Life is full of “what-ifs,” and ignoring them won’t make them go away. At Three Kings Wealth Management, we don’t just talk about growing wealth—we talk about protecting it. Your financial future isn’t just about what you earn; it’s about being ready for what life throws your way.
This blog examines the critical role of insurance. It also focuses on wealth protection, drawing insights from our eBook: Insurance and Wealth Protection Plan.
Why Your Biggest Asset Is You
Let’s get real: most people will insure their car, house, or even their phone, but forget to insure themselves. If your household income is $100,000 a year, you’re looking at a lifetime earning potential of $2 million to $2.5 million. That’s a serious asset—and one you can’t afford to leave unprotected.
Insurance isn’t just about worst-case scenarios. It’s about making sure your family, your lifestyle, and your goals stay on track no matter what happens.
It is true the old saying that if you put all of your premiums aside and compare them at the end of your life to how much you were paid on claim, for the average person you would be behind by paying the premiums. This makes people think “insurance is a scam” or “not worth it”. However, what this doesn’t account for is time and opportunity cost. What happens if it happens tomorrow and you just started saving? Or what about if it happens in 10 years and you have enough in your savings to cover it but then something else happens the following month?
As an adviser, I tell my clients all the time that I don’t like paying for insurances either nor do I enjoy dealing with the companies quite frankly, but I can budget for a $2,000 per annum premium very easily. What I can’t budget for is a $200,000 or more incident.
The wealthier you get, the less cover you usually need. Yet, ironically, the more you will want, given the potential ROI on the premium. When you are at the start of your journey, you need it the most, even though it’s probably the least time you want or can afford it relatively speaking.
The goal is to be self-insured, to have enough assets to cover your life bill. Your life bill is the daily cost of living multiplied by the days left to live. Unfortunately, at the start, we don’t have that. So our coverage should cover the gap between what we do have and what we need, and every few years be reassessed and adjusted according to that formula.
Why Insurance and Wealth Protection Matter
Here’s why getting the right coverage is a non-negotiable:
-
- Protecting Your Income: If illness or injury stops you from working, insurance ensures you’re still covered financially. Dive deeper into this with our blog on Lifestyle Planning.
-
- Reducing Stress: Knowing you’re covered means you can focus on recovery, not bills.
-
- Maintaining Stability: Life doesn’t stop when things go wrong—insurance keeps your progress intact.
-
- Providing Peace of Mind: Your family’s financial needs are met even in the toughest times.
-
- Leaving a Legacy: Life insurance ensures your family’s future is secure and their lifestyle protected.
Understanding Your Options
Insurance isn’t one-size-fits-all. Here’s a quick breakdown of the key types:
1. Life Insurance: Provides a lump sum payment to your family if you pass away. Covers debts, living expenses, and future needs. Learn how super works in retirement to understand its role in wealth protection.
2. Total and Permanent Disability (TPD) Insurance: Offers financial support if you’re permanently incapable of working due to a disability.
3. Critical Illness Insurance: Covers costs from severe illnesses like cancer or heart disease. Check out this resource from the Department of Health for more on health-related impacts.
4. Income Protection Insurance: Replaces up to 75% of your income if you can’t work due to illness or injury.
Who Needs Insurance?
Honestly? Almost everyone. But it’s especially critical for:
-
- Working Parents: To keep their family financially stable if something happens.
-
- Self-Employed Individuals: To cover both personal and business expenses during recovery.
-
- Young Professionals: To safeguard their earning potential and future goals.
Don’t Fall for These Myths
Too many Australians stay underinsured thanks to common misconceptions like:
“I’ll never need it.”
“Super has me covered.”
“I can just dip into my savings.”
Contrary to what insurance advisers will scare you into thinking, you want to think of the scenarios for each coverage as “if this happened to me yesterday, what would I want the outcome to be?” Write down all the outcomes you would want to happen, put a number next to them, and those things added up minus your liquid assets (super, shares, cash, etc.) is roughly in the ballpark of what you need. Then you can strategise around how to get that level of cover with the highest quality and best chance of payout at the lowest cost.
How to Figure Out What You Need
Ask yourself:
-
- What’s your debt situation?
-
- What does your family need to keep their lifestyle?
-
- Do you need to fund your children’s education?
-
- How will you handle medical costs if something happens?
Answering these questions lays the groundwork for building a strong plan.
For example, I once had a young couple tell me, regarding their Income Protection, “I would rather pay that extra $1,200 p.a. off my mortgage,” which is a common way to think. However, this young couple just bought their first home, and their mortgage absorbed one entire income—not to mention they had a bub on the way.
I showed them the numbers. That extra $1,200 p.a. would pay off their mortgage an extra 2 years earlier. However, without the coverage, if something unexpected happened in those 28 years, they would likely lose the entire home. That’s not a gamble many people should be taking.
Building a Comprehensive Wealth Protection Plan
At Three Kings, we’re all about tailoring solutions to your needs. Here’s how we help:
-
- Risk Assessment: Understanding your financial obligations and liabilities.
-
- Customised Coverage: Finding the right level of protection for your situation.
-
- Tax Insights: Helping you navigate tax implications. Learn more at the ATO website.
FAQs About Insurance
1. What’s the most important type of insurance?
It depends, but income protection often tops the list because it secures your earning potential.
2. Is insurance expensive?
It feels that way upfront, but the financial fallout of being uninsured costs far more.
3. Can I rely on my super for insurance?
Super provides basic coverage, but it’s rarely enough to meet all your needs.
Protect Your Future with Three Kings
Insurance and wealth protection aren’t just “extras.” They’re essential. They give you peace of mind, protect your progress, and secure your family’s future. At Three Kings Wealth Management, we don’t just guide you in building wealth—we make sure it’s safe.
Insurance is there for a purpose, not just to have. Aligning your coverage with the real-life scenario of what you want to happen is what matters. Consider this when reviewing or putting together your portfolio.
Ready to take the next step?
-
- Download our free Insurance and Wealth Protection Plan eBook.
-
- Book a Discovery Session to tailor your coverage.
-
- Check out our Google Reviews to see how we’ve helped others.
Let’s get you covered. The time to act is now.
