Q. My wife and I have no children, own our house, have 4 investment properties which are rented out, have $2M in Super and other investments and no debt. Is there any compelling reason why we should have any personal insurance – Life,  Income Protection etc? We can’t think of any, can you?

A. My firmly held view is that the purpose of insurance is to maintain the status quo in the event of an unforeseen event.  If you have sufficient assets for you and your spouse to maintain your lifestyle at an accepted level in the event of disability then it would be hard to see a need for Income Protection or Total and Permanent Disability.  Likewise if the surviving Spouse does not need funds to repay debt or replace income on the partner’s  death, Life Insurance may not be required.

If you feel you have no insurable need, “stress test” your thesis.  Work through the scenarios  on a “what if basis”.  Consider the impact of unexpected medical care or rehabilitation costs. Likewise the loss of income to care for a spouse.  Make sure you take into consideration your short and long term Financial Planning needs.  For example would your retirement funding goals be met if you couldn’t work.

If you have satisfied yourself that you are financially secure both now and under any insurable scenario, then you may not need insurance.  I would encourage you to get a Financial Planner to confirm your view just in case.


Follow Andrew on Twitter @AndrewHeavenFP.  This article was originally published in The Australian.