Propertyscouts Invercargill

Insurance - Making Sure You are Protecting Your Assests - 19th Apr 2016

Clearly when you are growing your investments you do need to think about insurances as well to minimise your risk.  This is an interesting read.


 LIFE INSURANCE—FOR RISK PROTECTION

 Nearly everyone who owns a home considers it important to have insurance cover in place in case the home is accidently damaged by fire, flood, earthquake, storms, and other damage that was  not intentionally caused. This cover allows the house to be repaired or replaced up to the level of cover you have while only costing you a small excess often as low as $300.  The annual premium depends on the level of cover and the excess you choose but for an average cover of say $300,000 the annual premium is close to $900.00 per annum.
 Yet at this time very few people will insure their own or their partner’s lives against death as they don’t want the added cost even though this is very little different from the cost of house insurance. Yet the financial consequences of yourself or your partner dying can be devastating for those left behind. The loss of income can mean the mortgage is not able to be paid and the home will need to be sold to repay the mortgage and other debt. If the life insurance was available this could repay all the debt, a debt free home would give the family the security of a roof over their heads and no rent, and there is the added bonus of the long term capital gain building up in this asset to keep up with inflation. This will give the family many more financial options at a later date when they might be needed. The reduced income is also now available to help the family with living , education and other costs.  
      For those families renting a home  life insurance is still an important expense to budget for. If called on in the event of death the lump sum received can buy a home and eliminate the rent expense. This family now also has an asset going up in value over time and giving a much better level of financial security.
      Just remember the house insurance can only rebuild the home while the other component of your insurance cover, life  insurance, can rebuild lives shattered by the death of a loved one and a major financial partner.
      One issue with life insurance is that each year as the individual ages and gets closer to death the insurance company takes on more risk and therefore raises the annual premium they charge. As a consequence many people when they reach the age of 55 plus can no longer afford the premium and therefore cancel their policy. Insurance statistics show that on average only 3% of life insurance policies ever pay out. This is a sad statistic as in today’s world where most people are still heavily in debt well beyond the age of 55 and the risk of death from many causes has greatly increased there is no life insurance to protect against these risks.
    As an insurance and mortgage adviser I have found ways to keep the life insurance cover affordable and in place until all the family debt is repaid or at  least covered many times by the income earned from their investments. I continue to work with my clients as their adviser right through their working life to show them how to maximise their ability to compound their incomes while managing any risks that they may face. The outcome is to be able to live comfortably in retirement.
     We all only have one lifetime to get this right and it is so much easier to achieve when the journey begins at a younger age. It is also a skill we can jointly pass onto your children so they can continue from where you left off to build lasting family wealth.
    It is important that you start this process now to achieve the maximum benefit.  Please ring me anytime on (03)4158799 or (027)5158799 for an initial discussion or visit my website at www.mortgagelinksouth.co.nz and leave a message.
    
 
 

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