Insuring your biggest asset.... YOU!
As we all know, insurance for most is a swear word. Strangely more so when we are tasked with considering insuring ourselves rather than our car, dog or household possessions.
I like to use a nice simple example to illustrate this… If you had a machine that printed off a cheque (showing my age here!) at the end of each month, would you insure it? Of course you would, so why wouldn’t you insure yourself? You are your money making machine.
Is it a lack of knowledge, lack of trust of insurers, the cost, or a bit of everything?
To help dispel some myths, I wanted to give you a simple example based upon age of what good mortgage insurance looks like and could cost.
Take a young couple who have just bought their own home, consisting of a 31 year old male and 33 year old female.
Life Insurance – a lump sum paid out if you die.
Proposed Amount - $300,000 each which would go towards covering the mortgage and supporting the family should children be on the scene.
The amount you may want to insure clearly varies dependent upon what debts you have and how many children. If no children are involved then you might be more inclined to cover both of you for half of your mortgage each to save money that can be better spent on what is generally the short fall, if you survive an event and can’t immediately return to work.
Indicative cost = $15.12 per fortnight combined
With a policy like this you can claim up to 20% of the total cover per claim (maximum 5 claims) for each illness covered. Over 40 illnesses are covered, with the major 3 being heart attack, stroke and cancer. This is a financial payment that can be used toward covering household bills or treatment amongst other things.
Proposed Amount - $100,000 each
Indicative cost = $ 4.81 per fortnight combined
Mortgage Protection Income
After a pre-agreed wait period (generally 8-13 weeks) you can claim a pre-agreed amount to be paid until you either return back to work or your benefit period has expired. (Generally 2-5 years)
If you are unable to go to work due to injury or illness you are entitled to claim. This product is not offset against ACC so you would receive both, whereas income protection you do not.
For the purposes of this quote we are considering 13 week wait period and benefit period of 2 years and covering $3,000 each per month.
The indicative cost would be = $20.90 per fortnight
Am I too young?
Certainly not and if I had my time again I would have taken out a policy when I was young and bullet proof as some of the injuries I have picked up on the way through are now exempt or loaded. Insurance is very cheap in your 20’s as it is highly unlikely these events will occur. It means as you get older and if incidents do occur all, of your body is covered rather than commonly injured areas like knees, back and shoulders etc being excluded.
Depending on the policy, your children from the age of 2 could also be automatically covered at no extra cost. This is for a nominal amount of life insurance, but up to 20% of your trauma cover. There are a lot of variations between policies so it pays to seek proper advice on the best fit for you.
As you can see from above, for less than $50 (including policy fee) per fortnight both income earners will have a comprehensive policy cover for the unexpected. It’s an investment in your financial security you hope you never call upon, but if something unforeseen was to happen you will not need to stress about the basics and can focus on recovery.
Based upon a household income of $100,000 an investment of as little as 1.2% of your income ensures your family is protected when they need it the most. It’s not a case of if you should, but how much and the type of products.
At Loan Market we can work through all of the options with you and ensure it is specifically tailored to your family situation and your budget. Insurance can also be cancelled with no fees at any point implemented. Managed correctly, your insurance will evolve with your life and financial situation so you can be comfortable with your policy as you go through life.
If you have car and pet insurance but none for yourself, I strongly suggest you review what you are insuring as you are the most important asset you have.
Contact us no for a no obligation chat and quote if you feel you and your family are not protected.