A diagnosis of a life-threatening illness sent one woman on a journey she could never have predicted. Thankfully, her family was financially prepared for the fight of her life.
At the time, Natalie's life was on a predictable course. At 36, she was married with two young children, a mortgage and a job she enjoyed. The family dog completed the picture of a typical Australian family.
Unfortunately, the only thing we can predict with certainty is that life is unpredictable and full of surprises. Some of these surprises delight us and others are not so welcome.
In Natalie's case, a casual conversation with her husband led to the detection of breast cancer. Despite having no family history of the disease, she discovered a small lump in her breast. After a mammogram, an ultrasound and a visit to a breast clinic doctor Natalie was diagnosed with Stage 2 breast cancer.
When you are suddenly diagnosed with a major illness there is often very little time to plan how the family will cope financially. In Natalie’s case, not only was she unable to work while she was undergoing treatment, but her husband also needed to take six months’ leave to care for her and the children.
The couple knew they needed a plan. They had health insurance but that would not cover their loss of income. A quick check of their life insurance policy reassured them that Natalie’s loss of income and out of pocket financial costs would be covered and funds would be available for her husband to take unpaid leave to care for her. That provided peace of mind so they could get on with the job of healing.
Unfortunately, that’s where Natalie’s story is far from typical.
Research shows that 1-in-5 Australian families will be impacted by the death of a parent, a serious accident or an illness such as cancer that leaves a parent unable to work. Yet 95 per cent of families do not have adequate levels of life insurance.1
Understanding cover types
Unlike general insurance which covers assets such as your car and your home, life insurance can also protect the financial contribution you make to your family.
There are different types of life insurance that generally cover different life events:
- Life cover pays a lump sum if you die or are diagnosed with a terminal illness.
- Income protection can replace up to 80 per cent of your income (for a set period of time) which can be used to cover living expenses if you are unable to work due to illness or injury.
- Total and permanent disability (TPD) cover pays a lump sum if you are diagnosed with a total and permanent disability.
- Trauma cover pays a lump sum if you are diagnosed with one of a number of serious medical conditions, such as cancer or a heart attack.
In practice, you may need a combination of these products depending on your family’s needs and existing financial resources.
The best way to plan for your family’s future financial security is to ask ‘what if?’ What if one parent died or was unable to work due to an accident, illness or permanent disability? With the loss of an income, most families would struggle to meet their daily expenses and ongoing financial commitments.
While families with children have an added incentive to have adequate life insurance cover, young couples and singles may also need protection. What if you become critically ill and need to take time off work. Do you have enough sick leave to cover the rent or mortgage and other living expenses?
Once you have a clearer idea of the amount of money you would need to preserve your family’s current lifestyle it’s easier to work out the right level of cover for your circumstances.
Life insurance and income insurance allows you to approach the future with confidence, knowing that the life you’ve built is protected.
*Based on a personal story. Names have been changed to protect identity.