Equanimity and Insurance
Noun (Latin: æquanimitas, having an even mind; aequus even; animus mind/soul)
• Calmness and composure, especially in a difficult situation.
In the case of a tragic event a comprehensive insurance strategy will allow for a family to cater for a difficult situation with a certain equanimity. For this reason, a fit for purpose insurance strategy is without question one of the most important considerations that every family must have.
Why Consider Insurance
The investment decisions we all make tend to centre around growing our wealth over a long period of time and working hard to ensure that we provide the best possible opportunity for our family and their happiness.
However, there is a universal caveat to everyone’s financial strategy – what happens if things beyond our control do go wrong?
Our natural optimism bias – ‘It won’t happen to me’ - implies that each of us is more likely to experience positive outcomes, and less likely to have negative ones befall us. It is the belief that the future will be more improved than the past and we tend to kid ourselves that we’re immune from disaster.
Reality is best exemplified by Mike Tyson’s analogy, “everyone’s got a plan until you get punched in the face”.
How to LIKE insurance
Every client has their unique story and circumstances, it is a financial adviser’s fiduciary responsibility to provide bespoke insurance advice to their clients. Considerations that advisers make to their clients could include:
If I was to pass away, what kind of legacy and impact will I leave my family? Two certainties of life are that one day we’re all going to pass, the other is we don’t know when it’s going to happen. Ironic.
When taking into consideration a life insurance strategy, the needs may include taking into account clearing any debts (mortgage, loans), an income stream for any dependants (children or spouse), and do I have any philanthropic bequests that I would like to be remembered for.
Legacy is important, whilst we may not be around to see it, it’s noted that those remaining will help ensure that you’re remembered.
In case I can’t work for an extended period of time, will I have cash flow to maintain my cost of living? Is my ability to earn an income insured? Would my home need any modifications in the event of my disability? Can I rely on medical bills from my private health cover or the NDIS? Would I have to clear any debts in the event of disability?
When developing a financial plan, it’s prudent to account for the worst-case scenario – just in case something tragic does happen.
Bearing the agency risk for a small business is an enormous responsibility.
Cash flow to a business is similar to oxygen to a human; we need it for survival. Unlocking cash from your business in times of need can be suffocating for the business’ survival and will have a detrimental impact on employees, creditors, suppliers, and other stakeholders.
If a tragedy occurs and you as a business owner aren’t around, the business as an entity will still continue.
Have you taken into consideration strategies to have your estate equalised, avoiding unnecessary tax, costly delays and having your financial affairs in order to avoid any family disputes?
Talk to your financial adviser about binding nominations, how to structure your insurances and question if you face any complexities in relation to your estate plan.
What to do
It starts with a conversation.
We’re committed to making all of our clients feel safe and having confidential discussions about their insurance needs.
For most Australians, we’re grateful for an abundance of food, fresh water, housing and a health care system that allows us to have a higher standard of living than the kings and queens of Europe 150 years ago.
Given it is Australia, we’re also prone to times of fire, drought and severe storms. A prudent insurance strategy will help us all not take shelter from the storm, but rather learn to dance in the rain in times of need.
That’s equanimity – LIKE and share if you agree!