Life’s journey can sometimes be a roller coaster and all of us will have a unique variety of experiences, but there are some key events that will happen to most of us and these can be important markers for planning our financial security.
Life is punctuated with events that can involve changes in lifestyle, relationships, opportunities and commitments. These are often celebrated occasions that bring positive changes, but they also have profound implications for our financial situation that need to be accounted for in our insurance planning.
Let’s take a closer look at what some of these key events are and how your financial plan may need to respond.
Tying the knot
Transitioning from single life to being a couple is one of the most dramatic lifestyle shifts we could ever make. The freedom and independence of the single life is now transformed into a dependent union, where you share your living space, your time and your finances.
You now have responsibilities to each other that may need protecting with insurance cover, so that there are no financial problems if something untoward were to happen to either of you. This may involve some life insurance and TPD insurance, as well as arranging for you both to have income protection if you are both working.
A place to call home
Not long after marriage (and sometimes before it), you will likely join the many who take on the major commitment of putting down some roots in your own patch of real estate. There is a lot of appeal in the sense of achievement this can bring, but it also flags a major financial commitment that you are not likely to want to give up in a hurry.
Life insurance is therefore a major consideration when you make such a major life change, with the objective of enabling either partner being able to pay out the full mortgage amount, if the worst was to happen. Income protection supplemented with trauma insurance may also need to be reviewed to cover any increase in monthly outgoings and to avoid having to give up this major asset if sickness or accident occurs.
The patter of little feet
No other life event carries with it the same level of responsibility as the birth of a child. In one instant, you are both taking on the mantles of provider and protector for a new and very dependent life. A future of nurturing, providing and caring is now mapped out ahead of you for many years.
The massive responsibility that this new addition brings, makes it essential to review cover so that funds are available to create an ongoing income stream if one partner were to suddenly be taken out of the picture, thereby allowing the surviving partner to focus on raising the child without the worry of needing to work.
This applies to both partners, regardless of whether they are working or in a stay at home situation. Extra funds may also need to be included in insurance planning to cover large one off costs like education or vehicle replacement. Each new child that comes along will of course increase the level of cover needed.
You’ve got the job
Career mobility is a much greater issue than it was in days gone by. Several job changes over your lifetime are now the norm and each change may represent a step up in responsibility and an increase in income. This normally also results in an increase in expenditure and an improvement in lifestyle.
This may well leave you in a situation where there is a dangerous disparity between your income and your income protection cover, so it is vital to take the opportunity to review cover in order to maintain your financial independence if sickness or accident puts a temporary or permanent stop on your income earning ability.
If you have had a major life event recently, talk to your adviser about keeping your cover up to date.