This transcript was generated automatically and may contain small errors.
I would make the assumption that most people, when they do go and purchase a house, that they're going to insure the asset. And that's been one of the biggest challenges in Australia, because people don't think of themselves as that tangible asset. For a human life, that's pretty significant. And it's interesting that there's a value on it, right? Jack's like, wait, I'm an asset.
I don't have insurance. I think people often forget about themselves versus something that they can see, touch and feel. At some point, we're all going to get sick and we're all going to pass away. We just don't know when. It's the game of probability.
And so as a result, do you want to have the probability in your favor the most that it doesn't happen? Or do you want it to happen with the probabilities more in their favor, where they're like, oh, you're not such a good person to cover? I don't have insurance. And the reason is because my wife has had this joke with me that if you ever get life insurance, like I'm going to put something in your food. She called me the other day, actually.
Yeah, I'm a little bit scared about that. On our podcast, we talk a lot about building wealth. But today, we're going to be doing a first. It's talking about protecting wealth. When it comes to protecting wealth, this episode is something that's very close to my heart.
And when it comes to my heart, I'd actually gone through on a journey where I had to get open heart surgery at the age of 32. And when it came to getting open heart surgery, it was a surprise and a shock to me. It happened, though, as a result of getting checked for life insurance, getting checked for income protection, getting checked because I was looking to protect my family and make sure we could be in a better position. But it was through that journey of looking for protection that I'd unraveled and found out all these things happening in life. So without protection, without looking into this world, who knows?
I may not even be here today. So because of this, this has really inspired me to help many more Aussies get on the journey of protecting themselves. And as a result, Solace Life is now born. So Chris, the director at Solace Life, and I have come together to help many more Aussies make sure they're protected or at least aware of everything that's going on, just like I was, to save my life and save everything that we've built for my family. And so today, we're going to be going into what Solace Life is, how we help Aussies, how we're helping Aussies protect themselves, the biggest asset in their life, and learn about the intricacies of what insurance can do on your wealth building journey.
Let's jump into this episode and hear from Chris. Nerd Alert! Property Nerds, the home for data-driven property investors, where we uncover Australia's hot and cold markets, latest headlines and trends. Chris, my friend, welcome to the show. Thanks, Aj, for having me.
Been a long time since we last caught up. Absolutely. It's great to be on, and we'll definitely be having more regular chats together because what we're going to unveil today is pretty exciting, but also just talk about the impact that you make specifically. But to introduce everyone to this, can you share a little bit more about what Solace Life does and how your role fits into helping people protect their wealth? Sure.
So look, Solace Life was created to help protect Australians. We're really passionate about making sure that clients are insuring themselves should the worst happen. There are a number of things that can take place for people, but we want to be a specialist in this particular area and ensure that people are protected should the worst go wrong. And when it comes to protection and in particular personal insurance, what does it exactly mean and how is it different to say health insurance or home insurance for those that might be quite new to it? Personal insurance is an interesting area.
A lot of people think when you say personal insurance, they think of life insurance and such like, but there are differences from things like health insurance and other types. Personal insurance tends to protect the individual and the individual's families. And ultimately with personal insurance, it's there to come in at the time that you need it most when something has gone seriously wrong. What could they be? They could be things like someone passing away or someone becoming unwell and not being able to work.
And that's why it's really important to have a personal protection plan in place. Now, when it comes to personal insurance, our listeners, the majority of them are property investors, either active investors or investors who want to become property investors, right? And so on the journey of investing, they take on significant debt as part of that growth journey. And when it comes to significant debt, I want to understand why is insurance actually even important as part of that consideration? I suppose it's like anything.
The challenge that I feel people have is thinking of themselves as an asset. If you look at people that are investing in property, obviously you're buying something that's tangible and we often forget to then protect ourselves should something go wrong. I would make the assumption that most people, when they do go and purchase a house, that they're going to insure the asset. They're going to figure out its value. They're going to ensure that the policy is in force before they take ownership.
They're going to make sure that the value is recorded accurately. So if something does go wrong, if it burns down or there's a natural disaster, then they're protected and so is their asset. And that's been one of the biggest challenges in Australia because people don't necessarily think of themselves as that tangible asset. And if you do a little bit of research, if you put it into ChatGPT, it's kind of interesting to see the value for human life. And in Australia, if you look at it, the range is between $7.
5 and $10 million. So for a human life, that's pretty significant. And it's interesting that there's a value on it, right? Yeah, it's crazy. Jack's like, wait, I'm an asset.
I don't have insurance. And so I think people often forget about themselves versus something that they can see, touch and feel. Making sure that then people are insured just as a house is really why it's so important to do. Well, do you see people firstly not really think of themselves like that, an asset, and they separate themselves as an asset? And then when they think of assets, they think of it as like home, car.
I mean, car, depending, is a liability for most ones, right? Unless it's a collectible. But home and other assets, do you see it a lot where people don't insure themselves, that main asset that they need to be thinking of versus like how often people take up home insurance for the house they live in? Correct. I mean, I think it's often a forgotten necessity by the majority of Australians, unless they're actively seeking it.
But I would probably challenge the thought to say that most people don't wake up in the morning and think, oh, gee, I have to insure myself. And that's where I come in or where Solace Life comes in to sort of address that need and to educate people on insuring themselves. And it's just a simple fact that people don't consider it. And I think, you know, broadly in Australia, I don't know about you guys, I don't know about you. When I bought my first car when I was 18, my dad said to me, do not drive that car until you've insured it.
If you go and hit some bloke driving a Porsche, that's what you're going to be paying off for the rest of your life. And it's one of those things where, broadly speaking, we are not having those types of conversations and addressing that as a real risk. And it is a real risk because at some point we're all going to get sick and we're going to pass away. We just don't know when. Well, mate, I mean, speaking of that, like, can you share an example or situation where someone had the right cover in place?
Absolutely, yeah. Look, unfortunately, I had a client pass away fairly recently. We'll call her Lisa. And Lisa was one of my first clients that I took on when I entered the life insurance industry or at least started to specialize in it in about 2009. Yeah.
16 years ago now. 16 years. So it's a significant time to have a relationship with someone. And she was referred by her mortgage broker. And at the time, Lisa was newly married.
They had purchased a home in Alexandria and they had purchased a dog. So start of life. And I was referred and I sat down with her and she said to me, I'll never forget this because she was a Centrelink, a FIS officer is what they used to call them back in the day. But she used to see people coming in that were unwell, that were doing it really tough and were finding it hard to survive and carry themselves financially because of an illness or someone passing away in their family. And she said, Chris, if I'm ever in that position, I do not want to be financially constrained.
And fast forward, Lisa was 41 when she passed away. I was at a funeral about four weeks ago. And during that time, they upgraded their home. They moved up the coast. She had three children, nine, 15 and 18.
And about five years ago, she was diagnosed with ovarian cancer. And so how that the insurance conversation we had and we implemented how that all actually played out was the fact that during different stages, you know, she became unwell. She had to get surgery. She had to go through chemo. She had to go radiotherapy.
She had various complications from the surgeries. You get scar tissue and all sorts of things were going wrong. But the one thing that she could rely on was her That's something you've seen before. We love our acronyms, don't we? We love them.
Financial services, TPD. Total and Permanent Disability Cover. So yeah, TPD, we'll use that for now. Designed to provide a lump sum where someone's permanently disabled. Again, what on earth does that mean?
It means someone that cannot do their job prior to or have suffered something serious. Could be a mental health breakdown. It could be a loss of limbs. It could be someone that's gone through a stroke and can't look after themselves. So there's a number of things that sit into that category.
Probably the one that's really important is a thing called trauma insurance or critical illness insurance. And unlike TPD where you've got to be permanently disabled, critical illness insurance is paid out in the event of diagnosis of a critical illness. There are generally between 40 and 50 conditions. So if you're diagnosed with something irrespective of your ability to look after yourself or to go to work, you'll be paid that benefit. And it can also extend to even your children.
So once your child is at least two years of age, we can actually insure them. And as you can imagine, provide a benefit certainly to the family where a child has unfortunately been diagnosed with something that's not so nice. So that's three. And the last one is probably the easiest one to understand, which is life insurance. So if you pass away, the lump sum payable in that event.
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com. au and book a free strategy session with us today. Let's make property investing less stressful and a whole lot more rewarding. Nice. Well, if we could just hone in a bit on income protection, because a lot of people assume that they've got some level of income protection within their super, but a lot of times that's not the case.
Could you just explain that a bit for us? Absolutely. I think income protection in a lot of ways is the jewel in the crown. Again, trying to put a value on something is I feel it's important. And I've always used this as an example with clients where you're talking about what are we actually insuring?
So what's the value there? So if someone was say 35 and they were going to work for 30 years, they were going to earn 100K a year as a base example, what's that? That's 3 million bucks. So you're really insuring $3 million and the income protection is a product that you'd use to protect yourself and use that. So for me, that's a jewel in the crown for a lot of people.
I would hazard a guess that at 35, the majority of people, that would be their greatest asset and that's where that sort of plays in. Yes, you can get it in your super. Sometimes you might have it, but you've also got to be careful on the definitions and things in super which aren't as good as the policies you can get that are personally owned. So I've got a lot of clients that are young. They think that they're really young, they're healthy, they're earning well.
What do I need insurance for? What would you say to people like that? Look, I would say to people that getting insurance when you're healthy and well is the opportune time to do it. You're beginning your journey of life and look, it's a little bit like anything. If you didn't insure your house and you waited until something was to happen to it, it's too late, right?
Nobody's going to insure yourself. You're going to lose money and capital. There's no difference with people. The thing with the insurance that Solace Life puts in place for their clients is what we know, what we call guaranteed renewables. So once those policies are in place, the features, benefits and the contractual arrangements with the client cannot change.
So the insurer cannot make it worse off. They cannot change the definition. However, once something happens, even it could be something very simple like you've got a sore back, you might have been seeing a counsellor, things like that may cause an insurer to exclude certain conditions and in worst case scenario, you might get declined on insurance altogether, which is what we don't want. Really, really important. Hey, it's like the game of probability they're playing.
It's the game of probability. Like, hey, could something happen to Jack? Could something happen to Adrian? And so as a result, do you want to have the probability in your favour the most that it doesn't happen when you're healthiest, when you're youngest? Or do you want it to happen with the probabilities more in their favour where they're like, oh, you're not such a good person to cover and therefore more increases in cost, more exclusions.
Not to say you shouldn't still have it because at the end of the day, like coverage is better than no coverage. But it's so true what you say because I'm a living case study on that too. Like, I mean, at 32, I had to have open heart surgery. Do you think a 30-year-old like me was ever thinking like something's going to happen to me? Like, same thing.
It's just so important to consider like that when you're at your best because it can catch you even when you think you're at your best. So it happens. So whether someone's got protection or cover in their super or they're dealing with someone like yourself, how often do you think they should review and look at, you know, upping their cover if they've got extra debt or is it just every time they get more debt or do you do it on an annual or how often? I think it's worth doing it annually. Look, as a business, we ensure that we at least contact our client every year and offer them an opportunity to have a conversation.
And out of that, things always come up. And, you know, as time goes on, there might be a point where you start to pull back on your insurance because your debts are getting repaid and things like that. You tend to see that more people in their late 40s, 50s, etc. But at the beginning, it's, you know, it's taking on more debt. It's people having children later, etc.
So, yeah, I would say at least once a year would be important to do. So what would you say would be some common misconceptions when people talk about the type of insurance that you offer? Look, I think there are a few misconceptions. The first thing I always listen to people or people say to me when I ask them about their health, because that's an important question to ask to get context, is they say, I'm healthy. There's nothing wrong with me until you ask a follow-up question about their lifestyle habits and other things that have gone on in their life.
And they, not to say that they're not healthy, but there are certain impactful things that happen in anybody's lifetime. That's probably one. The other big one is, yeah, they talk about, hey, I've got insurance in my super, I'll be okay. That's another one. And then probably the third one is, oh, do insurers actually pay claims?
And how does that work? Because that's another really important aspect of what it is that we do is not just insure people, we make sure that people get the benefits and the payments made in the event of a claim. But interestingly, in my career, look, again, there are different types of life insurance products, but the products that you would get from someone like myself is, if you look at the claims admittance rates, and I've worked in various parts of the industry in the past, I was working for a big brokerage in the past where we looked at, out of all the claims admitted, how many did we actually pay out? And it was something like 98. 6%.
It sounded like a made-up number, but we actually methodically went through that. And the interesting thing was the ones that were not paid out were from the people that hadn't actually told the insurer about all the issues. And that's, again, part of our process and why it's important to get insurance when you're healthy. If you miss something out that's of significance, not that you had a cold two weeks ago, but if you had cancer or something serious, if you're going to leave it out, that could mean that the insurer may not pay you the benefit. So it's important to understand that.
Chris, you mentioned earlier before that for a lot of people, most people don't wake up in the morning thinking about insuring themselves, and that's obviously the first reason why a lot of people don't think about or get insurance. But the second part is also, realistically, the cost and the costs involved. So if we think about a lot of our listeners and viewers, they're property investors, they've got a lot of debt, they've got repayments to cover, and that becomes a bit of a consideration. How should people really be thinking about approaching budgeting for insurance? So look, in my view, I think that the vast majority of people that have mortgages and investment debts are the ones that actually need this the most.
So like anything, there's a cost of doing things, and you can run that cost either from a super fund. There are good and bad points to doing that. There can be tax implications of structuring, et cetera, and that's why it's really important for people to be fully aware of what you can and can't do. The other side to it then is you can have personally uncovered too, which you would find out of your personal cash flow. So look, either or, you can do it both ways.
So for people, there are definitely options.
