Today we’re diving into why we need to talk about insurance on the farm, and how having insurance plays a bigger role in building a successful operation than you might first think. But first? Story time.
I got into financial planning thinking it was about the latest stock tip, but as I started working as an adviser, most of the work I was doing was around Life Insurance and providing a sense of security for people from all different walks of life.
While working in insurance, I learned a great deal along the way – life is uncertain, that much is certain, and having a good insurance policy in place can help protect your business, your life, and the lives of your family members during times of uncertainty.
Insurance is on the list of things that no farmer really wants to talk about – we get it. It can be uncomfortable, it can seem unnecessary, and there’s no doubting that the first thing we think about at the mention of insurance is the expense of it. But the thing is, we really need to talk about insurance.
I believe we avoid thinking too hard about insurance because it can cause us to experience negative emotions. Topics like death, total and permanent disability, trauma, injury and illness are not things we want to discuss, but setting aside the time to think about your options in the event that something unfortunate does happen can help us experience positive emotions, like reassurance in the face of uncertainty and knowing that we are covered should something go wrong.
Having been a financial planner for some time now, I’ve personally seen the implications of those unlikely events happening and what it does to the whole family when there’s no back-up plan in place.
One of the most important things we need to consider in farming is the risk of the key person involved in the business. This really comes back to insuring that person to provide a degree of certainty to the family, the farm, and the business, in the unlikely event that something should happen.
We insure against the level of debt you may have, as well as taking into consideration your goals as a family. For example, if you’ve got children who are still at school and you want to ensure they can still do things off-farm once they graduate, taking out insurance can help reduce the pressure in the unlikely event of something happening.
Sure, insurance is expensive, but the better question to ask is what happens to your family if you don’t have it and something goes wrong on or off-farm?
Before you throw the idea out as a waste of time, it’s good to know that there are things that can be done to minimise the costs involved in taking out a Life Insurance policy. In fact, as part of your strategy, we can look at self-insuring, using products or building up assets and other ways to help pay for it.
I always tell my clients “You take out insurance when you don’t need it because when you do need it, you can’t get it.” In this case, it’s not just about paying a premium for life insurance, it’s about getting the best cover when you need it most.
No one really likes to pay the premium for a life insurance policy, I certainly don’t, but it does have its place in the creating financial security and a bigger future for your family and your farm.
Sally was a healthy, happy business owner who approached a financial adviser about how best to manage her finances now that her business was running well.
Along with other things, her adviser suggested she take out and insurance policy to help protect herself and her family in the event that she become ill or passed away unexpectedly. Sally was hesitant as it seemed quiet expensive and she wasn’t sure she’d ever needed, but she heeded her adviser’s suggestion and took out a policy.
Unfortunately, a few years later, Sally was diagnosed with cancer. As she had an insurance policy in place, she received a lump sum payment of $250,000, as well as an ongoing income payment of $10,000 per month. This allowed Sally to focus on healing and getting better without the financial stress added on top of her diagnosis.
Had Sally not taken a step back from their day-to-day life to put a solid plan in place for her future, the financial impact of this illness would have been devastating – not only for herself but for her family as well.
By removing the financial pressure that may usually come with accident, injury, or illness, you are able to focus on your recovery, heal, and move on.
We need to talk about insurance because it’s important to ensure that you, your family, and your business are protected so that both it and you can be here for the long haul. It’s important that we have these discussions and it’s important to review your life insurance on a regular basis.
To discuss your insurance needs, book an appointment with Matt.
Contact the team at Lifesolver Financial. Leveraging over 30 years of experience working with farmers, our team can help you with everything you need to achieve farm business success and a bigger future. Call us on (02) 5750 0519 or reach out to Matt: Info@lifesolver.com.au
*This blog/article is general and does not take into account your objectives, financial situation or needs. You should consider whether the advice is suitable for you and your personal circumstances. If relevant: Before you make any decision about whether to acquire a certain product, you should obtain and read the relevant product disclosure statement.
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