That Home Loan Hub
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Whether you're a first-time homebuyer, an experienced investor, or simply curious about the property market, this podcast is for you. Join me each week as we unlock the secrets to property success and help you make informed decisions. Let's dive into the world of property together!
That Home Loan Hub
Insurance vs Self-Insurance: What's Your Plan?
Could you save a million dollars for medical expenses if disaster struck tomorrow? This revealing conversation challenges the popular notion that "self-insurance" through savings is a viable alternative to traditional insurance policies.
We dive deep into a sobering real-life account of a young man whose life changed dramatically at age 26. Perfectly healthy one day—climbing poles as a linesman, exercising regularly, eating well—he found himself on an operating table just days later with a Crohn's disease diagnosis that nobody saw coming. His subsequent medical expenses over the next decade exceeded $1 million, a sum that would have been impossible to save independently at such a young age.
The mathematics simply don't add up for most people considering the self-insurance route. We break down the stark reality: a basic life insurance policy costing around $1,300 annually might provide $500,000 in coverage immediately, while saving that same amount would take a staggering 384 years to reach equivalent protection. Even more concerning is the timing—health crises don't wait until you've saved enough, and other financial emergencies can deplete your reserves precisely when you need them most.
Our most passionate plea comes for those in their 50s and 60s considering dropping coverage due to rising premiums. This is exactly when claims become most common, with heart attacks, strokes, and cancers becoming significantly more prevalent. Before making any decisions about your insurance, speak with a financial advisor who can explore alternatives, adjust your coverage, or potentially identify claim opportunities you weren't aware existed. One client mentioned in passing some heart problems and discovered she qualified for a $250,000 payout she would have otherwise missed.
Want to learn more? Join our upcoming webinar where we'll expand on these crucial topics in greater detail. Your financial security isn't something to leave to chance—reach out today and let's create a protection plan that truly works.
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Hello and welcome back to that Homlon Harp. Today we're going to talk about self-insurance versus insurance policies. Awesome. And if you haven't gathered, I'm joined by Rebecca. Awesome.
SPEAKER_04:With a little spice it up.
SPEAKER_03:Self-insurance versus actual insurance. Yes. What does that mean?
SPEAKER_00:So self-insurance, uh, people that think if they save enough, they can cover themselves if something bad happens, right? So if they think they've got enough savings, if they get uh if they have a heart attack or a stroke or anything like that, they can pay for their treatment themselves.
SPEAKER_03:I just heard of that actually. Just yesterday I had a client tell me, oh, if I actually put aside, you know, whatever it would have cost me for insurance into the savings account, then I could have covered myself for anything that I need.
SPEAKER_00:Yes, but think about if you have that mindset and think I'll start saving now, and then next week something happens, how much you could have saved realistically. Ah, good point. Um, you know, insurance, the bulk of it, you know, life in particular has no stand downs, you know, other than with like obviously suicide exclusions that we've talked about before. But if something happened to you, say even six months down the track, how much would you have actually saved? Say 100,000 for a trauma payout. If you tried to save a hundred thousand, say in even ten years, how long would it actually take you? How much would you have to put aside?
SPEAKER_03:Interesting, because um just the last week I was catching up with this client and um and he was diagnosed as a Crohn disease at the age of 26. And he said he was really fit and wonderful, and he was climbing, you know, big he had this really heavy job that he was doing, I think linesmen and stuff, and he was climbing these big poles and doing all those things on Friday. By Sunday, he was on operating table because his health declined rapidly, something happened, his body started attacking itself, so they had to like cut out his intestines and do all sorts. So um he was crippled and then he had to learn how to relive again, you know. And um, and he was telling me that like if you ask him at the age of 24 or 26, you know, whether he knew that would happen to him, he's like, nah, no way. Because he was, you know, he was eating healthy, he was exercising, he was doing everything right, and it just came out of nowhere. And um, and now he's involved with this um volunteering for people, you know, with this charity to help uh people and kids. And he's like, You have no idea how many kids actually get these things now, and um and they can't identify how what's causing it, whether it's genetic, whether it's not genetic. So it was incredible for me to hear those stories because he's like, get insurance for your kids the moment they're born. Like the moment you're pregnant, get that insurance because that's what saved him long term, because his parents had insurance on him, yeah, health-wise. And he's like, Oh god, I've claimed over a million over the last 10 years on various surgeries and treatments.
SPEAKER_00:How much he would have had to save for 10 years to get to a million dollars. Exactly, my point. And he was a well, obviously a teenager when it started. Yeah. If he's what 24, 25, whatever it was now, it's insane.
SPEAKER_03:You can't save over a million in 10 years. No, you know, unless if you can, I'd love your secrets, but YouTuber, you've got to be an influencer. Yeah, but that's the thing, right? Like people don't think of that. And we've just covered that in the previous episode about how people think they're invincible, nothing will happen to them, and just think that like you can go on living your life without thinking of the consequences in the future. But um, self-insurance, I guess it will work if nothing really happened to you all your life, and you put the money aside in high um return dividend fund, and then you end up with like all the savings at the end. All the savings, and I get it, like when people get to 50, 55, 60, insurance does get very expensive, and this is where you've got to be like, do I wanna put money aside and self-insure? Or just take the plot. And this is when people usually tend to claim as well, isn't it?
SPEAKER_00:Exactly. That's the age where things start to really happen. I mean, yeah, we have younger ones, but 50, mid-50 onwards is the major heart attacks, strokes, cancers, all of the big ones are a lot more predominant. And that's when people are cutting back on their insurance.
SPEAKER_03:This is the time where it's like, please don't cut out on your insurance right now. And there's another point that you've raised before in our other podcasts is before they decide to cancel, before it gets too expensive. Come and talk to us because we will be able to identify whether, you know, we can downgrade it, whether we can change the product, whether we can do something about it, or maybe there might be even hidden claims that you didn't know that you could have claimed on.
SPEAKER_00:Yeah, there's always we always have those things. Like I think I've talked about it before when I spoke to someone once and she was looking at getting rid of I think she was gonna have her trauma insurance, and she mentioned offhand that she had had some heart problems like a year and a half before, and she got a full payout. So she got if it was 250,000, she got paid out because we had that discussion.
SPEAKER_03:Yeah. And that's important, right? That's the power of an advisor. Like, this is why you have an advisor. Don't just think that it's set and forget. It's not just pray and walk away. It's actually being involved in your life. You know, we want to know what's going on in your life, whether it's good or bad, whether you had a baby, bought a house, changed a job, separated. Like all these events matter. Absolutely. We want to know about them. So um, awesome. So anything else to add for your self-insurance versus insurance points?
SPEAKER_00:Just come talk to us. That's it. Like, you know, you might think that you can save a certain amount of time, but think about those savings if something happens and you have to dip into them, and then you're back at square one and you can't, and then something health-wise happens, right? So, say you have to pay out because there's that major, you know, even something simple like needing a new roof and how expensive that can be, or anything like that, and then your savings are gone, and then six months down the track, you have a major health situation. Your savings are completely depleted. You've had six months. So just come talk to us first and we can figure something out.
SPEAKER_03:Yeah. And look, on a basic insurance, like even if it's just life insurance, you know,$25 a week, let's say, you know, 52 weeks a year, that's uh$1,300, right? And if of course a bit something happens to you, that will pay out like half a million. Yeah, exactly. How long do you have to wait to save half a million? And I'll tell you, you'll have to wait 384 years if you put aside.
SPEAKER_04:Well, it's not the cost of the yeah,$1,300 um dollars a year if you put aside$1,300 a year, you'll have to wait 384 years to get to 500k figure. You know, it's ridiculous.
SPEAKER_01:It puts it in perspective though, doesn't it? Because people think, you know, if I save enough quickly enough, but you don't have that disposable income to save the levels you need to be saving.
SPEAKER_03:Exactly. No, that's awesome. Guys, we are running a webinar with Rebecca to expand on all this topic. So if you are listening and if you want to come to the webinar, please comment or reach out. We'll be able to send you the link. And if you're already listening to this and the webinar has been, you can find it on YouTube. So um, thank you and goodbye.
