Ages and stages for insurance: How to best protect yourself

By Andrew Kennedy

April 18 2019
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While most people don’t hesitate to insure their car or their house, there is a reluctance to protect their most valuable asset of all – their ability to earn income over their working life.

But insurance cover should not only be established early in life, it should then be reviewed every time a life milestone is passed.

People get promotions, change jobs, get married, start a family and move to new cities, but they often overlook updating their insurance.

Anyone who is the family’s main income earner should ask themselves how would their family manage financially if they lost their income through accident, sickness or death. Would they have to leave the family home? How would they manage their living expenses?

To be adequately covered means being able to pay off, or reduce, any mortgage to manageable levels, as well as taking care of living expenses.

Equally, the contribution that both partners bring to the family needs to be considered. Even if one spouse doesn’t work, or earns considerably less, the cost to pay someone to cook, clean and look after the children is considerable, and is something that should be insured for.

But not all insurance coverage is the same, and the approach taken will vary depending on your age and stage of life.

If you are young, and in your 20s, it is an ideal time to live a healthy lifestyle and do some research about how you want your future to look. In most circumstances, this is where personal income insurance can play a fundamental role. Knowing that your income is protected in the event of accident of illness provides peace of mind. The added advantage of taking out this type of insurance in your 20s, is that you can lock yourself into a fixed premium – which will provide a large saving when you are older.

If you’re in your early 30s – or just starting a family – this is the ideal time to put in place a five-to-10-year plan that provides coverage for now, but also allow for change. This may include personal income insurance, life insurance for you and your partner, as well as trauma insurance to cover any unexpected illness with a lump sum payout.

As people get older, their insurance needs change. To quote American journalist Kin Hubbard, “Fun is like life insurance; the older you get, the more it costs”. Of course, if you locked into a fixed premium in your 20s, this doesn’t have to be the case, but regardless, personal insurances become even more important as people age.

For instance, as people’s circumstances change, their need for persona insurance cover can also increase – and increasing the insurance amount is often overlooked. Insurance is not something you can set and forget, and reviewing and updating it shouldn’t be something you put off until “you’ve got time”.

Insurance through superannuation is another area that needs regular review. While there is no doubt that some of the issues of surrounding insurance in super and financial advice following the royal commission may have put people off considering their own position, it is not something that should be ignored. It’s a good idea for anyone who has insurance cover through their super to find out more about it and ensure it still suits their needs.

Andrew Kennedy, risk adviser, HLB Insurance Services

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