A story about the importance of insurance

22 Sep 2015

By Shadforth Financial Group

If you are like most Australians, insurance is one of those things which can be put off for another day. But another day might be one too late – the story of Patty outlines how important it is to have the right insurance.

Patty was a fit and healthy single 53 year old who had just started her own bookkeeping business. One weekend she was hosting a Christmas in July party where everyone was enjoying themselves. Later in the evening she started bumping into things and slurring her speech, thinking she had drunk too much, her friends put her to bed. The next morning when she couldn't get up she called an ambulance.

It turned out Patty had a stroke which was caused by bowel cancer. After fighting for her life for the first couple of days, she started on the slow path to recovery which included chemotherapy, physiotherapy, speech therapy and psychotherapy. She had multiple surgeries to remove the cancer and had limited use of her left side.

During this already stressful time of dealing with health issues,

Patty started having money problems. Because she had just started up her business, she had limited savings. While she was in hospital there was no one to work in the business so she had no income coming in.

Patty did have trauma insurance, but she was not very good at maintaining the payments, so there was a question as to whether she was eligible for disability payments. While her friends and family were trying to sort out her financial issues, the rent on Patty's house became overdue. With no alternative, they had to move her possessions into storage. They also had to close down her business.

Luckily Patty did have income protection insurance through her superannuation. She had opted for the 90 day waiting period which meant that although she didn't get immediate help with her rent and bills, but she was able to get a regular monthly income before she came out of rehabilitation hospital.

What did Patty learn?

The good news is that two years on, Patty is back working as an office manager for a small business. She is now cancer free and even with slight disabilities, she has a new lease on life.

Unfortunately hindsight is always 20/20, and looking back Patty wishes that she had put better insurance in place. As she couldn't get sick pay from a regular full time job, she should have had insurance which could have filled the financial gap, which meant she could have kept renting her house.

Could you face a gap?

Most people don't understand the need for the right insurance until a friend or family goes through a serious illness or death, when the reality of not having a safety net hits home. What will you or your family do if you can't earn a living? Would you have enough money to cover the mortgage or the rent?

What if something happensWhich insurance will help?How will it help?
You become unwell or injured and can't workIncome protection insuranceHelps to cover your income by replacing your lost earnings
You suffer one of a number of specified medical conditionsTrauma insuranceProvides a lump sum to deal with medical and rehabilitation costs
You pass awayLife insuranceProvides a lump sum payment to your family which will help them deal with their financial situation
You become permanently disabledTotal and Permanent Disability insurancePays you a lump sum as you are unable to work any more
You become totally or partially disabled and you have your own businessTotal and Permanent Disability insurancePays you a lump sum as you are unable to work any more

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