How to protect the family finances

Protect your family

“A sensible man watches for problems ahead and prepares to meet them. The simpleton never looks, and suffers the consequences”.

Proverbs 22:3

Life is full of unexpected events, bumps and bruises. It is the reality of living in a fallen world. We can however mitigate the impact of many of these events through the sensible use of insurance.

The philosophy around insurance is not that it will make you rich, but rather that it will prevent you from becoming poor. Each year, thousands of people are driven into a lower standard of living, because they simply failed to look ahead as the proverb suggests. The vast majority of financial problems that people experience were entirely preventable, even if the events themselves weren’t.

I can’t prevent you from losing a job, but I can help you build an emergency fund, to prevent the impact of job loss. I can’t prevent your house from burning down, but I can suggest insurance to replace it. I can’t prevent you dying, but I can prevent the financial impact on your loved ones. How? Insurance.

Pause for a moment and ask yourself these questions:

  • If I died today, what would happen to my kids, would they have to change schools, move home?
  • If I got cancer and had to cease work for 6 months to get treatment, could I pay the mortgage or my rent?
  • If I had a severe car accident, that meant I was no longer able to do my job, would I still be able to achieve any of my financial goals?

According to the Australian Bureau of Statistics, roughly 30% of Australians can expect to spend at least 3 months off work.  I suspect it is not that different in other wealthy nations.

What Now?

  • Ask yourself, what would be the financial impact on your family if something happened to you? Be it death or disablement.
  • Make a list of your current insurances and the level of cover
  • Evaluate the level of cover versus what is really needed to meet the needs of your family in the event that you passed away or could not work for an extended period of time.
  • Consider purchasing term life insurance and disability insurance if you do not currently have them.
  • Adjust your policies or seek new policies accordingly

 

 

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