Justin Lip – Strategic Financial Solutions
Whether you’re a big corporation or still dreaming about that big idea, chances are that the aim of your game will be to build wealth – preferably, in the quickest possible time. Some might argue that we’re not all like that and of course, they would also be right as your financial objectives are unique to you. So why risk it all?
Invariably, we can’t escape reality. I’m sure you’ll agree that with money, greater certainty and opportunity abounds – essentially to spend time doing the things you love. In a rushing towards our objectives however, we can sometimes overlook the opportunity to make these same objectives more certain. This was only too true for a close family friend of ours – Jack and Joanne.
With three wonderful kids and in their early 40’s they had done considerably well. Jack had a stable and growing small business that allowed Joanne to stay at home and look after their 3 year old daughter and two boys in early high school. They were well on track with a reasonably sized investment portfolio, a couple of investment properties and had structured their debts appropriately to generate tax deductions.
Through our conversations, the topic of personal insurances came up several times and was always finished off with, “I’ll think about it”, “It’s all too hard, don’t have the time” or “I can’t see the value”. Ironically on numerous occasions when this topic surfaced; it was Jack who bought it up. Jack and Joanne had sacrificed a lot to get to where they were and it wasn’t through sheer luck either that they had managed to accumulate wealth. They had lived on a tight budget earlier on, buying in bulk when items were on sale, Christmas presents in July’s toy sales, skipping regular holidays.
One day, tragedy struck. Jack walked into the shower after a hard day’s work, slipped and rest is history. It took Jack a few hours to regain consciousness but another 8 months to get back on his feet. By this time, things had dramatically changed. Jack was no longer the same person physically as the slip resulted in a blood clot in his brain and was grateful to be alive. Joanne was forced to work part time with their youngest put into child care. They ended up losing their investment properties and their share portfolio is now only a fraction of what it was. How could this happen in such a short period of time, you might ask. Well, like I said earlier, Jack didn’t protect the most important asset – “You”.
I’ve asked this question many times to my clients’, what’s the most valuable asset that they have and almost without fail, I get answers along the lines of their investment properties, homes, shares, and jewellery. Only sometimes I get the odd answer, ME.
Do we really take care of our love ones like we said we would? Do we have any plans in place to spare our loved ones the aguish of having to live through such a situation? Can we pass this risk to someone? If I say yes, wouldn’t you agree that the “cost” is insignificant compared to what Jack and Joanne had to go through?
If Jack had life, total permanent disability, trauma and income protection insurances in place, they would have received lump sum payments to help pay down loans, lump sum for medical treatments and receive monthly income to help with ongoing family expenses. In their situation, to pass this risk onto the insurers would have cost them around $3,000 per annum or $250 a month or under $10 a day. Is that too costly? I’ll let you decide.
So before you jump on the phone and start calling insurance companies for quotes, seek professional advice – it could save your family and business potential heartache later on. It’s imperative, wouldn’t you agree?
