Aged 30-50? Chances are, you’re at risk*
by Matthew Congiusta
There are a number of phases in life, and for many your thirties and forties is a period categorised by increased personal and financial responsibility, it’s when LIFE happens.
If you are in this age group (let’s call people in this group the ‘accumulators’), you may find yourself flat out with work and family commitments. It is during this time that you’re likely to have your largest amount of debt and therefore be at your most vulnerable. In a family situation there is often one bread winner, and the family are heavily reliant on that one income, but also on the unpaid work of the stay at home parent.
With the constant barrage of mortgage repayments, childcare fees, school fees, car insurance, holiday costs, the cost of day to day essentials, who has the time, money or attention to devote to anything else?
No matter how big your house is, or the cost of your car, for the majority of us our most valuable asset is our ability to generate an income from our labour. For accumulators, their dreams are big – they have ambition to build a good life for themselves and their family.
Goals and issues common during this stage of life are; acquiring and/or upgrading the family home (and mortgage), kids’ education costs, family holidays, purchasing a second car, one partner not working full time, busy careers and lives, second families in many cases etc.
These financial pressures typically increase during people’s 30’s and 40’s before falling for many in their 50’s as mortgages are reduced and financial dependency of children reduces (slowly). This can work very well when all parts of the plan are in place and is fuelled by the ability of the family unit to produce income. But for some, it only takes one bit of bad luck or one poor decision for your lifestyle, goals and everything you have built to be jeopardised.
So, what could go wrong that could jeopardise this picture? Let’s consider some facts:-
It is estimated that 19% of Australians could only manage to get by for a month with the loss of the main breadwinner’s income.1
You have a more than 60% chance of being disabled for more than 1 month in your working life; and a 1 in 3 chance of being disabled for more than 3 months.2
You have a 1 in 3 chance of being diagnosed with cancer before age 75.3
Around 108,000 new cases of cancer are diagnosed each year, (that’s more than the capacity of the MCG) and there are 109 cancer related deaths every day.4
Between 1982 and 2007 there was a 200% increase in the number of new cancer cases diagnosed. Over the same period the population grew by around 30%.3
Survival rates are increasing for most types of cancer. The 5 year ‘relative survival rate’ for all cancers is around 58.4% for males and 64.1% for females.3 Therefore, it’s important to seek the best medical help.
The recommended amount to spend on medical expenses for someone diagnosed with cancer is $380,000 for high care; $180,000 for medium high care; $125,000 for medium care.5
Trauma insurance covers cancer, but is not usually included in automatic insurance within superannuation. People have to apply for trauma insurance individually.
In 2012 alone, TAL (life insurance company) paid over $77 million in Income Protection claims to Australians aged 17-69.1
For partners in a business, the chance of 1 partner dying or becoming totally disabled before age 65 is 52% (for a business with 2 partners); 77% (for a business with 4 partners) and 89% (for a business with 6 partners).6
With these statistics in mind, we can rely on ‘good luck’ or ‘good planning’ to ensure that all we work for and all we care about is not taken away or severely affected by an unforseen illness, accident or health event.
In our experience, many people in this period of life are so busy working hard, focusing on their career and current responsibilities, that they simply don’t have time to organise their insurance, or are under the false impression that mere hard work alone, is providing for and protecting themselves and their family. However, in actual fact, they have little or no safety net should anything untoward occur in their lives. The financial future of their loved ones is at stake. Taking some time out to get your insurance sorted is crucial, so you can get back to focusing on your career and your family with a clear mind.
Planning for the worst and hoping for the best is a pretty practical and simple way to look at it. This involves having a simple and straightforward insurance plan that is tailored to your own circumstances. With this in place you can be confident that no matter what, you and your family will maintain financial independence, money issues will be taken care of and you can concentrate on the things that matter, like your health and your family.
So don’t put off working out whether you are adequately insured. Chances are, your house and car are adequately insured, but you and your spouse/partner are not. Have your insurance needs reviewed, obtain a plan of what you need and importantly, implement the plan with an occasional review. Then, you can get on with…… LIFE.
*95% of families do not have adequate levels of insurance’ (LifeWise Natsem Underinsurance Report, 2010)
1 TAL Insurance Company
2 Interim Report of the Disability Committee,” Institute of Actuaries of Australia 2000
3 AIHW (2008) Cancer in Australia: an overview 2008, Cancer series no. 46, Cat. no. CAN 42, Canberra
4 Cancer in Australia, an overview, Australian Institute of Health and Welfare, December 2010
5 Methodology for the Macquarie Active Insurance Needs Calculator, RiceWarner Actuaries, July 2012
6 Mortality and Morbidity Calculator 2004.
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