By Martin Glennon, Head of Financial Planning at ifac
Some insurances are compulsory like car insurance, mortgage protection and property insurance (when taking out a mortgage). There are times, however, when we have a choice to buy insurance. It is optional to put life cover, illness cover, travel insurance and pet insurance in place. At first glance, it makes sense to cover the worst-case scenarios. For reasons such as cost, convenience and complexity, many people may ask, “Why bother?”
Two key questions will help you decide should you arrange insurance cover.
Question 1: What will happen if…?
You should look at the worst-case scenario. Consider the impact on you, your family and/or business.
If we take the example of a serious illness, such as cancer or heart problems, you need to answer the following questions:
- What will be the financial impact to you if you suffer a serious illness?
- What financial impact will it have on your family?
- Will the business support you when you cannot work?
- How long before the business feels the pressure?
- Will you need to hire someone to replace you? And, can the business support this?
- Will you need to use savings to replace your income?
These questions are helping you in two ways. They identify if there is a potential problem and subsequently, how big the problem might be.
Question 2. How important is it, to solve the problem?
On a scale of 1-10, how important would it be for you to find a solution to this possible problem? If your answer to this is at a 7 or higher, then you are likely to act and buy the insurance you feel you need. Anything less and you are less likely to act.
Many people have identified a potential problem that is important to solve but have not acted. This is usually due for one of two reasons. Firstly, the cost to insure the problem might be deemed excessive and stopping us from acting. Secondly, we may perceive that the insurance process is too complex.
At ifac we work with farmers throughout the county every day looking at their individual circumstances and helping them to understand their options to help their business, their family and themselves. Our client-focused service ensures our expert financial advisors deliver peace of mind by advising you on what’s right for your farm and family, thus removing any perceived complexity of the process.
If you need any further support, speak to your financial advisor or contact ifac’s team of specialist advisors who are available to help you plan for your future. Visit www.ifac.ie or call (01)4277400.