“How dumb are we not to have insurance?!”

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I have a friend, let’s call him John, whom I have known for over 20 years. John is in his late 40s, married (to a woman in her mid-40s who we’ll call Jane) and they have 3 kids (2 of whom are dependant). John and I used to work together in Brisbane and over the past two decades we’ve had what I’d describe as intermittent contact.

As most people are, John and Jane are always busy, running around, working hard (they are self-employed) and not thinking much about their super or insurance. Most of the money they earn is spent, rather than saved, and they have accrued an average amount of debt. But they are making ends meet quite comfortably.

Fast forward to the end of July and Jane is rushed to hospital where she is admitted to ICU with a brain aneurysm. Jane was released from hospital 3 weeks later with a hefty hospital bill and a tough diagnosis: she is now 100% blind in one eye and 80% in the other.

John and Jane are also facing serious financial hardship, because without Jane’s income their expenses far outweigh their earnings.

Although they are not my clients, I reached out to John and asked if they had any insurance and whether I could help them to get the claim paid. John said that he didn’t, but he thought that Jane may have life cover. I asked him where her super was, and he said he would have to find out. I explained to him that often there is some level of insurance inside super and that we may be able to look at this as an option. For example, if Jane does not regain sight in the next 3-6 months, she may be eligible to claim on her TPD benefit.

John did not have permission from the super fund to access his wife’s account, so he had to wait for her to get out of hospital. When Jane called the super fund, she found out that the cover inside her super account had been cancelled 8 months ago under the Government’s Protecting Your Super package. (The Protecting Your Super regulations took effect back on 1 July 2019 and require all super funds to cancel the insurance of any member whose account has been inactive for 16 months. They also allow the ATO to proactively consolidate inactive accounts with a balance less than $6,000 – which again means you lose your valuable insurance.)

So, now John and Jane are faced with significant expenses, greatly reduced income, no insurance and the stress of having to figure out how to make ends meet. Do they sell the house? Do they sell the cars? Can John mentally run the business? What about the strain on their relationship and the kids?

Faced with all this, John came to the realisation that so many Aussies do when faced with the unexpected. As we sat down this month to get his insurance in place and to help identify a path forward, he said to me: “How dumb are we not to have insurance?”

And while it is horrible that John is beating himself up over neglecting this area of their lives for so long, he is definitely not alone. So many Aussies do not have cover. So many Aussies do not take the time to look at their superannuation account to determine if they have cover or what they are covered for. So many Aussies don’t even bother to open the letters from their super fund, when those letters could be advising them that their insurance is about to be cancelled.

None of us are bulletproof. None of us can predict what might happen tomorrow. You could be in your prime, fit as a fiddle, no history of problems and be struck down in the blink of an eye. When this happens, which position would you rather be in? Safe in the knowledge that your finances are secure and your policies are up to date so you can get on with healing? Or, like John and Jane, facing into serious financial hardship while you simultaneously battle significant physical health issues?

If you want to check if your cover remains in place inside your super, or would like to talk about your insurance options, give me a call for a complimentary review.

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About the Author:

Tatiana has over 15 years experience within Financial Services with the last 7 years focussed on Life Risk. Tatiana has held Senior roles with a number of organisations such as Macquarie, AMP and OnePath prior to starting Monarch Advisory Group. Tatiana holds an Advanced Diploma of Financial Services and is completing the CFP (Certified Financial Planner) through the FPA (Financial Planning Association). Tatiana is also a member of the FPA, which is the highest professional body for the Financial Planning industry. Tatiana is very approachable and passionate about ensuring her friends, family and clients are properly protected in the unfortunate event that something goes wrong.

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