When it comes to building wealth, most people focus on saving, investing, or paying off debt. Yet one of the most crucial parts of any financial plan is often overlooked – insurance. While 80% of working Australians have motor vehicle insurance, 66% have health insurance, and 63% have home or contents insurance, only 34% have life insurance. This highlights a common gap: protecting the people who depend on us is often deprioritised, even though it is critical to long-term financial security.
Why Insurance Matters
Insurance is about managing risk. It ensures that unexpected events, illness, injury, or loss of income, don’t undo years of financial progress. Income protection, life, trauma, and total and permanent disability (TPD) insurance all play a role in protecting your financial stability when life takes an unexpected turn.
At Treysta Wealth, Senior Adviser Tim Ross brings more than 30 years of experience helping Australians grow and protect their wealth.
Tim believes insurance isn’t an expense to be trimmed when budgets get tight, it’s a core part of long-term financial wellbeing. “Insurance which is regularly reviewed & market tested by your adviser, gives clients the ability to stay focused on their wealth creation goals,” he says. “It protects them when life doesn’t go to plan and ensures that they can still achieve their goals. When life takes a difficult turn, protected clients and their families don’t bear the financial burden alone.”
A Hypothetical Example
Consider a scenario where someone, let’s call her Jenny, decided to let her income protection insurance lapse to save money. At the time, she was healthy, had a stable income, and assumed she wouldn’t need the cover.
A few years later, imagine Jenny facing a serious illness, like a cancer diagnosis. With two children in private school and a mortgage to manage, the financial strain could be immense. Without income protection, she might need to sell assets, dip into savings, reduce household spending, and rely on family support just to cover everyday expenses. The stress of balancing medical bills, school fees, and living costs would add a significant emotional burden at an already difficult time.
This example illustrates how unexpected events can occur at any time. Without adequate insurance, even a short-term loss of income could affect a family’s lifestyle, stability, and long-term financial goals.
If a person in this situation had sought professional guidance, they could potentially put protections in place to reduce the financial impact and maintain peace of mind during difficult times.
Protecting Your Family and Retirement
Even when parents have adequate personal insurance and are beyond the age of primary coverage, gaps in the insurance of adult children can create unexpected financial obligations. Under-insurance is most pronounced among younger working Australians (18–34), with only 54% covered compared to 63% of those aged 35–54. If an adult child faces a major health event or financial shock, parents may be required to provide support, potentially affecting their retirement plans. Encouraging appropriate insurance coverage for adult children can help reduce this risk and protect long-term financial security across generations.
Insurance for Business Owners
For business owners, insurance extends beyond personal protection. Policies such as key person insurance mitigate the financial impact of losing a critical team member, safeguarding both business continuity and the long-term financial objectives of the owners.
Structuring Insurance for Greater Value
While insurance can feel expensive, there are practical ways to manage the cost without compromising on protection. By planning strategically, you can make sure your cover is both effective and affordable:
- Review your policies regularly – Life changes, and your insurance should change with it.
- Hold cover within your superannuation – This can ease cash flow and may offer tax advantages. Premiums paid through super are generally not personally tax-deductible, so it’s important to structure your cover correctly.
- Claim tax deductions – If held personally, income protection premiums are generally tax-deductible, helping reduce the effective cost.
- Seek professional advice – A qualified adviser like Treysta Wealth’s Tim Ross can help structure your cover efficiently and ensure it aligns with your goals.
Are You Covered for the Long Term?
Life evolves, and so should your financial safety net. Ask yourself:
- Could my family maintain our lifestyle if I couldn’t work?
- Have my circumstances changed since I last reviewed my cover?
- Do I understand the risks of being underinsured?
Insurance isn’t just a policy, it’s a wealth protection strategy. It ensures that no matter what happens, your long-term goals remain within reach.
Building Resilience Through Wealth Protection
At Treysta Wealth, we view insurance as an essential pillar of holistic financial planning. It’s not about fear, it’s about peace of mind and resilience. The right cover allows you to focus on what’s important, knowing you’re protected if life changes suddenly.
Insurance can seem expensive, but it’s an expense you can’t afford not to have. The financial impact of being uninsured, depleted savings, forced asset sales, or long-term debt, can far outweigh the cost of maintaining the right level of cover.
Take the Next Step in Protecting Your Future
Don’t wait until it’s too late to safeguard your family, lifestyle, and long-term goals. With over $11 billion in claims paid by Australian retail life insurers in 2022, ensuring adequate insurance is more important than ever. Book a consultation with a Treysta Wealth adviser today to make sure you’re properly covered.
Written by Mark Nagle, Co-CEO and Executive Director at Treysta Wealth
