Jan 16, 2018  | Tags: personal risk, Insurance

Our Insights

Most Australians are unprepared for unexpected personal disaster, writes financial adviser Ben Calder.

A Rice Warner survey in 2015 revealed a few surprising statistics:

• Most life insurance only covers about 61% of basic needs
• Most life insurance replaces only 37% of the income actually needed
• Even disability cover and income protection insurance cover only 13% and 16% of their needs, respectively

A separate study conducted in 2013 discovered that less than 40% of Australians even had life insurance cover, at all.

These figures show just how startlingly underinsured we are.

No one expects the worst to happen. That’s probably the main reason Australian adults wind up with insufficient insurance cover. 

The same is true when it comes to finances. Like most people, you may be mapping out your financial plan with every expectation that you’ll be living well past retirement age.

But you must still accept the possibility that the worst can happen, jeopardising your ability to keep earning and saving in line with your financial goals.

It’s essential to protect your finances in the event of the unexpected. A stock market crash, death, storms and fires can all affect material assets and insurance will ensure that your family still is financially protected.

Managing personal risk means doing what you can to prevent disaster in the first place or to mitigate the damage when things are beyond control. Insurance cover is one way to protect your finances after a catastrophe.

Financial risk management is a collection of strategies that may include personal, property and liability insurance cover.

There are different kinds of insurance: life insurance, income protection, trauma insurance, disability insurance and so on. What kind you need and how much cover you’ll need depends on your financial goals, health, family members and other such circumstances. 

It’s not just about insurance 

There are other ways besides insurance, however, to manage personal risk. You don’t want to merely cover the damage once the bad event happens. It’s just as important to do what you can to minimise the chances of ‘the bad’ happening in the first place.

Here are a few ways to manage and reduce your personal financial risk:

• Savings
• Diversified investment
• Pay off debt ASAP
• Maintain a margin by spending less than you earn so you’ll have extra for emergencies
• Make healthy lifestyle choices to avoid serious illness
• Take safety precautions to avoid serious injury

It’s crucial to seek advice. For help with assessing your situation and making sure you have the right insurance coverage, contact a professional financial adviser.

Expert Financial Advice 

For a no obligations discussion about your needs, reach out to our team here at Calder Wealth Management. Call on 08 8373 3333 today to schedule an an appointment.

- Ben Calder, Private Client Adviser