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Smart Money

Australia has a ‘she’ll be right’ mentality. “Everything is going to be fine.
I’m bulletproof. I’m going to work for the next 30 years and make money
and nothing is going to go wrong.” That is okay up to a point, like if you
are single. I quite often hear people say, “Well, if I die, then so be it. It is
not my problem anymore.” But that changes when you have a partner and
children and debt obligations that your kids have no capacity to repay. It
is quite grown up to think about the topic of death when you are in your
prime – your 20s, 30s, and 40s. You don’t want to think that way, but
unfortunately, it is one of those things that has to be considered. We, as
mortgage brokers, try to raise the topic and make sure that is something
you take seriously and you review along the way. Once the insurance is in
place, it is far easier to say, “Okay, now she’ll be right.”

By taking out insurance, we look to protect the worst-case scenario, and
the worst-case scenario, from a financial perspective, is the death of the
breadwinner, or physical incapacity, or the inability to create an income
by either of the breadwinners if you are part of a couple. We look to make
sure that if one of those people is removed from the picture, the survivor
or key parties aren’t going to be left worse off financially. Obviously, if
that person is the primary breadwinner and has a large home loan debt,
the answer is generally yes, they are going to be worse off. We don’t look
to profit from death, but we need to mitigate against the financial impact
of that person’s removal.

Case Study
A single mother with a young son just moved into her new home with a
mortgage and shortly after there was a very stressful incident, and she was
unable to return to work for a period of time. She was handling a tragedy.
She had only recently taken out income protection insurance when she
took out the loan, and after a month of being incapable of work, the
income protection kicked in. It continued for four months while she was
going through all of her treatment. She said that without us she wouldn’t
have her home. That’s pretty powerful. She said that the income protection

insurance was the difference between keeping her home and losing it.