Getting better at managing our personal risks in our connected world
It's a difficult time, and winter is coming.
But it won't always be.
And we all need to be ready for the Spring; to better understand what we can control now (and who we can take care of today), so we're all getting ready for a better tomorrow.
- The risks of an interconnected world
- The Life Insurance Industry position on Coronavirus (Covid-19)
- Let's be careful not to forget the 'statistical realities' we all still have to face - every day
- Learning how to prioritise big decisions
- How to manage your personal risks better?
- Start your thinking here
- How would you approach this decision about managing your risks?
- Applying basic risk management thinking to the question above might look like this:
- Where to from here?
- The top 7 questions I’ve been asked about Coronavirus and Life Insurances
Our community is not new to struggle and staring down threats, finding ways through hard times and making some fabulous decisions along the way.
Now is time for a fresh look at how to keep our friends, families, and community safe and get through these difficult times together.
- The key to sensible planning is the ability to be able to have sensible conversations about ‘what would happen if’ scenarios and honestly facing the unavoidable statistical risks we all have to face and manage.
It’s these critical conversations that are perhaps our best defense and help at getting better at managing the risk we all face.
The risks of an interconnected world
Major health epidemics and financial risks are not new to Australians.
- In 2002 when SARS (Severe Acute Respiratory Syndrome) flue across the Australian border, governments, businesses, and families had to work through its effects.
- In 2007 when the GFC (Global Financial Crisis) hit, government bodies, businesses, families, and individuals had to respond in different ways to manage their risks.
Today, we are managing the evolving Coronavirus (COVID-19) and preparing for its bigger impact on our social and business community.
The real calamity will not come from the virus directly, as such—but from all the indirect effects it will stir up. Drew Browne
The Life Insurance Industry position on Coronavirus (Covid-19)
The governing Financial Services Council states on its website;
'The majority of those who suffer from the virus are likely to recover relatively quickly and with no permanent consequences … all life insurance companies have pandemic risk management plans in place...'
'There are no inbuilt pandemic style exclusions that would prevent the paying out of a claim related to Coronavirus' - Drew Browne Founder Unusualrisks and Sapience Financial.
Let's be careful not to forget the 'statistical realities' we all still have to face - every day
We all make hundreds of small decisions every day about risks - from parking in a 15-minute loading zone, crossing roads through to juggling a myriad of health and financial decisions.
The difficult reality is there are statistical risks of life we all face, all the time.
And these statistical risks are not personal, just statistical - they can't be avoided - but they can be managed.
That said, the statistical realities are we all still have;
- A 1-in-10 of passing away unexpectedly,
- A 1-in-4 chance of being unable to work because of a long term sickness or injury, some time in our working life.
- A 1-in-3 chance of having a significant medical illness or injury
- A 1-in-20 chance of becoming totally and permanently disabled and often unable to work long term.
These known statistical realities are why we use specific insurance products to manage these risks.
The current uncertain times just add another layer of complexity and if you've not had the opportunity to think about this before, it's understandably going to make many people feel anxious and uncertain about what they can do and what they can control.
Thankfully, the burden of illness and death from most communicable diseases in Australia is much lower than in the developing countries of our neighborhood.
- But in an average year, up to 30,000 Australians are hospitalised and around 2,000 may die as a direct or indirect consequence of influenza.
Learning how to prioritise big decisions
We all have to be prepared to better manage the statistical realities of life risks.
That’s where personal insurance products like Life Insurance and Income Protection can be an essential part of a healthy backup plan.
- So, it’s worth taking a moment today and doing some sensible thinking about how to better manage your risks as we all prepare for a storm ahead.
How to manage your personal risks better?
Basic risk management for families and businesses actually both share a similar 4-step foundation.
It all starts with the question - What do you want to do about it?
Pro tip: Insurance is about compensating a person's loss if the unexpected happens - not providing a windfall if the expected happens.
Start your thinking here
When thinking about the best way to manage the normal risk of your life (and business) - ask yourself these 4 questions to explore what you are prepared (or financially able) to accept:
- Do I want to accept the risk - when the benefits outweigh the cost?
- Do I want to avoid the risk - especially when the risk is catastrophic?
- Can I manage the effects of the risk - and reduce its impact by planning & diversification?
- Should I outsource the protection against the risk - usually insure it?
How would you approach this decision about managing your risks?
Example: Buying the latest new Smart Phone outright.
Question: What happens if I drop it or lose it (or if the family dog buries it in the garden with her favourite chew toy)?
Applying basic risk management thinking to the question above might look like this:
- Do I want to carry the risk myself? - I can afford to buy another phone outright asap.
- Do I want to avoid the risk - don’t ever buy a new phone - just use pre-owned ones that have been reconditioned in case you lose them.
- Can I manage the effects of the risk, - I’ll take on the responsibility and always use a phone case, perhaps an adhesive screen protector too, and pay particular care and attention to how I treat it (and won’t let the kids play with it - especially at bath time).
- Should I outsource the protection for the risk - I’ll transfer the responsibility (and cost) for the risk and buy 'smartphone phone insurance' sufficient to repair or replace the phone if the unexpected happens and I drop it, lose it or if the family dog buries it in the garden with her favourite chew toy. (again).
Where to from here?
- If you have an insurance policy and aren't sure what it covers and need a second opinion, get in touch.
- Perhaps you have a policy but it's issued by a bank or from an adviser you've lost touch with - we're here to help you out.
- Or if you realise you need to stop and just put some basic cover in place right now, while you can, we are open for business and here to help.
If you just need to chat and get some clarity on your options too, just get in touch for a chat - this is what we do.
The top 7 questions I’ve been asked about Coronavirus and Life Insurances
Q2. How do future health changes affect my Life Insurance and Income Protection cover today?
Do future health changes affect my Life Insurance and Income Protection cover today?
A. All life insurance products are underwritten for the risk they protect on the date you first apply for the cover. Future changes in your health are excluded.
All life insurance companies already have pandemic risk management plans in place line with the government regulator APRA Prudential Practice Guide 233.
Q3. If my employer forces me to take time off work to self-quarantine will I get paid?
If my employer forces me to take time off work to self-quarantine will I get paid?
A. If employees are required to stay away from the workplace as a precaution, they are entitled to receive full pay. Income Protection cover will pay if you're sick or injured and cannot continue to work.
Q6. If I’m required to travel for work, will this affect my Income Protection policy?
If I’m required to travel for work, will this affect my Income Protection policy?
A. Australian Income Protection policies are designed to cover you 24 hours a day, 7 days a week, and, unless you travel to an active war zone, provide worldwide cover too.
You should check the working of your policy about whether you must comply with official government travel advice, but the majority of high-grade IP policies don’t have this stipulation.
Q7. If I want to take out Life Insurance and Income Protection now, what’s the best way to do that?
If I want to take out Life Insurance and Income Protection now, what’s the best way to do that?
A. Work with a professional like us who can take care of this for you.
Crazy questions we have heard asked?
Q. Should I panic now?
A. No. When has panic ever helped clear thinking?
We encourage our clients, friends and supporters to get in touch as questions arise.