As an ethical financial advisor with an interest in growing and protecting the wealth of my clients, I cannot recommend strongly enough that if you have dependents you should obtain appropriate personal insurance such as life insurance.

Unfortunately I have seen the consequences to families when someone is underinsured too often. While it is an unpleasant topic here is one example which illustrates the need.

John was 52, married to Deborah, with three children. They lived a comfortably well-off life in the Upper North Shore, with the children attending private schools, and John earning upwards of $200k per year. John unexpectedly died from a heart attack, with no life insurance. After his death, his widow learned that the comfortable life they had was entirely dependent on John’s regular income. They had a $550,000 mortgage on their home, which while manageable with John’s income, after his death became an unsustainable financial burden. John’s superannuation had amounted to $300,000 which was inadequate to cover all their debts and provide for Deborah and the kids’ living and education expenses. While dealing with the grief for the sudden loss of their husband and father, the family had to move out of and sell the family home, relocating to a different neighbourhood, the children had to leave their friends and familiarity of their school, and Deborah had to return to work for the first time in 15 years.

I ask all my clients to face the “what if?” question for themselves.

What if…. you were diagnosed with cancer and required 6 months off work for treatment? How would you cover the costs of medical treatment which can be in the hundreds of thousands of dollars, while paying the mortgage and the bills?

What if…. you were in a car accident and died suddenly? What kind of life would you leave behind for your partner and children?

In the example above of John, the lives of his wife and three children would have been quite different had he been covered by life insurance. I would have advised John to secure a policy that would payout a lump sum of approximately $2 million – sufficient to pay off the family home, provide for the education of his three children and to cover living expenses for the family until Deborah reached retirement age.

Personal insurances should form just one component of a comprehensive financial plan. This is when a discussion with a trusted advisor who fully understands your financial situation can help you sort out which of those insurances you need and what level of cover is appropriate and importantly within your budget.

My advice is to be brave and face the “what if” questions for yourself, and then, find a financial advisor that you trust to help you obtain the most appropriate cover. Edney Ryan Wealth Management’s qualified financial planners; Brendon Vade, Raghu Vattam and I, are of course able to assist our existing and new clients in making this important family decision.