“Hi, I’m Bruce Brammall. I’m a Shit Creek paddle salesman. When you’re really up Shit Creek, I’ll be the there to hand you the paddle.
“If you die, I’ll look after your family. If you have a big accident, I’ll look after you. If you’re deathly ill, I’ll get you out of the crap.”
Welcome to the “elevator pitch” of a life insurance adviser. It’s the best line I’ve heard in this industry. Sure, it’s catchy. Sadly, it’s true.
It would be theft to use it without attribution. And like the crackdown on download pirates – “no, officer, those copies of Entourage were downloaded legally as a Christmas present, I swear!” – I have to give credit where it’s due. It came from a South Australian adviser called Lucas Barsby.
But, like Lucas, I do “sell” life insurance. (I hate that word “sell”.) Insurance is, or should be, about one-third of what a financial adviser does. (The other two-thirds are investment and superannuation.) But the figures suggest it isn’t.
Life insurance, advisers are told, is “sold” to clients. It’s a grudge purchase. Nobody actually wants to buy insurance. They buy it because they’ve received the hard sell.
Bollocks. I’ve never understood this. I don’t understand why people feel they have to be sold insurance.
Let me tell you something. There is nothing in my life that I love more than Mrs DebtMan and our DebtKids. Everything, even my love of beer, which would probably run next, has daylight streaming between it and my family.
And here’s something else for free. If something happens to me tomorrow, I want Mrs DebtMan (and me if I’m still around) to be able to give our kids the life we’ve always talked about giving them.
If I die tomorrow – Mrs DebtMan, that’s not an invitation to go bat-crazy with a saucepan on my scone – my beautiful family will be okay.
Why? Because I’ve got life insurance. Enough to make sure the home loan and all of our other debt is paid out. And then some. My little DebtKids will go to private school. Mrs Debtman will be able to stay home to care for them – if I’m dead and DebtBoy and DebtGirl don’t have a dad, that’s what I’d want her to do.
If I have that big car accident and end up in a wheelchair, or if my somewhat unearthly love of pizza causes me a heart attack …
Or, if some tropical disease picked up in the wilds of South America keeps me bid-ridden for a couple of years … I’ll survive, financially.
Because I’ve covered my ass(ets) with insurance.
There are four types of life insurance, covered in detail elsewhere in Your Money today. But, roughly, they are life, total and permanent disability, trauma and income protection.
How much should you have? Try this instead: “How much do you love your family and your lifestyle?”
Here’s what I generally recommend. Look at the attached graphic (subs note: please see bell curve shaped graph) for a better indication of where your life stage is.
For those with young kids (say, under 12):
- Life and TPD: About 12 times your income for both. Do it in super. Salary sacrifice contributions to cover the extra cost.
- Trauma: Double your income, or $200,000, whichever is greater.
- Income protection: 75 per cent of your income, plus super contributions, through until age 65, outside super.
As the kids get older, as the mortgage reduces, your investment assets grow in value, your super begins to look a bit valuable … then you start to cut your insurances.
But while you’re young, get loads. It’s cheap as chips when you’re under 40, even 50.
Do you do it yourself, or get a professional in?
I’ve been doing this financial professional caper for 15 years. Before that I was a journalist.
I’ve always said that if I ever decided to go back to journalism, I’d continue to look after my own investments and super forever.
But I would go and see an insurance adviser every time. Insurance, particularly for those with even minor health conditions, is complex stuff. And a professional will prove their worth.
“Whatever excuses you may have for not buying life insurance now will only sound ridiculous to your widow.” Unknown author.
Forgive the Shit Creek paddle salesman. For any line he uses to get you covered properly with insurance, it will be worth it.