Research highlights the benefits of insurance for families

Family Walking 500x600

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.

That’s why I was particularly interested in the findings from a recent study[1] that explored the impact the sudden disability of a parent has on children and the other parent, comparing both insured and uninsured households.

I wanted to share some of the key findings with you as I think they help 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:

  • 65% took on more household tasks and chores
  • 46% reduced their involvement in social activities
  • 36% stated a worsening in academic performance.

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’d 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.

Call us today on 1300 858 492 to make a time to review your insurance.

[1] ’Impact of parent’s disability  on the family’ – Research conducted by Ipsos, prepared for ANZ Global Wealth, June 2015

Disclaimer:

The information (including taxation) in this article is general information only and does not constitute personal advice. It has been prepared without taking into account any of your individual objectives, financial solutions or needs. Before acting on this advice you should consider the appropriateness of this advice, having regard for your own objectives, financial situation and needs. You should seek personal financial advice from a qualified financial adviser before acting on the information. (Please consider a Product Disclosure Statement before deciding whether to buy or keep a product.)”

About the Author admin

Leave a Comment: