Ok I will admit to going a little abstract here, but can you remember the story about Jack? He had some magic beans and ended up stealing the goose that laid a golden egg.
Well here’s ground breaking news:
There is no magic in financial planning and if you had a goose that laid golden eggs, chances are you would care for it, nurture it and protect it, right?
Guess what, you are that golden egg laying goose!
Think about it for a moment, you get up and go to work, then come home, have something to eat, sleep and repeat on a daily basis. In return your employer gives you a pay cheque at the end of the month. What happens to all of your great ideas, passions and plans if you were injured and unable to work, who would pay you then? Worse still, imagine you didn’t return home in the evening and the family are left relying on you to put food on the table? Who’s going to look after them?
Now… You might be thinking; “It won’t happen to me.” Maybe, maybe not, but my father died aged 50 leaving a widow and 4 teenagers whilst my best friend was only 42 when he died. He left a lot of happy memories however, memories weren’t going to look after his wife and two young sons.
The foundation of planning is to look at contingencies, sometimes referred to as the “what ifs?”
“What if you were diagnosed with cancer, or broke your leg playing football with the kids?”
“What will the family have to sell in order to pay debts that weren’t covered in the event of your death?”
Chances are you insure your TV ($1,000), your car ($20,000) and perhaps the mortgage on the home ($200,000) but using those figures, the likelihood is your family would probably need you insured for in excess of $1,000,000 to replace your income. How much are you worth?
Do you have adequate protection for you and your family, or are you taking risks with your future?
Once you have the cover in place, has it been reviewed to ensure it is fit for purpose? What do I mean by that? Well, here are two simple examples of clients fortunate to be introduced to me:
Mr. T is married with 3 children. His life insurance was arranged so that on his death, the cheque would be made payable to himself!
Mr. E is married with 1 child. On his death, the cheque would not be paid to his wife, but his sister-in-law leaving his wife and child without access to the cash, relying instead on the good nature of a now wealthy sister.
Both of these clients are based in Dubai and had their insurance arranged by another firm. Can you be confident that you have the correct protection for your family?
This will vary between individuals, but generally when you have liabilities such as a mortgage, or perhaps the breadwinner for the family, when you die, so does the ability to pay the mortgage or put food on the table. Life assurance is a “what-if” type of planning. One thing thus far in my career I can guarantee, you will die some day and wouldn’t you rather your family were taken care off?
23 years old was Zurich’s youngest life assurance claimant between 2013 and 2015. How old are you?
This type of cover is more comprehensive than basic life assurance and should be used in conjunction, not instead of. Terms vary between the different providers, but usually within 28 days of a covered condition being diagnosed, the provider will pay out a lump sum of money straight to you. In many cases, you make a full recovery and return to work having had the mortgage paid off or perhaps pioneering treatment with the proceeds. Life assurance on the other hand is black and white; are you dead = No; keep paying until you are!
20 years old was Zurich’s youngest critical illness claimant between 2013 and 2015. Who do you know who has suffered from a serious illness?
Whilst very rare, there are occasions when an insurer deems the risk too great and therefore declines the opportunity to insure you. There are many insurers out there and working on your behalf, I’d explore which ones might cover you.
Similar to the above answer, the insurer has deemed the risk too high but is still prepared to cover you on amended terms. This may be an exclusion or increased premium or even a combination. It is your choice whether you accept these revised terms and sometimes the result can be appealed; however, in most cases I would recommend acceptance to ensure you or your family are covered.
Do you have adequate protection for you and your family?
I help international workers and expatriates plan their finances. Providing unbiased and independent financial advice, I work with many of the world's major Banks and Financial Institutions covering many areas. I offer a free consultancy meeting lasting 1.5 hours in which we can review your current financial circumstances and suggest options to you that are designed for your money to work harder for you, and in a tax efficient way.