So The SH%!T Has Happened. Now What?

If you are reading this blog, chances are you have some interest in money, wealth and financial security.

We have this incredible opportunity here in Australia where we can actually insure ourselves, our income and our health. You see insurance companies already know what we’re only just beginning to catch onto ourselves – that is, our health is our wealth.

Think about this for a moment – what happens for you when you think about not being able to work?

Not in that “wishful thinking, winning Lotto and spending my life on the beach” sense, but if something happened today, and you experienced an illness or injury and it took you out of the paid workforce – what would you do?

I am sure most of us know one or more people who have has a major cardiac event, cancer, mental illness, and a range of other health events that have kept them out of the paid workforce. And once all of your sick leave, annual leave and long service leave is used up (if you are indeed entitled to them) …. what’s next?

The smart ones reading this article will be thinking, “Thanks Jo, but I have my trauma insurance, my income protection insurance, my private health insurance, my TPD insurance.  I’m set.”

And if that’s you – fantastic – because you are so far ahead of the game here in Australia.  High five to you. The truth is that Australians rank in some of the most UNDERinsured people of the developed world:

“The typical employed person requires insurance of 84% of income until retirement… in the event of disability”

What is alarming about this statistic is that it’s incredibly difficult to purchase an income protection policy for 84% of your pre-illness income. This usually requires a number of policies with different definitions, exclusions and criteria to be bundled into an insurance portfolio for you. This is not the norm, even for people who are insured.

And what about the rest of us? KMPG’s analysis of the Australian Population and our insurance coverage suggests that 35% of people do not have any disability insurance.

So, while it’s fantastic if you have your insurance all set up, it’s probably not enough. No matter how awesome your Broker or Advisor is, no one can predict your future. And despite all of the regulations that have taken a hold of the Financial Services and Insurance industries in Australia, there really are no guarantees that your claim will be paid, paid when you need it to be paid, or cover your expenses plus all the new costs that have appeared since you have become ill, injured or disabled.

As a Rehabilitation Consultant, I work with professionals just like you every day who thought than an income protection policy was all they needed. After all is said and done, and your claim is accepted, your insurance income is likely to be around 75% of your pre-illness income – at whatever rate this was agreed to with your insurance company at the time you purchased the policy.

The amount you receive is not necessarily 75% of the pre-disability income you have been earning in recent history – and this becomes even more complicated for people who are self-employed.

But when the SH%T hits the fan – what will you do next?

Just ask anyone trying to live on their superannuation or “pension”. There is strong research evidence that now tells us that those people who are living on lower incomes experience worse health outcomes than those on higher incomes. And it’s not just because they don’t have the funds they need to access adequate treatment – it’s also because being away from the workforce for a long period of time is bad for our health.

While working provides us with an income, it actually provides us with so much more than just money in the bank. Studies show that work is generally good for health. As well as a financial reward, it gives many of us self­-esteem, companionship, status, and a sense of accomplishment and contribution.

There is a common misconception that we have to be fully recovered from any health event to be able to return to work.  I am here to tell you this is a fallacy.

Just think about it.

How many times have you gone to work on crutches due to a sporting injury, or with a cold, or with a headache or backache? There are people who are working every single day who live in wheelchairs, who live with depression, who are living post-cancer, who live with CFS. The experience of a health event does not preclude everyone from the workforce.

Further, research is now telling us that people will actually recover faster when they are given the opportunity to RECOVER while at WORK. This is GREAT news.

Therefore, insurance isn’t the whole picture of preserving your wealth, your health and your earning capacity. Being able to resume some type of work and developing some type of earning capacity completes this picture for us.

Our insurance helps us to feel secure while we are recovering, it allows us to know our basic needs are being met. It ensures that we have choices when it comes to the treatment we want to pay for and how we want to invest in our health for the future.

Being able to resume work even in a part-time capacity will allow the health benefits of work to be realized. Know that going back to work after an illness or injury can look different for everyone, and it doesn’t have to be exactly like it was before you were ill:

• We can re-engineer your pre-illness role to help you manage your health while you continue with your recovery. This might mean changing your working hours, changing some of your duties, or providing you with tools and equipment.
• You can learn some additional self-management techniques that allow you to work and to maintain the other important life roles that you have without burning out.
• You may retrain or find a new job, one that is more suitable for the change in your health needs.

What you may not know is that your Insurance company actually wants to help you return to work…

And not just because they want to stop paying you! Yes, I know they are BIG businesses and they exist to keep their shareholders happy, BUT insurance companies are actually invested in helping people like you and I return to work – even if it is in some part-time or reduced capacity. Over on the Purple Co Blog we have many case studies of clients who have been supported by insurance companies to return to meaningful employment post-illness or injury.

Insurance companies are so invested in this return to work and wellness approach to their products and services that it is forcing a genuine change in the industry. There is much greater promotion of health maintenance and health prevention, there is greater assessment of what policy holders are doing to preserve their health, and there is a massive recruitment drive across the industry to employ allied health professionals in claims teams, to help people who need to make claims, understand how their health and their wealth intersect.

While insurance is important, our health and our wealth does not stop there. We need some mechanism for being able to access choices for both health improvement and wealth creation, not just now, but also into the future. Being able to work and having some type of earning capacity is what holds all of this together for us.

This doesn’t negate the need for insurance, not at all. It just completes the picture for us, so that we can make informed choices about our future.

Having an income protection policy is a good idea for anyone – but it isn’t the whole answer.

So, I ask you: What do you plan to do if and when SH%T DOES happen – because chances are, that policy won’t be enough to provide you with the health and quality of life you want for yourself.