Ever thought of yourself as an insurance provider?

08 Jul 2013

By Andrew Bollen

With the stress of young children, career progression and mortgage payments, one of the last things your children may think about is life insurance. It seems that there are always other more pressing priorities.

What you may not fully realise is that if your children do not have life insurance of their own, you are effectively acting as their life insurance provider. Let's take an example:

Tony and Sue, both aged 38, are married with two young children and a sizeable mortgage. Tragically, Tony is diagnosed with a brain tumour and passes away within a few months of his diagnosis. With no life insurance and the loss of Tony's income, Sue has no choice but to sell the family home to repay debt and medical expenses. She also has to move in with her recently retired parents. Not only that, but without Tony's income Sue can no longer afford childcare for the children while she is at work, so her parents have to step into the role of caring for the children full time.

While most grandparents are delighted to spend time with their grandchildren (mine sure are!), not many would envisage their long awaited retirement being spent in this way.

Maybe it is time to talk to your children about their life insurance needs? An insurance policy on each of their lives (it need not cost a lot of money*) could have provided Sue with a lump sum to repay debt and cover the cost of childcare and other expenses. It would have also meant that Sue could take some much needed time off work to care for the children following Tony's death.

What if your children are not interested? Cannot afford it? Say that it will never happen to them or think they have enough cover through their super fund? Would they be happy to move back home if there was a disaster and insufficient cover?

As an integral part of your retirement plan, you might want to consider taking out a life insurance policy over your children's life. This is an inexpensive solution to a potentially crippling problem.

At Shadforth Financial Group we can provide you with a range of affordable insurance solutions. Why don't you give me a call to discuss this important issue?

*Around $155 per month for a 38 year old could initially provide for a life insurance payment of $2m (costs typically increase with age and can be dependent on health and occupation).

To learn more about Andrew, view his online profile.

If you like this article, please feel free to share it with your family and friends.

Educational guides