Is Your Insurance Coverage Keeping Up with Your Lifestyle?
As your life evolves, so do your responsibilities. You’ve likely invested in a home, started a family, and created a life filled with love, memories, and aspirations. But have you paused to consider whether your insurance coverage is evolving with you?
Many Australians don’t think twice about insuring their car, but when it comes to protecting themselves and their loved ones, they hesitate. It’s easy to see insurance as a “waste of money” until the unthinkable happens. Let’s explore why insurance is not just an expense—it’s a safety net for your family’s future.
The True Cost of Underinsurance
There are an estimated one million Australians underinsured for Death and TPD and about 3.4 million underinsured for income protection insurance.*
Imagine this:
What would happen if you couldn’t work for months due to illness or injury?
How would your family manage mortgage repayments and daily expenses without your income?
Who would ensure your children’s future education and well-being if you were no longer around?
These are the uncomfortable questions no one likes to think about, but avoiding them doesn’t make the risks go away. Life has a way of throwing curveballs, and without proper insurance, your family could face financial stress at a time when they need stability the most.
Why Your Insurance Needs to Evolve
Life is not static. As your lifestyle grows and changes, so should your insurance coverage. The policy you took out in your early 20s may not reflect your current reality. Consider these life events and how they might signal the need for updated coverage:
Marriage or Partnership:
Sharing financial responsibilities with a partner means you may need to protect each other’s income and contributions to your family’s stability.
Buying a Home:
A mortgage is likely the largest debt you’ll ever take on. Ensuring that debt doesn’t fall on your family in your absence is crucial.
Growing Your Family:
With young kids, your focus shifts to securing their future, including their education, living expenses, and emotional stability if something happens to you.
Career Advancements:
As your income grows, so do your expenses and lifestyle. Your insurance should reflect your current earnings to replace them adequately if needed.
Health Changes:
Life is unpredictable. Changes in your health could impact your ability to secure affordable coverage in the future, making it essential to reassess policies early and often.
Types of Insurance to Align with Your Lifestyle
Insurance isn’t just about protecting things—it’s about protecting people. It’s the difference between your family thriving or struggling in your absence. While insuring a car is essential, consider this: your car can be replaced, but your income and the security you provide to your family cannot.
Think of insurance as the safety harness on life’s rollercoaster. It doesn’t stop the unexpected, but it ensures that if you fall, your family has a soft landing.
Income Protection Insurance:
If you’re the primary earner, losing your income due to illness or injury can cripple your family’s financial stability. Income protection ensures your bills are paid, your mortgage is covered, and your lifestyle is maintained while you recover.
Life Insurance:
As your family grows, life insurance becomes the backbone of their financial security. It can cover debts, daily expenses, and future needs like education, ensuring your loved ones can maintain their quality of life.
Trauma Insurance:
The cost of recovering from a serious illness, such as cancer or a stroke, can be overwhelming. Trauma insurance provides a lump sum to help with medical bills, rehabilitation, or even taking time off work to focus on recovery.
Total and Permanent Disability (TPD) Insurance:
If an accident or illness leaves you permanently unable to work, TPD insurance ensures your family can adjust to a new way of life without financial strain.
Child Cover Options:
Some policies allow you to add cover for your children, ensuring their medical needs or recovery costs are taken care of if they face unexpected health challenges.
The Emotional Impact of Being Prepared
When tragedy strikes, the emotional toll is already immense. Insurance doesn’t take away the pain, but it removes the financial burden, allowing your family to focus on healing and moving forward. Without it, they might face not only grief but also the stress of unpaid bills, mortgage defaults, or uprooting their lives.
Debunking the Myths Around Insurance
“It’s too expensive.” - Many families spend more on daily coffee runs than it would cost to protect their future. With tailored coverage, insurance can fit your budget while providing priceless peace of mind.
“I’ll deal with it later.” - The earlier you take out insurance, the lower your premiums and the more secure your family will be. Waiting until “later” could mean higher costs or limited coverage if your health changes.
“I won’t need it.” - We can’t predict but we can prepare. No one plans for accidents or illness, but life is unpredictable. Insurance ensures you’re ready if the unexpected happens.
How to Ensure Your Coverage Stays Relevant
Review Policies Regularly:
Life changes quickly—reviewing your insurance annually ensures your coverage reflects your current needs.
Work with a Financial Adviser:
Tailored advice can help identify gaps in your coverage and align your insurance with your goals.
Consider Future Expenses:
Look beyond your current financial needs. Will you need to fund your children’s education? What about covering potential long-term care costs as you age?
Bundle and Save:
Many insurers offer discounts when you combine multiple policies, helping you get comprehensive coverage at a lower cost.
Taking the Next Step
As financial advisers, we understand the challenges of balancing today’s expenses with planning for the future. Our goal is to help young families like yours navigate these decisions with confidence.
Your family deserves the peace of mind that comes with knowing their future is secure, no matter what life throws your way. Let’s make sure your insurance coverage keeps up with your lifestyle and protects the people who matter most.
*Stats based on the Financial Services Council's Life Underinsurance Gap: Research Report 2023
About the Author
John Cachia is a seasoned financial adviser and dedicated parent of three boys. With a passion for financial literacy and wealth management, John has been in the industry since the young age of 14. His early start in finance has provided him with a wealth of experience and insight, which he now uses to guide families towards achieving their financial goals. As Australia's leading wealth adviser for young families, John is committed to helping parents become positive financial role models for their children, ensuring a secure and prosperous future for the next generation.
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