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Why risk insurance and mortgages go hand in hand

Marty McDonald - Monday, October 31, 2011

Over the years I have had a few clients fall seriously ill and as a result fall into serious arrears on their loans. This has made me realise just how important it is to have that sometimes uncomfortable discussion about risk insurance when you are about to take on a mortgage. I like so many of my clients are guilty of not always taking this seriously enough but the stats don't lie you have a very good chance of something terrible happening to you or your partner in your working lives. On that basis I wanted to introduce McIntyre Financial Advisory whom I am now referring all my Sydney based clients to for a pre loan settlement insurance health check. The firms principal Angus Dockrill has kindly written a few words more words about risk insurance below.

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Guest blogger - Angus Dockrill principal of McIntyre Financial Advisory

How to protect you, your home and family from financial disaster

Purchasing a home can be one of the most exciting times of your life. You’ve done your research of the property market, found your ‘dream home’, got your finance approved and with a few legal checks done you’re ready to make a bid. Insurance isn’t always top of mind. However, at this important juncture it’s worth making sure you protect the things that are important to you from the financial impact of an unexpected ‘curve ball’.

I’m not just talking about protecting your assets like your home, contents and car. As sensible as it is to protect these material possessions, the more important issue is protecting yourself and your family from the financial impact of an unexpected illness, injury or death. A cost effective strategy to protect yourself as well as your family includes insurances such as:

  • life insurance
  • income protection insurance
  • trauma insurance (aka critical illness insurance)
  • total and permanent disablement insurance.

Purchasing a home, refinancing your home loan or having a child is the perfect time to review and upgrade your personal insurance portfolio.

It’s worrying to know after just one month without work, over half the families in Australia will run out of money . Yet you can protect your family for as little as $3 a week.

It won’t happen to me

I don’t know about you but I plan on living a long and healthy life. I exercise regularly, eat well and, other than indulging in the odd beer, am in good health. I rarely get sick and am not planning on getting sick anytime soon. Or so I reckon.

Research statistics indicate that an illness, injury or death is ‘likely’ to occur to most of us before we turn 70. In fact, research indicates that 68% of males and 47% of females will suffer a critical illness or injury before our 70th birthday . In other words, it is likely to happen to you or someone important to you.

Protect your family financially

One of the most important ways of protecting your family is to make sure the bills can continue to be paid if the unexpected happens. Imagine being diagnosed with cancer and having to sell your home and move into your in-laws home because you can’t continue to pay the home mortgage as well as the medical bills (and kids education).

So what are your options in protecting yourself and your family from the financial impact of illness, injury or death? You could:

  1. Hope it doesn’t happen to you.
  2. Rely on your parents to help. Any parent would want to help their kid have the best chance of recovery and long term financial security. However, most people are of the view that there is a time for personal responsibility. And let’s not forget that, in light of the investment market falls of the last 4 years, parents are worried about their own retirement and not in as strong a financial position to help you out as much as they would like.
  3. Self-insure – While we all want to be in a position of financial strength, it is rare for someone to have enough assets to be able to fund their lifestyle as well as cover for the financial impact of illness, injury or death. If you have a home mortgage chances are you are not yet in a position to ‘self insure’.
  4. Purchase a personal insurance protection portfolio to protect you and your family and transfer the risk to an insurance company. This will allow you to continue to lead the life you want with confidence and peace of mind. Speak to a specialist financial adviser to help clarify what you would want to happen to yourself, your family, your home and your plans for the future in the event of a ‘disaster’. They will provide expertise to help determine what types of personal insurance policies you need to ‘disaster-proof’ your life (including being across the ‘fine print’of the various policies on offer in the marketplace) and advise on how to do this as cost and tax effectively as possible.

Do you want security or risk?

                “The wise person builds their financial house 
                                 on the safety of rock 
                           and not on the sands of risk”


Angus Dockrill
Principal Advisor
McIntyre Financial Advisory
Sydney, Australia
www.mcintyreadvisory.com.au
adockrill@mcintyreadvisory.com.au
02 8969 8110

Angus Dockrill and McIntyre Financial Advisory Pty Limited are Authorised Representatives of Apogee Financial Planning Limited an Australian Financial Services Licensee, Registered Office at 105–153 Miller Street, North Sydney NSW 2060. This article may not be suitable to you because it contains general advice that has not been tailored to your personal circumstances. Please seek personal financial advice prior.

[1] Source: Rice Warner for IFSA, A Nation Exposed, August 2005

[1] Source: General Reinsurance Life Australia Ltd, 2003.  Statistic based on being aged 30 now.

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About the Author: Marty McDonald is principal of mortgage broker “Mortgage Experts”. Marty specialises in assisting active property investors with loan structuring advice and implementation as well as helping credit worthy borrowers with slightly outside the box income and employment situations. Find Marty on and LinkedIn.

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