| ign="center"> | | | | retiring at the age of 65, that person will earn a |
| Having worked with clients for over twenty years | | | | further $1,875,000 in today's dollars - (ignoring both |
| advising on insurance solutions, I have observed a | | | | CPI rises and possible salary increments through |
| very consistent theme when clients assess their | | | | promotion, productivity increases etc.). |
| assets and financial matters. | | | | So here we have the paradox: |
| This trend still leaves me somewhat perplexed yet | | | | * Car/motorcycle comparatively low value - very high |
| forms the basis of much discussion with clients as I | | | | level of insurance take up |
| attempt to raise their awareness of the | | | | * Household contents relatively low/ moderate value |
| consequences of them focussing on insuring their | | | | - very high level of insurance take up. |
| personal possessions rather than insuring the | | | | * House relatively high value - very high level of |
| individual's whose efforts have generated the current | | | | insurance take up. |
| standard of consumption/living and will underpin future | | | | * Future income - very high value - very low level of |
| lifestyle through future income producing activity. | | | | insurance take up. |
| Most clients I deal with will have basic cover against | | | | Yet if you asked the main income earner the |
| real property loss yet very few will have valued and | | | | following question - "If you had a machine that |
| insured their most valuable asset. The vast majority | | | | produces at least $62,500 each year for the next 30 |
| of people when asked the simple question - What is | | | | years would you insure it??" The answer is universally |
| your most valuable asset? They will nominate from | | | | YES. |
| the following list usually in this order: 1. House 2. Car | | | | One of the greatest challenges a Life adviser faces is |
| Motor bike. 3. Furniture. If we are to quantify the | | | | getting clients to take a long term view of their |
| value of these assets they are usually relatively small | | | | income generating capacity and insure against the |
| compared to the inherent future worth of the | | | | potential loss (through either illness or accident) of |
| breadwinner's income generating capacity. | | | | that income. The great irony is that premiums for |
| In Melbourne Australia the average house price has | | | | income protection insurance are actually tax |
| just reached $A500,000 (The Age 2009), a new | | | | deductible in Australia (with any claim benefits being |
| General Motors 6 cylinder, 4 door family vehicle costs | | | | assessed/taxed as income) yet personal motor |
| approximately $38,000 (Redbook valuations 2009) - | | | | vehicles do not generate tax relief (unless used for |
| (depending on options). Whilst most families would | | | | business purposes) nor do private homes or personal |
| value their personal furniture etc. at a similar or | | | | contents. |
| slightly greater figure to their vehicle. | | | | You need to protect your most valuable asset via |
| If we were to take a male 35year old earning | | | | insurance - your future income generating capacity. |
| average yearly earnings of $62,500 (Wikipaedia) | | | | |