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Our fourth Women in Focus webinar tackled the inevitable issues that prompt us to reassess our goals and change course when life takes unexpected turns. When Life Gets in the Way: How to Plan for the Worst was led by Senior Financial Adviser Chad Hohnen.

Chad gave an overview of some of options available to protect you and your family in the worst-case scenarios that can impact the ability to earn an income. The most well thought out plans can change on a whim, so it’s all about being prepared and seeking sound advice.

Personal insurance, Chad said, is one of those products that people may resent paying for, but not having appropriate cover to protect your income, for example, will cost you more in the long run. Most people readily insure their cars and their houses, but they stop short of protecting their most valuable asset: themselves.

The Women in Focus series aims to educate a new audience on the basics of managing finances through each of the life phases, or refresh the knowledge you may already have.

Each month, CountPlus One introduces another of its leaders to unravel financial information you can use as the basis for conversations with the rest of the family, or your friends and colleagues.

You can get to know the latest presenter, Chad Hohnen more here.

A recording of the Webinar can be found here:

Here’s a brief recap of Chad’s presentation:

‘What would you do if one day you lost the ability to earn an income’?

This is the underlying question that Chad addresses in his presentation, with the goal of helping you:

• Understand why we recommend our clients put in place a risk mitigation strategy as part of a wealth plan,
• Better understand how you can protect yourself and your family in case you can’t provide for them
• Assess if your current risk mitigation strategy is right for you and your stage of life.

While the primary objective of an adviser is to help you build wealth, most plans are based on you continuing to earn an income.

The reality is that for a multitude of reasons, the capacity to earn an income can be cut short, through illness or an accident, for example. That can have an enormous impact on a family’s ability to maintain their lifestyle, including paying the mortgage and schooling children.

Insurance is a “critical aspect of the whole wealth plan because every wealth plan we put together, unless of course you are retired, relies on your ability to earn an income,” said Chad. He said Insurance cover can help to mitigate some of that risk, and outlined some of the key options for protection:

• Life insurance: A lump sum payable on death or terminal illness, which can help support your dependants to maintain living standards or pay off debts.

• Total and permanent disability (TPD) insurance: A lump sum to help support you if you are totally and permanently disabled by illness or injury.

• Income Protection Insurance: A monthly income stream to help support you if you are temporarily unable to work because of illness or injury.

• Trauma insurance: A lump sum to help support you if you are diagnosed with a specified major medical condition (eg: heart attack, stroke or cancer.)

It is impossible to determine what insurance is relevant without knowing an individual’s complete financial profile, and you should speak to an adviser to take next steps. As a general guide, Chad said these are some of the questions to ask yourself when considering types of insurance cover.

Life and TPD Insurance

• Do you have a Mortgage? Would you want it be paid off?
• Are you the main income earner in your family? Would they need a percentage of your income to maintain their lifestyle?

Trauma Insurance

• To cover you for a short period of time while you cannot work. This insurance covers you in the event of suffering from cancer, heart attack, stroke etc.

Income Protection

• When your leave runs out could you maintain your existing lifestyle?

Chad also points out that most people would have some sort of insurance in their superannuation account but it may be basic and even unsuitable for you. An industry retail industry provider may be more appropriate for your needs.

He also dispelled the thought that insurance is a forever expense, or set and forget. Just as financial goals change with the stages of life, insurance needs also change and should be reviewed regularly to ensure that they are still relevant.

In the early stage of life when we have few assets and possibly young children to support, protecting income is especially important. In the later stages when the mortgage may be paid off, children are grown and we have assets, the need for insurance may be less.

Of course, this is general information only, and you should speak to an adviser for appropriate guidance on developing an insurance plan, which Chad warns can be a time consuming and complicated process.

An adviser will also be able to calculate how the cost of cover impacts your overall wealth plan, determined by the goals that you have set, as we have discussed in previous webinars.

For more on recent webinars, to ask questions relating to your personal situation, email [email protected].