Personal Insurance is important to protect an insured’s wealth and the beneficiaries.
All humans face one of several inevitabilities in their health status:
- Acute ill health
- Chronic ill health; or
- Death
These are identifiable risks to a person’s capacity to work and/or work at a normal
function level.
Depending on the nature of the health issue the ongoing effect could be short or
long term. A variety of Risk Insurances have been developed, and with a combination
of policies these can be tailored to suit a client’s particular state of affairs.
Very often your insurance needs will best met by a combination of income replacement
and capital replacement in the event of death, temporary or permanent disablement
or the suffering of a ‘lifestyle altering’ medical condition. These can be catered
for by using a combination of risk insurances
It is not possible to insure against the risks themselves, however we can insure
against the financial effects of these risks. The majority of us rely on the income
earning capacity of a worker for ongoing financial security.
The loss of capacity to earn income can be broken into two categories:
- The actual loss of income today
- The potential loss of income tomorrow and in to the future
The table below illustrates the amount a person could expect to earn in their remaining
working life for the income given. The magnitude of income is amazing over the period
of time and firstly-where does the money go? Secondly, how would I or my family
survive if this money could not be earned due to illness or death?
Earnings to age 65 (allow 5% pa growth)
|
Current Age
|
Income PA $30,000
|
Income PA $45,000
|
Income PA $70,000
|
|
30
|
$2,710,000
|
$4,064,000
|
$6,322,000
|
|
|
|
|
|
|
35
|
$1,993,000
|
$2,990,000
|
$4,651,000
|
|
40
|
$1,432,000
|
$2,148,000
|
$3,341,000
|
|
45
|
$992,000
|
$1,488,000
|
$2,315,000
|
|
50
|
$647,000
|
$971,000
|
$1,510,000
|
|
55
|
$377,000
|
$566,000
|
$1,510,000
|
Imagine if death or a disability
happens before your retirement, who will give you this money?
Types of Injury and disability insurance
Although they may be called different names, risk insurance are generally referred
to as:
- Term life(and whole of life) insurance
- Total and permanent disablement insurance
- Trauma insurance; and
- Income protection insurance.
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