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Chad Dunn, AMP Financial Planner, Safeguard your future
It’s a cliché, but it’s true: people should expect the unexpected, and one of the best ways to prepare is to have some insurance.
If there’s an unwelcome intrusion into a person’s life, whether it’s a burglary or something more devastating like death or a long-term illness, insurance can at least take care of the financial disruption, providing the money to help a family cope.
Most people believe that their home is their biggest asset but they tend not to realise it could be their ability to earn an income. For example a 35 year Real Estate Licensee on a base wage of $50,000. p/a who has 30 years remaining to retirement, has the potential to earn $1.5 million over that time – that’s a lot of income lost to support their family and debts if they are unable to work again in that time.
An AMP.NATSEM Report that looked at the high cost of illness found that even the highest paid households can become the lowest paid as a result of just a mild disability.
Many Real Estate Agents are simply not prepared for the financial consequences that can follow unexpected events. If, for example, a normal working couple with two children were suddenly reduced to one income, their household income could fall by between $20,000 to $80,000 in the first year alone. If either parent were to suffer a serious and long-term disability, this loss could be between $500,000 to $1.8 million over 20 years.
Most Real Estate Agents are so focused on earning their pay and building their wealth that they don’t take the next step to protect it. In one year, the average family could lose around $40,000 in lost earnings after a disability. However, with insurance, the same family can ride out the bad times without having to worry too much about how they will pay the bills.
There are several insurance options available to protect against the loss of income in the case of someone suffering a disability. The most common is income protection. Income protection can pay a monthly amount, kind of like a wage, if a person is injured or ill and cannot work. It also has the benefit of a tax deduction at the end of the year on the premiums paid.
Income protection payments can help maintain the household, meet the mortgage repayments and even pay some of the medical costs while someone recuperates before they go back to work. Most people do have life insurance via their superannuation, which is a simple and cost effective way to buy this insurance, but often people still don’t have enough cover. Many superannuation funds provide life insurance cover of less than $100,000, originally taken just to cover the mortgage But the AMP.NATSEM Report revealed the average Australian household has debts of around $100,000.
If the family’s major breadwinner passes away, tragically, it can be a huge emotional strain. But the financial strain can also cripple a family. The Investment and Financial Services Association estimates that approximately 4,000 Australians with dependent children under 21 die each year, many with inadequate insurance cover and often with large debts to pay off.
Finding out if you have enough cover is relatively simple and is as easy as talking to a financial planner, who will work out your insurance needs based on your own objectives, financial situation and needs.
Chad Dunn is a Financial Planner from Bluecorp Wealth Management who are accredited by AMP and based on the Central Coast. Mr Dunn works with Real Estate Industry professionals in NSW to ensure they are not caught out in this way. Real Estate Agents or their clients wanting more information about insurance or other financial issues, can log on to www.bluecorp.net.au, or call 0414 980 644 to discuss things further with Chad Dunn of Bluecorp Wealth Management.
Chad Dunn is an Authorised Representative of AMP Financial Planning Pty Ltd, ABN 89 051 208 327, AFS Licence No. 232706. Any advice given is general only and has not taken into account your objectives, financial situation or needs. Because of this, before acting on any advice, you should consult a financial planner to consider how appropriate the advice is to your objectives, financial situation and needs.
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