(Provided with permission by Tower Life Ltd)
"it was just after our 20th anniversary when our world collapsed..."
Jack and Shirley had always dreamed of a European vacation. Initially It was going to be before they had children, but then the twins came along and everything changed.
They sold their two bedroom apartment and upgraded to a larger house with a mortgage to
match. Instead of saving for airfares and tours, they were suddenly pouring money into the house.
After eight years and two more children, Shirley went back to work part time as an architect. Jack was making around $130,000 and progressing well up the corporate ladder. The extra money enabled them to put a bit .more into the mortgage and eventually borrow against their equity to buy a little holiday house on the coast.
They never let go of their European dream and on their 18th wedding .anniversary Jack and Shirley made a pact to take the trip once all the kids had finished school. Shirley eventually returned to full time contract work and was earning similar money to Jack.
Then their world came crashing down.
A few years later, just as lifelong dreams were becoming reality, their world came crashing down. Shirley was diagnosed with breast cancer and following surgery began a long battle with chemotherapy. She couldn't work and the holiday house was sold to help pay the bills.
Shirley suffered depression after the treatment - Jack would have loved to treat her to that European holiday. Such a trip was now out of the question. Losing Shirley's income also meant taking the kids out of private school and scaling down to one car.
Before the cancer Jack and Shirley had considered talking to a financial planner, but the pressure of work and raising a family had always distracted them from taking action. Paying a little extra off the mortgage and saving for their trip had taken priority over any long term plans.
What could they have done differently?
A suggested personal insurance strategy for Shirley and Jack prior to Shirley's illness might have included:
- Critical illness insurance to assist in mortgage repayments and the cost of medical treatment and time off work if either suffered a major medical condition such as cancer.
- An income protection plan would have replaced 75% of Shirley's income during her time off work and would continue to pay her while she was unable to work.
- Total and permanent disability insurance equivalent to life insurance cover, so that if either were permanently disabled they could extinguish the mortgage. Additional requirements for refurbishments, ongoing medical expenses and home care should also be considered.
- Life insurance cover of at least $500,000 to extinguish the mortgage should either die prematurely. Additional requirements such as funeral expenses, ongoing income and education costs should also be considered.
This information is of a general nature only and has been provided without taking account of your objectives, financial situation or needs. Because of this, we recommend you consider, with or without the assistance of a financial adviser, whether the information is appropriate in light of your particular needs and circumstances.
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