One of the most rewarding things about being a financial adviser is seeing the positive impact an insurance policy can have on a family’s life.
A recent study explored the impact that the sudden disability of a parent has on their children and the other parent, comparing both insured and uninsured households. The key findings of this study help to illustrate why an appropriate level of insurance is so valuable for families.
What impact does the sudden disability of a parent have on children?
The study found there were wide-reaching impacts on children. For example, among the children in the study:
Many children were forced to grow up faster than they would have otherwise, and unfortunately this often came at the expense of their social lives and their studies. It’s worth noting that the parents surveyed often underestimated the impacts on their children, so the changes are not always obvious. The study also highlighted some worrying trends with children’s mental health, with 30% of the children studied experiencing anxiety/panic disorders, depression or abusing drugs and alcohol.
How does having insurance help?
Among these upsetting findings, it’s heartening to see that insurance had a significant impact in helping families cope with the loss of a parent. The most obvious impact came from an increased level of financial stability for those families who had cover in place.
Among families without insurance, the percentage who rated their finances as ‘struggling’ jumped from 11% to 62% after the parent became disabled. By contrast, among families with insurance, the percentage of families who rated their finances as ‘adequate’ increased from 36% to 42% after the other parent became disabled.
This financial stability had a flow-on effect to other aspects of the family’s situation. Families with life insurance were more likely to stay in the family home and increase the amount of time they spend together, plus the carer parent was able to reduce working hours to look after their partner and children.
Keeping your options open
Whether it’s something as life-altering as a parent becoming disabled or an illness you can recover from, it’s always nice to have the financial freedom to make appropriate choices for yourself and your family.
There are different types of insurance available that can cover different circumstances.
Life insurance is the most well-known insurance, paying a lump sum in the event of the death of the life insured. Trauma insurance is growing in popularity. It pays a lump sum in the event you suffer a critical illness – things like major cancers, heart attacks and strokes. In many cases people survive these events, but the financial impacts can be significant while they have time away from the workplace to recover.
Income protection insurance is also highly recommended as it pays a portion of your income if you’re unable to work due to disability. Whilst many people have a small level of cover through their employer superannuation schemes, this is usually not enough.
And, unfortunately, most people don’t worry about reviewing their insurance until they need to make a claim. At that point it’s too late to check if you have enough cover.
The disability of a parent can bring significant change to a family’s day-to-day life.
You owe it to your family to make sure that the financial impacts are minimal thanks to an adequate level of insurance.
What you need to do
We would love to meet with you for an insurance review.
We can help you think about the ‘what-ifs’ – all the different insurance events that can happen to someone at your stage of life. We’ll work with you to decide on suitable levels of cover across all the different types of insurance. If you’re happy with our suggestions we’re then able to prepare more detailed advice and recommend specific insurers.
Investing in insurance is about investing in peace of mind. It’s about protecting your own best interests.
An essential part of your financial plan is to make sure that your family and assets are financially protected if something unexpected happened to you. While everyone’s needs are different, it’s important to have a comprehensive risk protection plan in place.
Your health is your most important asset. Without it there’s no work, no income, and no way to pay the bills. And if you have a family, a mortgage or both, there’s a lot riding on it.
Together, we will prepare a plan to consider:
Serious illness and/or injury can strike at any time. You only have to know someone who’s been struck down by an illness or accident to know that it can and does happen.
Insurance can help ease the financial burden if you get sick or injured – giving you more options for treatment, and allowing you to focus on getting better.
One in two men and one in three women will develop coronary heart disease before age 65. (Source: Australian Institute of Health and Welfare “Heart, Stroke and Vascular Diseases”2001)