 2021
Personal Risk Insurance –Why? How much? What? and When? by Tracey

All of us wonder from time to time whether those insurance policies we pay for are necessary. They can be a big chunk of the budget and even more galling if you never lodge a claim.

Of course, if you have had it when you needed it, you're always thankful for it.

However, covering every possible risk may prove unaffordable, so most people need to think carefully about their mix of insurance policies.

Before you start, remind yourself what insurance is for. It isn’t a consumable like petrol or groceries. When we buy insurance, we are buying protection.  Protection for our assets or for our financial future.

A simple fact of life is this, unfortunate things happen.  These things happen when we least expect them, and often catch us completely by surprise. Not only for an unexpected event that damages or destroys property or assets, but through death or loss of income due to an injury or ill health.

For personal risk insurance, a general rule to bear in mind is:

 "Insurance is all about preserving your standard of living”.

Any event that would affect your or your family’s lifestyle or wealth, needs to be insured against. Such as, death, loss of income or illness.

How do we decide what insurance we need?

To start with, ask yourself how much risk are you prepared to take? It will depend on your circumstances.

My advice here is to bring it back to the basics and take a systematic approach.  What will be the consequences if something happens?

-I am too sick to work?

-What if I die?

Then, consider the consequences both for yourself and those people financially dependent on you.

Your insurance needs also change with time. When you are young you might take the risk, but the picture changes as houses are bought and children are born. Then, when houses are paid for, children leave and you retire, your insurance needs change.

What are the odds?
According to Quality Product Research Limited the probability of you suffering one of the listed events before the age of 65 is as follows:

Risk

31-year-old Female

Non-smoker

31-year-old Couple

Non-Smokers

44-year-old

Male

Non-Smoker

44-year-old Couple

Non-Smokers

Death

7%

18%

8%

16%

Total and Permanent Disability

5%

29%

4%

9%

Trauma or Critical Illness

10%

24%

15%

27%

Disabled for 6 months

16%

24%

8%

21%

Health

100%

100%

100%

100%

To put that in perspective:  The chance of rolling a dice and getting a “six” first roll is 16.6%

What insurance is best?

Insurance can be very confusing, and it is the main reasons that people avoid getting insurance.  Trying to understand the different policy types, companies, benefits, documents, quotes etc is difficult.

Why not let someone else do the hard work for you?  My job it to make the process as clear and simple as possible, so you can easily understand your options and make informed decisions to ensure you get the right cover in place for your situation.

When?

Today – Tomorrow – Never???

Or, before you need it! 

I urge you to get advice from someone who can work through your options for the different types of insurance out there and help you decide for your own situation, what is appropriate. I am always happy to help.


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