Ladies – You Need to Protect Yourselves!

By: Michelle Bryant

As you may have read in the news, the number of financial advisers providing risk advice in Australia has declined significantly over the last five years. This has led to a large gap of under advised and underinsured consumers.

A recent report completed by Deloitte, titled "Mind the Gap", found that the reduction in risk advice is creating a large gap of under advised and underinsured consumers. The report estimated that Australian families could have claimed $25 billion more last year if they had adequate personal insurance. This is $25 billion that Australian families and individuals had to fund themselves.

The report states that "a significant number of advisers selling risk products have exited the Australian market post the royal commission and the recent wave of regulatory change. As such, remaining advisers are moving further up the market and putting their focus on serving high-net-worth individuals." But what does this mean to those of us who aren’t High-Net Worth clients?

The Impact on Consumers 🤔

This decline in risk advice has a significant impact on consumers, particularly those in the middle-income bracket. These consumers are often the ones who need insurance the most, but they are the least likely to have access to it.

Consequences of not having Personal Insurance or being Under Insured 🤕

Personal insurance is a type of insurance that protects individuals and their families from the financial consequences of unexpected events such as illness, injury, death, and disability. There are four main types of personal insurance:

• Life insurance: Pays a benefit to your beneficiaries in the event of your death.
• Total and permanent disability insurance (TPD insurance): Pays you a benefit if you are unable to work due to a total and permanent disability.
• Trauma insurance: Pays you a benefit if you suffer a serious illness or injury, such as a heart attack, stroke, or cancer.
• Income protection insurance: Pays you a portion of your income if you are unable to work due to illness or injury.

Not having any personal insurance or being underinsured can have serious financial and emotional consequences for you and your loved ones.

Financial consequences 💸

• Medical debt: Without Trauma insurance or Total and Permanent Disability Insurance, you could be on the hook for thousands of dollars in medical bills, even for routine care.  
• Reduced quality of life: If you do not have adequate personal insurance and you experience a major loss, such as a serious illness or injury, you may have to reduce your standard of living. You may have to sell your home, move to a smaller home, or cut back on expenses.
• Loss of income: If you are unable to work due to illness or injury, you may lose your ability to earn an income. Without personal insurances, you may have to rely on savings, but how long would your savings last? How many months could you cover your mortgage without an income?
• Funeral expenses: The average cost of a funeral in Australia is over $7,000. Without life insurance, your loved ones may have to bear this financial burden.

Emotional consequences 😢

• Stress and worry: Financial problems can be a major source of stress and worry. If you are facing medical debt, loss of income, or other financial hardship, it can take a toll on your emotional health.

What are the consequences of being Under Insured? 💸

• Not enough coverage: If you are underinsured, you may not have enough coverage to pay for all of your losses in the event of an illness or injury. This can leave you with a financial shortfall.
• Higher premiums: If you wait until after you experience an illness or injury to take out insurance, you may have to pay higher premiums. This is because insurance companies view people who have previous illness or injury as a higher risk.

What is the industry doing to try to solve this problem? 🤔

The financial advice industry is implementing a number of solutions to address the problem of underinsurance and the undersupply of risk advice in Australia. One solution is to provide more digital advice options. Digital advice can be more affordable and accessible than traditional face-to-face advice, making it a more viable option for middle-income consumers.

However, it is important to note that digital advice cannot provide the same level of comprehensive and personalised advice as engaging with a financial adviser who is a risk specialist. A risk specialist has a deep understanding of the different types of personal insurance available and can help you find the right policies for your needs. They can also help you understand the complexities and pitfalls of personal insurance, and they will be there to support you through the claims process.

What can you do? 💼

The best thing to do is to review your personal insurance cover with a Financial Adviser. They can help you assess your needs and identify any gaps in your coverage. You may also want to consider increasing your coverage limits or adding new types of insurance.

Advised clients have better experiences when it comes to making a claim. 📝

It is important to know what to do if you need to make a claim. This can be a complex process, and it can be helpful to have an adviser on your side.

Advisers can help you with the following:

• Understanding your policy and what is covered
• Filing your claim correctly
• Negotiating with the insurer on your behalf
• Ensuring that you receive the full amount of your claim

Advisers can also help to reduce the stress and hassle of making a claim. They can take care of all the paperwork and communication with the insurer, so you can focus on your recovery or on supporting your family.

If you do not have an adviser, it is important to read your policy carefully and understand what is covered. You should also keep good records of your medical expenses and other relevant documentation.

What can you do? 🤩

You may already have an existing relationship with a Financial Adviser, and if so, you should engage with them to check if you have the right personal insurance in place. If you don’t have an Adviser, you can access the Adviser Ratings website to find a Financial Adviser that offers Personal Insurance or Risk Advice.

https://www.adviserratings.com.au/

Personal insurance is an important way to protect yourself and your loved ones from the financial and emotional consequences of unexpected events. Everyone deserves access to quality risk advice, regardless of their income or financial situation. Digital advice can be a valuable tool, but it is not a replacement for the expertise of a qualified Financial Adviser. If you are looking for comprehensive and personalised advice on personal insurance, I would encourage you to connect with a Financial Adviser.

Contact our Ambassador Michelle Bryant, Financial Adviser, Parc Wealth Management

This article contains purely factual information and/or general advice and does not constitute personal or product advice. This information has been provided by Parc Wealth Management Pty Ltd and does not take into account your objectives, financial situation or needs. You should consider whether the information contained within this information is appropriate for you. Where we refer to a financial product, you should obtain the relevant Product Disclosure Statement or offer document and consider it before making any decision about whether to acquire the product.