She's On The Money - Let's talk about personal insurance

Episode Date: February 18, 2020

IT'S INSURANCE TIME GUYS! If you don't know your income protection insurance from your TPD cover then this is the pod for YOU! Join us as we chat about the ins and outs of insurance... We PROMISE it's fun (or at least Victoria seems to think so) and by the end, we think you'll be ensuring you have your insurances in order. Sighhhh. Do you love the podcast SICK and want more SOTM? Of course you do! Join our Facebook page to share your money wins and money confessions, follow us on Insta for daily inspo to keep you on track and DEFINITELY subscribe to our newsletter, the written recap of the pod's key takeaways, including some bonus bits you won't want to miss... In a money mess and need help untangling the muddle? We've got you sorted - simply record your qualm and send it through to us at [e-mail] and you may end up on the podcast! Your podcast hosts are Georgia King and Victoria Devine. The advice shared on She's on The Money is general in nature and does not consider your individual circumstances. She's on The Money exists purely for educational purposes only and should not be relied upon to make an investment or financial decision. Victoria Devine is an Authorised Representative of Consultum Financial Advisers Proprietary Limited ABN 65 006 373 995 I AFSL 230323.See omnystudio.com/listener for privacy information.

She's on the money. She's on the money. Hello and welcome to She's on the Money, the podcast for millennials who want financial freedom. This episode of the show is brought to you by Sports Girl and their 2020 Be That Girl campaign, which we will be chatting about shortly as it features a certain dark-haired financial advisor currently sitting across from me. My name is Georgia King, a copywriter and TV assistant whose money smarts could definitely use some improving. And it would seem I'm in luck, as I am, as always, joined by millennial

money whiz kid slash wonder woman slash Australian sweetheart, Miss Victoria Devine. Georgia King, that was not the script that we had agreed on. Just run with it. So today on the show, we are going to be delving into the intricate world of insurances, home, car, travel, income, the list of insurances out there is almost never ending. But today we are talking about the elusive world of personal insurances. Now Victoria tells me there are four different types we are covering in our combo today, life insurance, TPD, income protection and trauma insurance. And whilst I don't know what any of those are yet, we all will by the end of the show, hopefully. Before we get into the thick of it, Victoria, let's chat money

wins and confessions. How did you go this week? Hello, G. Hi. I am so excited that we are covering this topic. Everybody thinks it's going to be really dry, but I am super psyched because it's one of my favorite things to talk about. But before that, I have a money win for you. Okay. This is the season of money wins. This week, I attended the NBL MVP. And for those of you who don't know because i didn't know before i was invited to it by morgan that's like the brown low version of basketball basketball's not yeah it's so so fancy stunning amazing everybody's dresses were next level so that meant i had to step my game up a little bit and turns out i don't have a wardrobe full of ball gowns what do you mean i know right it's just completely despicable

of me but what i did was go down to my friends at her wardrobe and they organized a really beautiful dress for me to wear for one night that i could give back the next day and it meant that i got to wear an $800 dress for a night but definitely not part with $800 and I feel like that's a massive money how good is for me and for the environment and pretty much for everybody that was probably attending that event exactly yeah like let's be honest um no but I was really stoked about that and I just feel like I didn't need a ball gown sitting in my wardrobe that I wasn't gonna wear it again maybe for some podcast records I don't know yeah it just made me feel a little bit less guilty about the whole absolutely one dress wear kind of thing yeah anyway do you have

a money win or a money confession I have a confession this week I can tell from the look on your face yeah I'm pale and white and feeling sick about it you're pretty tan though like you just look a bit down I'm sorry okay let me explain it to you I'll paint the picture so I was at a trendy bar uh in Carlton with my best friend Luce how are you Luce good to see and I ordered a beer instead of a cocktail because it's usually half the price I didn't want to spend twenty dollars I was trying to I was trying to create a money win to make you proud Victoria I'm very impressed I feel like i don't really like beer so that never works for me yeah see it works for me i drink like a fish anyway ordered my beer and the lady goes that'll be 18 please did she charge you twice

no well i don't know what she made a horrible mistake but i was too much of a pushover to question it so i just tapped and i went but the kicker is that the guy from client liaison which is a really trendy australian band guys he was standing a shout out from youtube he gets a shout that. So he was standing behind me and I didn't want to, I didn't want him to think that I was tight. So yeah, I just paid it and ran and cried into my beer. Now he just thinks that you buy really expensive beer. Yeah, he thinks I'm cool. Oh no, that's not cool, is it? That's really not that cool. But also of all people to not stand up when they're charged more than they should have been. I just feel like it should have been you. Yeah, I know. I'm a goose. Anyway, let's move

right along to the Facebook community which was impressive as always this week. Victoria did anyone stand out to you in particular? Yes they did. So she's not my friend but I totally feel like I was at her birthday because of the post she put on Facebook this week. So this is a post from Mary and she did this massive post including really gorgeous photos that she had taken of her birthday on a budget. She said that she had celebrated her 21st birthday at home and wanted to share some of her money wins to help save some serious dollars when it came to birthdays and she literally put down this list of all these things she did for herself little hacks yeah instead of you know going and sourcing them out right so she said that she did a DIY cake that

cost her $15 and looked delicious instead of like 200 instead of $200 she did a DIY grazing table that cost her like $130 which is completely understandable because cheese can be so expensive rightly so though but professional grazing boards are often like six or seven hundred dollars and she did her own balloon arch that she bought online and put together herself and i just feel like that's really savvy and i wanted to talk about it absolutely well done mary um mine is also from a mary mary mary quite contrary is that what's going on i think it could be mary has written my first official money win i had an appointment booked with my regular hair salon for the end of March, but I realized today how desperate my hair was looking and decided I needed to trim ASAP.

She usually pays well over $200. She then did some research and found a walk-in place that's open on Sundays in the middle of a shopping mall in town, which do look quite dodgy sometimes. She's written she's not that snobby about her hair, and she'd always had a bit of an icky feeling about those kind of express haircut places, but she was desperate, so she bit the bullet, went in. She walked out half an hour later with the exact result she wanted. She got a wash and a cut for $35. She walked out with half damp hair and it wasn't exactly an experience like her usual salon provides, but she was willing to forego her head massage, the good chat and complimentary coffee for the sake of a bargain and great service. I rate that. Although I feel

like I really need to hold back on this one because I recently found out that my hairdresser listens to my podcast. And I don't know if you guys have listened to season one, but literally season one episode one I tell everybody that I did a box dye but I hadn't admitted that to my hairdresser and she brought it up last time I was at the hairdresser and she was like I'm on to you so this is probably not a great time to let her know that I've been giving myself a trim with safety scissors but let's move on how about that right along okay crew now it is time for the main part of the show insurance now initially when we thought to chat about this topic I worried it would be bland, I'll admit it. Now having done a little bit of research, I confirm this topic is

at the very least moderately interesting. There are so many insurances out there from health and car to income and life insurances. Victoria, can you please kick us off with a little chat about what insurances actually are and which ones are out there that we need to be considering? Okay, so let's start this chat off by really defining what we're going to talk about here. So as you mentioned, there are so many insurances out there from car insurance to life insurance and then back to your Apple Watch insurance. Like if you can name it, you can insure it pretty much these days. So I think it's important to just frame this conversation and say I'm talking about personal insurances that I talk about with my clients every day. So as you mentioned at the start of this show, even though you didn't really know what you're talking about, which was impressive, you said TBD and then like side glanced me.

I didn't know what that meant. We are talking about income protection. We are talking about total and permanent disability insurance. We are talking about trauma insurance, and we are also talking about life insurance. So we're going to cover those four things this week, because those are the things that you need to put in place that you need to be aware of to make sure that you can sustain your lifestyle should something happen to you, regardless of what that is. So if we're going to start talking about personal insurances, I think we need to start with a definition and say, what on earth is personal insurance. So personal insurance is a type of cover and there are a number of

different styles that we're going to talk about. It's a type of cover that provides financial security to you and your family in the event of serious injury or illness or loss of ability to earn money or the total and permanent disability of you or even death. So it covers a very very large range of things and we can talk about them but people often get personal insurances to make sure that they are able to maintain their lifestyle with the financial support that they need to still achieve their financial lifestyle goals, but also their bigger savings goals and to cover any outstanding debts and the everyday expenses that they would have. So when we start talking about these things, I find it really interesting because so many people don't have

the right insurances or don't seem to make it a priority for them. And I don't know why. Guilty. Exactly. But it's one of those things where Australia is actually the most underinsured country in the world, given we are a first world nation. It is something that we are actually severely lacking and need more education in. And you look at other countries around the world where, you know, you look at South Africa and I'm pretty sure the statistic is that 80% of their population have income protection, whereas not even half of the Australian population can say that they have that and if they do most of them have it as a default in their superannuation which has a whole other bag of issues associated with it if you don't know what you're looking out

for. Okay so which insurances are integral which ones can we live without and which ones do we need or I'm kind of getting the sense that we might need all of them am I right? It is so complex and I think it's a really interesting question and one I can't legally answer for you on the podcast because that would constitute personal advice which I clearly wouldn't give you but it's one of those things where it actually depends on the life stage that you are at depending on what insurances you uptake so gee you are young you are wild I have no dependents no you don't have any dependents that you're aware of and you also don't have any massive debts that I'm aware of now as you're now self-elected financial advisor when we start talking about you know which ones we need

if you are young and wild and free you probably don't need all of that much insurance okay we do need to start talking about what insurances you need to have in place as well because things like exclusions start coming into the conversation where you know you might get a little bit older and you twist your back at work and throw it out and you know accidentally slip a disc in that case an insurer is probably not going to want to insure your back because it will be excluded from the cover. So often we're talking to clients about making sure that they get insurance as young while they are healthy and fit and don't have any things on their medical history that could be a massive exclusion. So when we talk about that, then you move into a different stage of

life, G, and say you've saved up and you have bought your first home. You are now in a lot of debt that if you, unfortunately, and let's talk about yesterday because I never like to talk about personal insurance is happening tomorrow. So if something happened to you yesterday, your parents or your next of kin would be lumped with that debt. So life insurance is often about extinguishing that debt and making sure that the people that you are leaving behind are set up for the success that they need from you. And while you're young and don't have dependents, it's often just about extinguishing debt. If we then move forward into our lives again, we get to a stage where we have, you know, a couple of dependents, we have a mortgage, maybe you've looked at an

investment property and things are getting a little bit wild financially. If you're in that position, then we do need to look at more comprehensive insurances and look at having a full range of things, but also increasing those levels of insurance. So say you bought your first home G for $600,000. Maybe that's what your life insurance could potentially have been at because you are in a position where that's the only debt that needs to be extinguished, but your life insurance is going to jump significantly once you need to be looking after a couple of kids a dog your wife and then also extinguishing debt on properties and then that comes back to personal values again because I don't know what you want to leave behind I don't know what legacy you're

planning on leaving and that's where having a really good chat with a financial advisor that can help understand your situation comes into play because they can go all right well what does this actually look like because there are so many variables that you need to take into place so it is really complex. And I know a lot of people that are listening are going to go, oh my gosh, Victoria, this is so not valid for me. But it totally is. Because once you reach that point in your life, I would love you to already know the things that you need to be looking out for. So Victoria, you mentioned income protection was your favourite. Sounds riveting to me. It's wild. Watch out. Can you please tell us a little bit more about that?

So income protection is quite straightforward. It protects your income. No way. I know, wild. Who would have thought? Given the relative importance of your income, you actually want to know that if you ever need to make a claim, you will actually get paid out. So G, you mentioned to me before in passing on the pod that you had car insurance, but you weren't sure what your personal insurances were. Is that correct? Yeah. So what you're telling me is you've insured your car, which doesn't produce any income for you. Gets me from A to B. Yeah. If it broke down, you would then use your income to purchase a new one or fix it, right? Okay. Well, what happens if you're no longer able to produce income. Is your income going to buy you a new car? Is it going to

fix your broken car? No, I'll be poor and I won't have an income. No, woe is me. But I think it's really important to just go, all right, so we place so much value on insuring our cars, insuring our engagement rings, insuring our houses, insuring so much stuff, but no one is placing a priority on insuring their income, which is actually the thing that helps us sustain our lifestyle. There's a lot of hearsay about, you know, what's good about income protection and what's bad about income protection. Often there is a little bit of trouble when your income protection is sitting inside your superannuation as the policy definitions are not as broad and not as inclusive in comparison to outside of superannuation claims. And when I talk about that, what I'm talking about is when I say

inside superannuation, it means that that policy is owned by your super fund and the policy is paid for by the money you contribute to super so it doesn't impact your weekly cash flow right right and outside of superannuation is a policy that you personally go and establish and you pay for out of your income that comes into your bank account each and every single month dumb question can you have both you can have both and sometimes people mix it so sometimes people have some of their policy inside super some of their policy outside super i personally and i feel like this is going to be a really good way of explaining it is to just be really honest and open about the insurances that I have. And I have all four of these insurances because I'm a financial advisor

and I really, really see the value in it. But I have all four, but I hold my life and TPD insurance inside superannuation and I hold my income protection and my trauma insurance outside of superannuation, but we can go through that. So when I talk about income protection, it's really important to make sure that we understand the policy that we are signing up for so there are a couple of things that I want people to take into consideration and they are features that you can often only get outside of superannuation and these are why I am I guess so passionate about it but also have it personally outside of superannuation is I can guarantee my income with income protection outside of super so I can sit down with a financial advisor

I improve to them my income by providing my tax return? Give that to the insurance company and they go, no problems, Victoria, you earn X amount in that year. So if you ever need to make a claim, we're not going to make you prove your income. Too often do I see instances where people go to claim income protection and they think that they are really well covered because they go, hey, Victoria, I earn $60,000 a year, but I'm paying for $100,000 income protection policy. So I am fine. But when it comes to point of claim, that insurance company says, okay, no problems. Could you please prove your income? And they will only pay up to 75% of your actual income, not of the policy you've been paying for. So that's really important. If you're guaranteeing income on

income protection though, you are also able to lock it in. So if you are proving with your tax return your income but then you go to a lower paying job or a part-time paying job you're actually still in most cases you'd need to check a pds so a product disclosure statement you are actually still able to claim on the highest level that you financially endorsed so i think that's a pretty good feature especially because i'm talking to a group of women who often will go through different life stages and take different roles and it's often a priority or it is a priority for me to lock in my income at the highest possible point and have it completely financially underwritten

so that it can never be questioned again, even if I go and start working for a job that pays me a quarter of my income. The second is medical history. And for me, having my medical history and any exclusions outlined upfront is essential. I don't wanna get stung with going through probably one of the most traumatic periods in my life

should this happen and then find out that because it's a gene in my parents lineage. I'm not covered for it. And I've seen that before where I've had not clients, but I have heard stories and met people where they have unfortunately been diagnosed with breast cancer and said, that's okay. I'm going to go and claim on my insurance. And when they go to do that, their insurance says, sorry, but that's a hereditary thing for you. We're not going to be covering. Really? Yeah. Which is heartbreaking. And I think that that's the issue here and this is where a lot of insurance companies get painted in really bad lights they're actually just following their product disclosure statements and the terms and conditions that were

agreed upon by the person taking out the insurance exactly and you agreed to it but we didn't put enough thought and time and effort into really truly understanding what that actually means and every single product is different like there is no one size fits all it's not like I can put my hand up and say hey go and get the insurance that I have because that doesn't actually fit everybody and it doesn't make a lot of sense for a lot of people so for me it's about making sure that you understand your income and your insurance company understands your income and they also understand your medical history and you have disclosed everything you need to disclose so that there are no surprises at the time you need to claim because at the end of the day if

you are in a situation where you need to claim on insurance you're not having a very good time and this insurance should actually make your life easier not give you more hurdles to jump over so would you say that someone at the start of their career making a pretty low income would actually need to consider income insurance in my personal opinion absolutely yes i think the earlier the better at the end of the day this is actually an investment in you like we spend so much money on things that one we don't need but then two that we think are protecting us like i'll jump up and down again about the car insurance versus the income protection comparison I made before and for me if you said Victoria if you had to get rid of every single one of your insurances

including car insurance health insurance my iPhone insurance what would you keep yeah I would keep income protection any day of the week so you'd go that I would go that above and beyond any other type of insurance because protecting my income to me is a very very large priority because for me if my income is protected, it means that I can still achieve the things that I've been planning my whole life. So like right now I'm 28 and I'm making some pretty big plans. I'm probably going to purchase a family home at some point. I'm probably going to have children at some point. I'm probably going to want to go on trips overseas. And for me, I think that ensuring the ability to still achieve all of those financial goals, whether or not I have the

capacity to work is essential. Like if I ride off a car, I'm not saying get rid of your car insurance and take this insurance up. But I just really want to highlight the importance to me of income protection. And that is I can buy another car with the income I'm creating each and every single month if I can guarantee it's still coming in. In terms of cost, it isn't prohibitive. I believe that there is a really negative stigma in society about how much it costs to get income protection. But it scales based on how old you are and what income you're making. So if you're really young and not making much money. So an example that I just pulled from the canstar.com.au website for a 27 year old non-smoker female, a monthly benefit paid out of $3,125 for an accountant.

There's a couple of examples here, but for an accountant is about $50 a month in income protection. So that's what I'm not saying that that's exactly what it'll cost you personally, but it's a good example. And something to also take into consideration about income protection is it's tax deductible. So that sounds a little bit sexy. That sounds a little bit attractive. Yeah, okay. It's tax deductible. But when things are tax deductible, it means that you pay tax on it. So if you are making that $3,000 premium and that's being paid to you, you still have to pay tax on it. And I think that that's worthy of pointing out because there are some insurances like trauma insurance that you do not pay tax on. But the reason you do not pay tax on trauma

insurance is because you actually receive the full benefit payout instead of getting $100,000 and then having to pay most of it back in tax. Does that make sense? It does. So no, cost isn't prohibitive, but it also depends on whether you're going down the retail pathway or you're going to see a financial advisor. A financial advisor has access to often cheaper and more complex slash better products than retail because you just don't want an off-the-shelf income protection policy. Like they do not cover you for the things that you need to be covered for, but they will still charge you through the nose for the grace of having that policy. So I think it's really important that if you're on an insurance comparison website and picking which income protection

policy you need, you're probably in the wrong place. And in all honesty, have a chat to a financial advisor about this. And if you are only talking to a financial advisor about setting up insurances, it shouldn't be too expensive. You just touched on trauma insurance, Victoria. I did. Can you tell me a little bit more about that? I can. Trauma insurance is a standalone insurance policy that more often than not, you hold personally. This isn't one that is commonly found sitting inside your superannuation. trauma insurance cover or sometimes it's called critical illness insurance provides a lump sum payout to cover immediate medical expenses or other financial needs when a critical illness

or an injury occurs so that could be anything from experiencing a heart attack or stroke to being hit by a bus various types of cancers etc so it is a really traumatic period in your life that you experience but that's why we have trauma cover so trauma pays an agreed amount of cover to you for many different things and as I mentioned before like the list is endless and it totally depends on which type of policy or which company you go through because their PDS will outline the things you are and aren't covered for and it's very very important that if you're going to get an insurance you understand the breadth of cover as opposed to just going oh well I went with this insurance company because I liked their branding and marketing better it's really

important to get into the nitty-gritty of it because sometimes they'll exclude different parts of certain illnesses so I know that for breast cancer more recently I've been looking into this for a client only some forms of breast cancer are covered really but more more traumatic and more serious versions of breast cancer were not and then genetic breast cancer wasn't covered but standalone breast cancer was so it's one of those things where you really need to understand the policy instead of just going okay well I've got trauma that's fantastic so a serious illness or injury causes much more than just the physical issues. So, you know, let's say that you were riding your bike to work and unfortunately you yesterday got hit by a bus. It's so much more

than just physical and emotional turmoil. It has the potential to cause massive disruption to your income and to your lifestyle. And while income protection is going to help replace a portion of your income, and that is usually up to 75% of your income that is standard across the board when you can't work due to illness or injury it's useful to have a lump sum of money that can cover your medical needs and financial needs because often those are above and beyond what private health insurance covers for so say you need specialist plastic surgery this is going to help you pay for all of those out-of-pocket expenses it's going to help you pay for the travel and for all of the things that you need to get back to being your best self this is where

trauma insurance just comes to the party. So you can get on with recovering and get on with your life without having to worry too much about your finances. It's one of those things that a lot of people have, and it is actually a more expensive insurance. So if we compare them all for the levels of cover, trauma insurance is a little bit more expensive. And the reason for that is it's claimed on often. So it's not something that people have and don't use. It is something that does get used and when insurance companies price insurance policies they price that based on a heap of things but the biggest thing they price on is risk so the more at risk you are depending on your job or depending on your lifestyle or your age or your lifestyle habits the higher your policy is

going to be priced at so it's important to understand what is and isn't covered but then what it's going to cost you and often my clients who do have family histories of significant and very serious illnesses they want to be covered with trauma because it's kind of like well actually I can pretty much guarantee at some point I'm going to be hit I'm going yeah yeah I'm going to be hit with this situation and I want to make sure that when that happens I'm in the best possible position and I don't miss a beat financially also Victoria I work in TV and in the writing world so thanks so much more exciting than trauma insurance so we're just going to go completely off track i just want to say that so i work in tv no as a 25 year old who

works a relatively cushy office job i guess yes girl how does that how does that compare to someone who works in say construction or somewhere where there's a lot higher risk of injury yeah what do we need to be considering that do i still need it's all taken into consideration so it's one of those things where you actually need to have a nitty gritty conversation with a financial advisor to make sure that one you can be covered because there are some industries that aren't covered so I have a new client she is brilliant she is an air traffic controller but we can't get some insurances for her because of the risks associated with her job and so we've had to sit down and explain those things because it's often a very complex situation or where my client sits down

and goes but I could just go buy this policy off the shelf and it's like well actually you'd be paying for a policy that you could never trigger and just understanding what that means and as her financial advisor making sure that I am essentially overcompensating in some other areas because there are some things that she can't actually set up for herself. So it's important to work out what that means but yes if you are in a job that has more risk associated with it you are going to either have increased premiums or you are maybe not going to get some cover for some spaces that you might have wanted cover before and that actually leads really well into a chat about total and permanent disability insurance tpd insurance yes girl you were calling it what was

it before you were calling it tpg great internet providers yeah apparently an internet provider but you can use the internet to find a financial advisor so not sure if that's bad advice anyway total and permanent disability insurance cover a lot of you might already have it inside of superannuation and if you are listening to this podcast and you're like what are you talking about victoria i don't have insurances inside my super check make sure that they are not there this is something that i jump up and down about all the time because your insurances inside super annuation they're kind of special like they are insurances that whilst i often don't love the policies and i don't love a lot of the terms and conditions associated with them often they were

established really early on which means you don't have any exclusions associated with them so if you've gotten older and something has happened to you or you've found something out about yourself medically these insurances often make sure that you're covered for those things and a financial advisor will help sit you down and explain why we might keep some of that insurance and top it up in another area with a different policy to make sure that you're always covered for the things that you need to be covered for and for me this is vital that you don't just go in and roll your super annuations together into one fund and go cool well i did my super i'm in one fund but you've actually missed a whole heap of opportunities to ensure that you have the right insurances in place

for you cool story victoria um but you were meant to be telling me about tpd excuse me cut to the point um no that is true i do get a little bit ranty when we're talking about your passion and i'm loving it yeah i'm kind of like raising my hands above my head and like very animated yeah okay anyway tvb all right to those playing along at home total and permanent disability insurance cover, it pays you a lump sum if you become totally and permanently disabled. So the definition of total and permanent disability actually really varies between insurance companies. So it can mean one thing to one person and a completely separate thing to someone else. So again, I'm harping on this, but understand your PDS, understand the definitions that your insurer puts in front of

you. It can mean that you are disabled to the extent that you probably will be unable to work ever again in your occupational job or it could mean something a little bit lighter than that but again please look into making sure that you understand what you are covered for and what you are not. So TBD is an insurance that I often talk to my clients about to make sure that you have enough money to continue life. So as I said income protection is something that will help replace a portion of your income when you're unable to work due to sickness injury or illness but if you are permanently disabled and unable to ever return to work again it's also really useful to have a large lump of money that covers your immediate medical needs but also makes sure that you're clearing any

outstanding debts or the mortgage that you have or help set up you know any changes that you need to make to your house so say something happens and you are seriously disabled well you're probably going to need to make some pretty serious modifications to your house maybe you need a ramp at the front to help the wheelchair get up maybe you need modifications to your bathroom and that's really it's really expensive and I never want any of my clients or you know what any of my community to be on the back foot when it comes to that so as much as I jump up and down about having income protection having other insurances in place to make sure that you're able to make the most of that income is really really important so TBD really hard to calculate

how much cover you need the appropriate amount of cover again depends on your family situation and the life stage that you are in, it's one of those things that is really flexible. As you're going through a period in your life where you have dependents and a mortgage, you need a lot more. And when you get out of that life stage, you've paid off the mortgage, the kids have gone and they've set up their own homes and you're probably in a position, hopefully, you know, in 30 years when you've been listening to the She's On The Money podcast for a really long time, you're in a really financially independent position. You're going to need a lot less because you become what's called self-insured and that's where you have enough money in investments that are producing

income so you don't actually need insurances because you're able to self-sustain but that's pretty cool that's like my ultimate goal just for those playing along at home but tbd primarily exists to make sure that any of your immediate medical needs that you have and getting rid of debt so it's one of those things that it's important but keep in mind that there's so much more to disability than just medical needs hi there you've reached the shoes on the money mailbox do you have a money problem you want help solving do you have a money dilemma you just want to chat about victoria is here to help every week we'll be playing your questions to help make sense of a money mess you may have found yourself

in make a quick recording on your phone and send it through to podcast at shoes on the money.com.au and you might find yourself on the show but for now here's today's listener question hi guys my name's Chloe and I'm currently in the process of reorganizing my finances one element I'm having some trouble with is insurance I'm 27 with no dependents and I currently have private health insurance but I'm getting really confused by all of the insurance options if I set up all of my personal insurances properly does that mean I can cancel my private health insurance or do I need to keep it thank you i kind of have the same question too do you actually well yeah i think it's a good question though it's something that comes up all the time it's absolutely something

that is warranted to discuss yep and i think that it is really important to point out that private health insurance only covers certain bills related to medical treatment and it often doesn't cover a lot else so the standards like dental yeah the standards and like if you've got really high levels of private health insurance amazing but there are still gaps in what's going on and hospital policies generally cover treatment as a private patient in either a public or a private hospital and like low-key off the side if you are going to have private health insurance make sure that you are treated as a private patient in a private hospital because I know a couple of people have got stung where they have hospital policies and they have their private health insurance all

lined up but it's so that they get treated as a private patient in a public hospital and if you're going to be paying for private health insurance i'm assuming that you just thought that meant you could go to a private hospital when in actual fact that's not the case and it's definitely something that she probably needs to look into as well assuming she's not going to cancel her private health insurance if you have an extras policy that might cover for you for things that go above and beyond like optical and dental and other treatment for non-medical or allied health services but private health insurance isn't going to pay you for any loss of income you sustain while you're in hospital or recovering or if you've broken your leg and you can't go to work

for a while like that often impacts people really significantly and financially and whilst private health insurance means that you're going to have access to the best medical care that we have available in Australia it doesn't mean that you're not going to get stung for having a private underneath their test it doesn't mean that you're not going to get stung there's still going to be all this extra expenses yeah yeah for you know a really particular cancer specialist that you know isn't actually covered by the system so i think it's important that during the time that is probably going to be the most traumatic event in your life you are actually covering your normal expenses and commitments as well as the private health costs that are going to be there so unless

you have really significant amounts of savings set aside or a really large pool of leave entitled with your employer this could actually have a pretty devastating impact on your family and your friends if you're then thrown into a position where you don't have an income right so the policies that i was talking about earlier in the pod before the question it's really good in collaboration with your private health insurance so it's not something where i say all right well you can just get rid of it yeah and they're absolutely certain there are absolutely times that i just say to clients yep get private health insurance for example if they earn over the medicare threshold and they they earn more than ninety thousand dollars you probably should have

private health insurance because otherwise you're paying the medicare levy um but then it is definitely down to personal preference because as we all know australia is known as the lucky country and our standard of living and our climate and our health care and social systems are so amazing that we are supported so it literally comes down to what you value as a person but i also want to touch on something that I love and this is actually by Zurich. So shout out to my friends down at Zurich. Emily, I love you. You're my favorite. Lovely. But they recently did and I think it was in 2018 they released this. It was the Zurich cost of care white paper and that white paper actually outlined the cost of medical care in Australia and insurance claims and was this

super in-depth white paper. If anyone's interested, they're probably not, but I'll just about it for a little longer kind of interested yeah but it essentially outlined how much it costs to be sick in Australia and what covers what and when and where and how and I absolutely loved it and it was just one of these things that you know the facts and figures in that were amazing do any stick out yeah so the cost of burden was estimated at 30 billion dollars and upwards each year and it falls on taxpayers for those who don't have cover and those that are ill and in crippling situations so it was one of those things where it was like oh well actually this is massive and they actually found that in 2016 and 2017 there were 777 000 hospitalizations due to

injury or poisoning and this year alone there are going to be 130 000 new diagnoses of cancer so I guess the key takeaway from this conversation and talking about personal insurances and talking about you know making this a priority as unsexy as it is is we all think that this stuff isn't going to happen to us absolutely we all think that this isn't our problem and I'm healthy and I'm okay but all too often do I see those people who thought that they were healthy and okay actually have pretty significant health concerns or you know just run into injury that really knocks them off the bandwagon. And I would never want someone to be in a position like that. So today, guys, we are joined by my good friend, Emily Kozinyani, who works in the life insurance

industry and has done for many, many years. And I thought that I would bring her along today instead of a money diary, because I thought she had a whole heap more value to provide you guys with in terms of experiences and examples that we can all learn from. So Emily, thank you for joining us today. And let's just jump straight in. Why don't we? Tell me a little bit about yourself. What do you do? How do you work in the insurance industry? So I work in the life insurance industry and work at a life insurance company more specifically. Have done for a little while now. But before that, I worked for a financial planner who specialised in giving life insurance advice. And so it's definitely become a passion of mine, as nerdy as that might

sound. It's totally not. I love it. Like you come into our office and whiteboard our client scenarios like nobody I've ever seen. So when this topic came up, I was like, Emily has to be involved. So I guess jumping straight in, obviously this episode is about talking about insurance and to so many young women and women in general, insurance is never the priority. Do you think that that's probably an accurate depiction of what I believe people's values are? Yeah, I think you're spot on there. I think anecdotally, not that I have a piece of research that I can kind of refer back to but anecdotally what you hear is that yes less women have any kind of life insurance compared to men which is quite scary because we're all becoming these really

good breadwinners right and we're becoming just as important in that family unit and yet we've got less protection than than our male counterparts why do you think that is I just think we're undervalued, right? And we undervalue ourselves so much anyway. So it's just part of the vicious cycle of thinking, well, we don't need it. Like I'm fine. It's, you know, I've got someone else who can take care of me and that's more important. And, you know, we often put people in front of ourselves. And I think that is reflected in what we do with life insurance and even just financial planning advice in general. Yeah, I agree. And whilst we don't have solid stats on male versus female getting insurance um you know i definitely see it in my office as well where a husband and

wife or partners will come in and if the female is a stay-at-home mom she would just say oh i don't need insurance like i don't i don't work i don't generate income um and to me that's so wildly dangerous because her job is worth so much and you know to replace her in that role is going to cost upwards i think the stats are ninety thousand dollars a year to replace a stay-at-home mom so like she often actually needs a little bit more insurance than her partner actually does it's so scary because you're 100% correct if you think about what a stay-at-home mum is doing for her husband to be able to go and work the hours that they work or travel as much as they do or whatever it is and be as passionate as they are about whatever it is they're passionate in

she's given up so much to do that and so the actual dollar value attached to that seems like it's not anything but is in reality huge how is that valued in the industry how do you measure anything right yeah absolutely how long is a piece of string I mean even if you're talking about someone who actually works full-time what you come up with is the right amount of cover for that person versus what another financial planner comes up with they can actually look completely different because it's it's all up to that that person and the discussion that's taken place between you and that person to get to that figure in the first place so that was actually something that I used to jump up and down about when I entered the industry and I think

you've heard this from me before actually Emily I've called you a number of times I'm like cool so what's the methodology how do I value this and you're like um that's not how this works and I've called so many other insurers to get just an outline of okay well where's the metrics how do I measure things like what standard practice and across the industry that doesn't seem to exist it's more in the hands of advisors to use their initiative and understanding of the cost of life to value that. And the values of the person that you're talking to because you'll talk to a client and that client might value something in their lifestyle more than something else and if you can bring that out of them then that's what usually then drives forward well when I'm calculating how

much insurance you need you told me this was really important to you and so when I've come up with these figures that's how I got there yeah absolutely yeah absolutely everybody listening to this episode of she's on the money knows that my favorite type of insurance is income protection I know that's a shared love of ours though um so can you maybe like we've defined already on this episode what income protection is so we don't need to talk about that but can you maybe talk a little bit more pragmatically to the value of income protection and how you see that implemented across the board probably more specifically for women but what does that look like to you yeah I mean income protection you're right it's like my most highly valued insurance as well

with such nerds yeah to the extent that you know I've had my income protection policy since I was 21 and that's a really long time ago now but um if you don't look at guys if you spoke to most 21 year olds, they don't have income protection, right? But there's so much value in getting it early, right? Absolutely. You know, I got my policy when I was young. I had no health events that had happened to me at that point. So it was really easy to get. I locked away my premiums on something that's called a level premium. And I am absolutely reaping the rewards of that today because I am definitely much older than I was back then. And even though my income has changed a few times over those years it's been really easy just to increase it as I needed to because

the bulk of it had already been taken care of when I was so much younger and healthier than I am right now. I actually had a conversation with my friend she's a school teacher she's a secondary school teacher and when she got her full-time position at her first school I sat down with her and I said look you know that I work in this industry this is how the products work and I am going to tell you as a friend this is something you should consider and it's up to you whether you want to do something about it but I want to have this conversation with you now so that I can feel rest assured that we had this conversation at some point and she said to me oh you know but I've only just started working and that's the point exactly and I said to her I was like okay

let me rephrase this for you you haven't lived at home now for how long do you think you could live at home with your mum again? And she just looked at me and went, nah. And I said, would that be the option if something happened at this point? And she went, yeah. And that's what did it for her. I have had clients come into the office and they're saying, look, Victoria, it's now a priority to me. I've had this back issue. I don't want to be, I don't want to be at risk again. It's like, oh, it's a pre-existing back issue. I can't cover that. I can't give you insurance for something that's already happened and it's often heartbreaking because the issue that they are experiencing is quite debilitating and they're just trying to do the best thing for them the best

thing for their family but that ongoing issue is now no longer able to be covered and that's just really terrible yeah so I was watching one of the morning shows the other day I don't remember specifically which one but there was a little piece they were doing on GoFundMe and how people use GoFundMe now as a way to essentially fundraise for themselves to do things the unfortunate thing I think I see all too often in my Facebook feed is people that are sick that have got GoFundMe pages so they can try and get through this if you've got trauma cover in place you don't need you don't need to worry about GoFundMe yeah you don't need to reach out to your family and friends and say look I'm experiencing this really horrible time and I need your help you don't have to rely

on the generosity of others to try and help you through that period of time because you've got things taken care of I know someone who has recently had a heart attack and that sounds terrible and it absolutely was it was an incredibly traumatic experience however they had their trauma insurance in place they were also in the CBD when this heart attack happened so they got to the hospital really quickly and they were actually in and out of hospital in 24 hours they were back at home and they were literally back at work I did not advise this but they were back at work in three business days and so for me that would have been a death sentence even 10-15 years ago but now we are surviving these things and he got his full trauma payout which was a couple of hundred

thousand dollars when he was back at work by Friday and that's not the first story I've heard of that exact thing I've heard more than one story where clients have had something significant happen to them like that and that yeah when these products were designed you would have to crack someone's chest open to fix that problem you can have it done in a day procedure now literally yeah and it's something that our Facebook community has been talking about more recently we had a lovely woman post this week actually and talk about how she'd broken her leg but had specific event insurance on top of her income protection and she broke her leg and she walked away with $25,000 paid off her car loan and was still going to work with a broken leg and whilst that's awful

I think that we don't actually think of the events that could happen to us that we could actually claim on that put us in a better financial position and whilst you don't get insurance to be in a better financial position is to maintain it. It's also, well, why wouldn't you want to be in a position where if something pretty terrible happens to you, at least you're not stressing about money. Absolutely. So Emily, you mentioned at the start of our chat that you work in the life insurance space and we haven't even spoken about life insurance yet. So as much as life insurance is very straightforward, there are a heap of things in this space that we should be talking about so tell me a little bit more about your experience of life insurance yes so i guess

the first thing i have to say is that although it's called life cover or death cover um it's got lots of different very dramatic it is right you can actually still be alive when it gets paid yes but it has to be very serious yes to be paid out yes so if you're deemed to be terminally ill you can have it paid to you before it gets to the point where you're not around anymore now that's different to when again when it was first designed because you got it paid when you died and it was left to your beneficiaries but now it can actually be there to help you on that journey of getting to that point with your friends and family so emily when getting life insurance what is the most important thing to tell your advisor or insurance company it's so so important

that when you're going through that process to disclose everything you know about what they're asking about because it's important why they're asking those questions because once that insurance contract contract is in place you want the safety that's what you got it for and you want the security of knowing that if something happened to you you're going to be okay but if for some reason you went they don't need to know that even though they asked me about it all of a sudden when you should be having lots of peace of mind because you've taken care of this early on it's now becoming a burden and you're sick or injured or something's happened to you that's quite significant yeah and if they find out that you haven't disclosed something that you had a

pre-existing history of they'll just cancel your cover they won't actually pay out on any of that so you're not putting yourself in a better position by saying oh I am a smoker I probably don't want to tell them I'm a smoker and I tick the wrong box on purpose they'll never know they will know they find out that's it exactly well this has been incredibly insightful I love talking about insurance as you already know I was so excited to sit down with you today what is one thing that you would want people listening to this episode of she's on the money to walk away with knowing about insurance oh that's a really tough question I am so passionate about insurance because I have heard too many and seen too many situations where people didn't have it

and just what kind of an effect not even just financially but emotionally that can have on perhaps the people around you or even the people you left behind so if there's anything it's that you should absolutely consider it that if you can get it you should get it and get as much of it as you can possibly get as early as you can possibly get it because you just don't want to be that person who's another statistic that that needed help and didn't have it and now they're stuck in a rut. Sadly, that is all we have time for on the podcast today. But just before we head off, let's wrap the boring but important stuff. The advice shared on She's On The Money is general in nature and does not consider your individual circumstances.

She's On The Money exists purely for educational purposes and should not be relied upon to make an investment or financial decision. Oh, and yes, don't worry. We promise Victoria Devine is an Authorised Representative of Consultant Financial Advisors, Proprietary Limited, ABN 65006 373 995, AFSL 230 323. And thank you to our friend Ryan John for helping us produce this episode. We would love it if you joined our Facebook group, where our community shares money tips and tricks every single day free of judgment. Search She's On The Money on Facebook and join us.

If Facebook's not your thing or you want to find us on both, you can find us on Instagram at She's On The Money. Thanks so much for listening, guys. See you next week. See you next week.