When you think about building wealth, you may picture investments, property and superannuation. But there’s another critical element: insurance. It’s the silent partner in your financial strategy, quietly working behind the scenes to protect everything you’ve built.
Strategic asset allocation is the hallmark of a robust wealth plan, using diverse holdings to build long-term financial success.
Yet, defending a portfolio against unforeseen events and ensuring a smooth estate transfer is just as vital. That’s where targeted insurance solutions come in.
Far from being just a safety net, insurance can be a tool that preserves your assets and keeps your plans on track even when life delivers the unexpected.
Insurance can help to create a more resilient wealth plan, especially for those with complex estate considerations. In other words, the right cover can make all the difference between maintaining your lifestyle and facing financial hardship.
Safeguarding your family
Life is unpredictable. Illness, injury or premature death can derail even the most carefully designed financial plan.
The risk is magnified if wealth is concentrated in illiquid assets such as private business interests or large property holdings. Beneficiaries often need immediate access to cash to cover any outstanding debts, taxes that may be owing, and to manage business continuity. If funds are not available, the executor may be forced to sell the core portfolio, or business assets quickly, and potentially at a loss.
That’s where life insurance, Total and Permanent Disability (TPD) cover and trauma insurance can play an important role as a structural defence mechanism for a portfolio and an estate.
Life insurance provides a lump sum to beneficiaries after your death, allowing them to secure their future. TPD cover steps in if you suffer a permanent disability and are unable work again, providing the funds for medical care and living expenses. Trauma insurance covers serious illness such as cancer or heart disease, giving you financial breathing room during recovery.
Income protection insurance is another valuable way of providing income if illness or injury stops you from working. It pays up to 75 per cent of your income and helps you to avoid dipping into your savings or selling assets at the wrong time.i
These policies can mean peace of mind for families, helping to protect assets and ensuring that wealth transfers happen as you intended.
Protecting your business
Insurance is also a cornerstone of small business risk management strategy.
Assessing and managing risks may highlight the need for a range of insurances such as flood and fire, theft, public liability, professional indemnity and cyber liability. These covers can help to defend your business against the crippling expenses that may follow unexpected events.
Risks can also be personal.
Business partners can use life insurance policies to safeguard their interests in case one business partner dies, providing the funds to buy the partner’s share of the business from their estate. Without a policy, the surviving partner may struggle to buy out the deceased’s share, forcing a quick sale of the business at a discount. With the right cover, the transition can be smoother, preserving value for the families involved.
Meanwhile, key person cover helps to protect against the financial impact of losing a vital team member to illness or if they die. In the event of a claim, the business will receive the insurance benefit.
Car, home and contents
If your car was stolen or damaged, will your insurance cover its replacement? If your home was completely destroyed tomorrow, do you have adequate insurance to rebuild as well as buy new furniture and fittings? These are things you need to consider when taking out insurance.
Reviewing your cover
Life changes and so should your insurance. Too little cover in any area of your life could leave you exposed, too much could mean unnecessary premiums.
Regular reviews can ensure your various insurances fit with your goals and current circumstances. It’s about having the right cover at the right time.
Insurance doesn’t generate returns, but it protects the foundation of everything you’ve built. Without it, one unexpected event could unravel years of planning.
A few smart decisions now can make all the difference when life doesn’t go according to plan.
Please call us to talk about how your current cover fits with your financial strategy.
