I want to alert you to an issue that relates to your children, but could also lead to your own financial ruin if not taken seriously. It is something that is not only about helping your children, but also about securing your own financial position.
Have you ever considered the importance of personal insurance? In Australia, we are heavily under-insured when it comes to protecting ourselves from ill-health. Even so, many of you have made sure that you and your loved ones have been protected in the event you suffered a severe illness or injury through insurance.
But if you have built up your wealth and secured your financial position over the last many years, your need for personal insurance might have diminished. Therefore, you may have, rightly, reduced your level of personal insurance cover. This is because insurance is very important when it is needed, but once it is no longer required we can save a lot by not paying unnecessary insurance premiums.
Now getting back to your children… have they got any personal insurance? Have they considered its importance in protecting their families? Do they know whether or not they need insurance? But why would YOU care about THEIR insurance needs?
Firstly, without being too intrusive into our children’s lives, most of us would want them and their families to be protected if they should ever suffer any major illness or injury or even death (touch wood). We would want them and their families to have sufficient financial protection so that they could cope under the circumstances as best as possible. So, as parents it would be prudent of us to advise them to make sure they have adequate levels of insurance… whether it be car, home & contents, health, life or income insurance.
Secondly, have you ever thought of the impact it might have on you and your retirement plan if one of your children suffered a disastrous health issue? Probably not… but consider this.
If one of your children was unfortunate enough to suffer serious illness, injury or death, would you want to assist the family financially? If you would, you need to think about your capacity to be able to do this… could you afford it? If you did help them in such an event, it could have a major impact on your financial position and your ability to live a comfortable retirement.
Some examples that can illustrate the impact are as follows:
- What if the family is left with a large mortgage and you needed to assist them in repaying it?
- What if one of them was unable to work and you needed to assist them in supplementing income?
- What if your grandchildren were going to be impacted and you needed to assist them by paying for school fees?
If any of these examples occurred, could you afford to assist without impacting your own financial position significantly? If not, then it is important to YOUR financial plan that you encourage your children to seek advice regarding their insurance needs. Some people even pay the premiums for their children’s insurance to make sure they are adequately protected. And the great thing for young people is that they tend to be fairly healthy and a lower risk to insurance companies, which makes the premiums on personal insurance very affordable.
It may not be something you’ve thought about for a long time, but personal insurance may remain an important part in protecting your financial plan.