Insurance is often a grudge purchase, whether it be insuring personal assets, your business or personal risk insurances such as Life or Total Personal Disability etc.

Many people will have insurance on belongings such as their cars and houses paying thousands of dollars a year for cover, either by choice or due to lenders requiring it. Yet mention spending the same amount on personal risk insurance and most people will agree it may be important but it is hard to stretch the budget for it.

By all means all insurances are important, but you need to consider what may be the best insurance to take out in your own circumstances. Recently I sat in on a seminar and part of the session used the example of four partners in a business, each aged 35. Did you know that there is a 77% chance of one of them either being deceased or totally and permanently disabled by age 65! If there were six partners this rises to 79%!

Another example was putting 1,000 people together and then asking who knows someone personally that has lost their house or other assets due to a major insurable incident. Then ask the same group how many people they personally knew who have suffered from a major health issue in their life before age 65. It could be argued that the chances of having a claimable health incident are higher than your house burning down.

When deciding on insurance, think of what loss will have the biggest impact on your livelihood. If you were to lose a car due to a theft, what is the impact? It may be the requirement to pay out the rest of the loan assuming there is a debt on the car, or the inconvenience and expense to get another car. On the other hand, for a similar annual investment consider the risk of being unable to work due to an accident and not having Income Replacement Insurance. If you were unable to work and did not have sufficient leave what would the repercussions be? Once your income stops you need to start using savings, once that has gone you need to consider change of lifestyle, most likely drastically. This may involve having to sell cars and your home to reduce loan commitments. What is more important – car insurance or insuring you income?

Next time you are reviewing your insurance needs, weigh up the risks and ensure you make an informed decision!

If you would like to discuss you personal insurance risks please feel free to contact us at Green Taylor Partners to discuss your options.


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