Who can you count on when you need it most? Your insurance

You probably have insurance held in your super but you didn’t know you had cover, or that you’ve been paying for it. For most of us this is the case. 14 million Australians or 63 per cent of us hold insurance in superannuation according to a federal parliamentary report.

So, you could be paying for cover you didn’t need, or be holding insurance that doesn’t protect you at all. Further to this, 22 million active life insurance policies exist in Australia, but there are 12.5 million working-aged Australians (aged 15-64). This also means about 56 per cent of the entire insured population have insurance cover that they don’t know much or anything about.

To get you up to speed with the industry, and what you need to know about insurance, I sat down with a non aligned insurance expert and head of investment management at Sequoia Asset Management (ASX:SEQ), Sam Wetzler, and asked him a few questions
Jessica Amir: Tell us what you do and how you help people in your role?

Sam Wetzler: As an investment manager my day-to-day responsibilities revolve around assisting people with their investment decisions. I provide advice to clients across Australian and International Equities, Managed Funds, Structured Investments, Derivatives and Bonds. On the other side of the equation is protecting people’s wealth and that’s where life insurance is an important discussion. It’s not always the most exciting discussion to have with people, however I feel we are not doing our job properly if we do not broach the topic with clients.

I am constantly surprised by how little people know about their insurance cover. I would almost say the majority of people I speak to have a false sense of security that they “have insurance in their super fund” but really they have no idea how much cover they have. It is very important for all people to be regularly reviewing their insurance cover. Our circumstances are forever changing and we should therefore be regularly reviewing our insurance cover to match our circumstances.

Jessica Amir: Sadly a lot of people don’t know they need insurance until it’s too late. And most of us know someone who wished they had financial help, as they couldn’t work due to illness. Do you have any client examples you could share?

Sam Wetzler: I had a client who suddenly passed away within hours of getting his life insurance policy in place. His wife didn’t work and they had a mortgage to pay. It was an exceptionally fortunate result in extremely unfortunate circumstances for the family, who otherwise would have been experiencing severe financial hardship on top of their grief if he had of remained without Life cover. His life cover ‘pay out’ was enough to pay off their mortgage and provide his wife with some extra financial support.

Jessica Amir: What percentage of your clients have claimed on their insurance? And can you walk us through an example of when a client needed to make a claim on their personal insurance and how it helped them?

Sam Wetzler: Fortunately, the percentage of clients who make claims is very small however that is not to say it doesn’t happen. I have had clients claim on all types of cover including life insurance, Total & Permanent Disability (TPD), Income Protection and Critical Illness [Trauma Cover]. Although you would hope to never have to make a claim, this shows me the importance of considering all types of cover. Recently I had a client diagnosed with Motor Neurones Disease and he claimed on his TPD policy. With the money, he was able to travel the world with his family to seek treatment.

Jessica Amir: How do you tell your friends and family they need insurance? And what are the different types of insurance they need?

Sam Wetzler: If you have debts, dependent children, expense obligations or a lifestyle to uphold then you would be crazy to not insure yourself.

Life insurance (also known as death cover) provides a lump sum payment to your beneficiaries in the event of your death to ensure you do not leave a financial burden behind.

Total & Permanent Disability also provides a lump sum payment in the event you became totally and permanently disabled and ensures you can meet your debt obligations, make additions to your house if required, and continue to ensure your family is looked after.
Income Protection insures your most important asset, your ability to earn an income. You need to ask yourself a simple question, if I was sick or injured for an extended period of time and unable to work, would I be able to meet my obligations and live the lifestyle I am used to? If the answer is no, you should probably consider income protection.

Critical Illness Cover (also known as trauma) pays a lump sum in the event that you were diagnosed with a critical condition such as cancer or heart disease. As you could imagine the likelihood of cancer is actually very high and receiving a lump sum on diagnosis can help to ensure you have the money to receive the best possible medical treatment and enjoy a nice family holiday once you hopefully get through it!

Jessica Amir: So how do people get a better deal on their insurance or find out if they are over or under insured?

Sam Wetzler: Sequoia Asset Management provide general advice on life insurance. Being an independent financial services firm, we are completely agnostic with the insurers we work with and will ensure we find our clients the best deal on the cover they are after.

Tell us how much cover you need and we will source you the best value policy in the market. Check out our insurance calculator as a starting point if you are unsure of how much cover is right for you.

Jessica Amir: What’s your parting advice to Aussies reading this?

Sam Wetzler: Don’t be lulled into a false sense of security that everything is going to be fine, or that you have cover. If you do not know how much insurance cover you have, or after reading this article were unaware of some of the types of cover available, then get on top of it now! Once you work out what you need, speak to someone who can find you the best deal and is not aligned with any one insurance company.

Published: 26 August 2019
By Sam Wetzler and Jessica Amir

Jessica Amir

Jessica joined Finance News Network in January 2017 after having worked in financial advising for seven years and in TV journalism for seven years, specialising in finance, equities and analysis. She has interviewed former Prime Ministers of Australia, Tony Abbott, Julia Gillard and Kevin Rudd and ex Treasurer Jo Hockey. Jessica has worked as a journalist with Sky News Business, ABC 1, ABC’s The Business, ABC24 and has also been a regional Channel 7 and 9 TV reporter with Prime7 and Win News.