The Overlooked Role of Life Insurance, Income Protection, and Estate Planning in Family Security

In my role as a Will Writer and Estate Planner the first thing I like to ask a client is “what are you looking to achieve with writing your will?”. Often this is where I become will writer/counsellor because more often than I care to mention someone’s primary motivation to get a Will is seeing the damage not having one can do.

In this blog I’m going to share, with the client’s permission their story of their close relative Sherry and her husband, Rob (names and circumstances changed to protect the privacy of the family.)

This is the story of the overlooked role of Life Insurance, Income Protection, and Estate Planning in Family Security.

Sherry and Rob, a married couple with young children, and a mortgage just like you? When they took out their mortgage, they were offered to take out income protection, life insurance and critical illness, but like many of us decided “we’re too young to worry about that now”. This was the same attitude towards writing their will when their broker highlighted the importance of this. “Thanks, but we’re too young for that now”.

Not even 2 years later Sherry and Rob faced an unforeseeable tragedy that significantly altered the course of their lives. Sherry's sudden diagnosis of cancer and subsequent passing left Rob to have to go through the vigour of life as a single parent. Without life insurance in place for Sherry, Rob found himself under the crushing weight of financial and emotional pressures. Managing the mortgage payments, household bills, and the needs of their children on a single income proved to be an overwhelming challenge.

The strain of this new reality led to Rob experiencing severe burnout, forcing him to take extended leave from work. During this period, without a steady income and with no financial safety net to fall back on, Rob was unable to keep up with the mortgage payments. This series of unfortunate events culminated in the repossession of their family home, further exacerbating the family’s distress during an already incredibly trying time.

The Potential Impact of Adequate Protection and Planning

The tragedy that befell Sherry and Rob's family highlights the critical importance of having comprehensive financial planning, including life insurance, critical illness cover, income protection, and estate planning. Let's have a look at how these elements could have provided a safety net for Rob and his children.

What is Critical Illness Cover?

Critical illness insurance provides you with a lump sum of money if you are diagnosed with certain illnesses. Sherry, having such a policy in place could have significantly changed their circumstances, providing them with the means to handle Sherry's illness without the added pressure of financial hardship.

What is Life Insurance?

Life insurance is an agreement between a policyholder and an insurance company, in which the insurer agrees to pay a specified sum of money to a designated beneficiary upon the death of the insured individual. If Sherry had a life insurance policy, the pay out would have provided Rob with the necessary financial support to cover immediate expenses and pay off the mortgage. This could have alleviated some of the financial pressure during a time of intense grief and adjustment.

What is Income Protection?

Income protection insurance provides you with a steady income if you are unable to work due to illness or disability. This coverage continues until you can return to paid employment or reach retirement. An income protection policy for Rob could have acted as a financial lifeline during his period of burnout. Also, many providers these days include additional benefits such out counselling services, which would definitely have helped Rob deal with this grief.

How can Estate Planning protect my family?

Proper estate planning, including a will that outlines the distribution of assets, could have ensured that Sherry's share of the property was protected. This planning might have included the creation of a trust to hold her share of the property for the benefit of their children, potentially preventing the total loss of the family home through repossession. You can read more about this type of planning here.

The heartbreak experienced by Rob and his family tells us all we need to know about the impact that of not having financial protection and planning can have on a family's stability and security. Life insurance, critical illness and income protection serve as necessary safety nets, providing financial support during times of dire need. Paired with thorough estate planning makes sure that the wishes of the deceased are respected and that the family's financial future is safe and secure.

This case underscores the importance of seeking professional advice to put in place life insurance, income protection, and comprehensive estate planning. These measures are not just financial tools but acts of love and foresight that can protect families from the wrecked by tragedy of financial hardship during already challenging times.

If you'd like to discuss your Will or if you would like some recommendations for who I personally recommend for Life Insurance and personal protection reach out to book a free consultation today.