Page 81 - Smart Money

Smart Money

to sell the home to provide themselves with cash, or just to reduce or get
rid of the debt obligation? Will they have to take the kids out of private
school? Will they have to compromise?

It is one of those things that is always going to happen to someone else,
and that’s what people plan for. It will always happen to someone else,
but everyone knows someone that it has happened to. You don’t have to
go too far to hear a story about someone who had to miss work for a
long period of time because of an incident or a tragedy in their family.
Unfortunately, it does happen.

As a community, we are living longer, and part of that is due to better
health standards. We look after ourselves better, but we are also more
susceptible to things like cancer, heart attack and strokes – things that 20
years ago were almost a death sentence or severely impacted a person’s
life. Now you can go back to work within a month after a heart attack,
but if you’ve got income protection, you might be able to sit back and
take an extra month or two to properly recuperate and take stock, then
go back to work in a better state of mind.

Unfortunately, it does happen. For every 100 policy holders, we can
assume there have been six or seven claims in the last two years, so
statistically, it happens more often than people think.

There are four basic types of insurance

$ Death cover, which is the worst-case scenario, provides a lump
sum benefit for the beneficiary or the estate in the event of death

$ Income protection, which protects the person’s salary or income
against an inability to work for a period of time, depending on the
nature of the disability and how long the insurance will pay for
things of that nature
$ Total, permanent disability, which is a pretty grim scenario,
because it generally involves that person not being able to work
again for the rest of their life. These are reasonably severe things
– quadriplegia, diseases that attack the brain and mental capacity

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