Insure Your Biggest Asset – Your Salary
In Napoleon Hill’s classic book “Think and Grow Rich” he takes a well-structured swipe at insurance companies, particularly in relation to life insurance. While studying law 30 odd years ago I was amazed at how many insurance companies featured as defendants in breach of contract cases.
Our own Banking Royal Commission understandably turned up a few bad eggs.
I once encouraged a client to cancel his million dollar life policy because he had so much money that this payout would just make his estate even more impressive. Despite his firm conviction that he would live another 20 years, he died 18 months later. I got no thanks from his family for saving them $14,000 in insurance payments!
In my financial planning business I never offered to service clients who were interested in life insurance but I did then, and still do suggest that family planning (in its widest sense) should also include substantial income protection insurance. In the unfortunate circumstance of inability to draw a salary the mortgage can still be paid and the kids fed and educated.
This insurance is tax deductible, as life insurance can be too, but that is a minor benefit compared with the comfort that families with dependent children will get from a regular payment arising from income protection policy.