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“SOBERING FACTS: Dial-an-Angel is a National Agency of home and family care providers for the seriously ill and disabled. They offer nursing services and child care services to assist families with the difficulties in maintaining the family home and enabling partners/spouses to continue to work and provide for the family. At the Life Risk Forum in Melbourne (April 2010), Dial-an-Angel’s CEO outlined the average cost for home care 5 days a week, 8 hours a day with some small amount of child care included – it averages around $200,000 per year.
Total & Permanent Disability and Trauma Insurance can help to ease the financial burden on your family if you or your partner were in need of at home care and assistance by providing a lump sum payment when needed most.”
Here at Dornbusch Partners, we create Financial Plans for families in order to help them reach their financial objectives, protect the future interests of their children and maintain a certain standard of living. We create and manage wealth on behalf of our clients and take this role in their lives very seriously. However, there are some events outside of our and your control that can have a devastating impact on ones financial future. Particularly when you have a family of your own, you need to be protected from personal risks and the uncertainty of life whilst ensuring your spouse and/or children are equally protected if something happens to you. This is where DP Wealth Protection can help.
Too often in today’s society we seek to blame others for our misfortunes. Taking responsibility for our personal circumstances, no matter how they came to be is all part of managing personal risk. Personal Risk Management and Wealth Protection should be an active process everyday and should include specific strategies to minimise the risk of harm to ourselves both now and in the future, physically and financially – For example, you can minimise physical risks through: Quitting smoking, increase exercise to lose weight, have regular check-ups at the doctors to monitor general health and well being, etc.
But how can you protect your assets and cover your expenses and debts and support your families financial needs when you are incapacitated and probably unable to work? Life Insurance plays an important role in protecting our Financial Wellbeing in the event our physical wellbeing is compromised either permanently or temporarily.
The need for financial support and insurance claims can occur at any age, for a plethora of reasons. So it’s important to cover all bases. One Life Insurance Company’s claims records show the claims spread as follows:
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Please click on graph to see enlarged version
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So what is available to protect you and your family?
- Self Insuring means that you factor in contingency funds into your savings to cover expenses in the event your income is stalled or lost. Self-insuring means you need to find each dollar to cover costs and for the entire length of time you are incapacitated.
- Borrowing means a financial institution, such as a bank, lends you a lump sum of money to cover costs and debts. The repayment of this loan is the amount of the entire loan PLUS interest, so you effectively need to find more than the money you require in order to repay the bank. For example: You need $300,000 to cover medical expenses and living costs so you borrow $300,000 from your bank. The banks current interest rate for this personal loan is 11% compound interest per annum – so in the first year you will pay an additional $33,000 in interest on top of the $300,000. The other issue with borrowing is that if you are not working, you may not be eligible for a loan or for a loan at the amount you require – then what happens?
- Selling Assets is another alternative, however, it means that your family’s financial position is significantly altered. Whether it be selling of liquid assets (such as shares) or non-liquid assets (such as an investment property), you dilute your family’s wealth. It may also mean that your planned endowments to your children are lost. Plus, if you need the money urgently, you may have to sell these assets at a loss and to regain these assets in the future may be difficult.
- Insurance offers a financial product, guarantee of money, for a premium each year. The cost of this money is often around or less than 1% of the sum insured. For example, you insure yourself for $200,000 of Trauma Insurance, the premium will cost around $2,000 (depending on age, gender, medical history, etc) per year. So if you need to make a claim after 3 years, you will have paid $6,000 for $200,000 and there is no requirement to pay the insurance company back!
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