In my world of debt negotiation, the clients I work with have usually had a significant life event that has caused them to accumulate a massive amount of credit card debt. A typical scenario could be that someone in the family is diagnosed with a very serious illness. This could mean the main bread winner is struck down, forcing the family to live on credit to pay for bills, groceries and medical expenses. Even if it’s the main care giver or one of the children, this can also have a compounding financial impact.
Over the years I’ve been negotiating, I’ve noticed this exact scenario become far too common for my liking. This has made me reflect on my own circumstances and evaluate what we as a family could do to ensure our financial security.
Insurance is something many people overlook or say they can’t afford. People are always insuring their homes and vehicles, but not many people seem to give a second thought to insuring themselves. Whether its your life, trauma or income protection, these are all insurances that should be considered, especially if you have debt.
My husband and I are both self employed so this was a no brainer for us. He has a business partner and staff that can step up if anything happens to him, but I’m a one woman show. If something happens to me, that’s almost half of our income that’s affected. When you have a mortgage, children at school and bills to pay, losing 50% of your income could have a massive impact financially.
So, some 5 to 6 years ago, we shopped around for an insurance advisor who we found through some referrals. We had our initial appointment, discussed our needs, debts and income that need to be covered in case of an event, and the premiums to be paid. At first it was all quite overwhelming, and it can be difficult to make sure you don’t over or under insure yourself, but once it’s all worked out, it was a matter of filling in applications, providing medical reports and we were on our way.
There are three main insurances we took out. Income protection, Trauma and Life insurance. Of course, not everyone will need all three. You may opt for just one or two. It should all depend on your individual needs and budget.
A couple of years later and I broke my arm playing soccer. It was my right arm and being right handed, of course this severely impacted my ability to work at full capacity. Our advisor helped me make an application, I provided some medical reports, and within 2 weeks, I had a full month’s wages deposited into my bank account.
Other than taking out an insurance plan, what else can you do to protect yourself in these such events? Learning from my own previous and my current client’s mistakes, I taught myself to budget and save. I put money aside in a separate bank account. This was built up to the equivalent of 3 months income that was not to be touched unless there was an emergency, and by emergency, I don’t mean a new pair of boots on sale. A REAL emergency.
I also started subsidiary accounts that I used for general savings (like a holiday or urgent purchases like white goods needing replacement). Once these savings accounts had suitable funds sitting in there, the sense of security was so liberating. Having insurance AND savings was a whole new world for me. The sense of freedom and safety was incredibly satisfying.
Fast forward to 2018 and we get shocking news! My husband, a fit, young, healthy, active man is diagnosed with cancer. Luckily for us, it’s a cancer than can easily be treated but the treatment was long and aggressive. He was unable to work for months at a time, and I myself spent a majority of the time at home caring for him. That’s two people not working but with bills still to pay. We have become a typical scenario of my everyday clients.
The trauma and income protection was a life saver for our family. My husband was able to claim on both, and with these funds we could continue to maintain our mortgage and pay bills. His business partner and staff were incredible too. Without them, it still would have been a massive struggle. We feel eternally grateful to them for working hard and ensuring it was business as usual. THAT is something insurance doesn’t cover.
Because the cancer physically affected only my husband, I couldn’t claim on any of my insurances. This is where I was forever grateful of my savings and emergency accounts. During the time I was caring for my husband, I had to curb my spending and budget tightly, but the savings I’d put aside for this type of emergency, allowed me to stay at home with my husband and care for him and our family.
He’s completely clear now and we’re both back at work. Unfortunately, because we deal with so many people in hardship, we made the conscious decision to make sure we covered our family with the insurance and unfortunately for us, we need to make a claim.
If there is one piece of advice I can give you all, it’s to insure your value. If you have a mortgage, you need to make sure you can cover your expenses in the event of a situation. Take out insurance, have a back up savings account or both.
If you’d like to chat about my story or ask any questions, feel free to call me any time.
Gabrielle – Choice Debt Solutions 0408 77 88 37
