When you think about what might happen if you have serious illness, major injury or died, the tendency is to look at yourself and family first, and rightly so.
The reality is that a major illness, disability or premature death rarely affects just one person. The financial and emotional consequences create a ripple effect that spreads through families, friendships, businesses and wider networks.
A serious health event or death can dramatically alter a family’s or business’s financial position overnight. Income may reduce or stop completely, while living and business expenses continue or even increase due to medical treatment, rehabilitation, or business continuity costs. At the same time, family members or business partners may need to adapt their work to provide support or cover in your absence.
Relying on your network is not sustainable
In these situations, a wider network of family and friends are often relied upon to help maintain daily life as much as possible. This can include help with nursing, childcare, school and extracurricular activities and in many cases, providing financial support.
The ripple effect does not stop with the immediate family. When financial pressure becomes severe, support is often sought from a wider network of relatives, friends or through public donations and fund raising.
While these acts of generosity are invaluable, they place considerable strain on the finances, wellbeing and goodwill of those providing the support and leaves a lot to chance. Most people are happy and willing to help, but it tends to be a short-term fix to what could be a long-term problem.
In practice it’s not fair, realistic or sustainable to expect others to modify their lives or provide funding to support your life or business in the longer term.
How will your business be impacted?
For business owners, the impact can be even more widespread. When an owner, director or key employee suffers a serious illness, disability or death, the consequences can quickly flow through the organisation. Revenues may decline, operations and workflow are likely to be disrupted, or in some cases the business could stop entirely. The ripple effect will be felt by business partners as their workload increases, shareholders if profits decline, and employees if the situation results in uncertainty around job security, reduced hours or redundancy.
Suppliers, contractors and clients can also be affected if the business is unable to operate at its normal capacity. If the business closes as a result, the ripple effect and financial impact will be felt by a wide number of families.
Insurance contains the impact
This is where life and health insurance plays a critical role by providing funds to contain the impact. This allows the effected parties to deal with the situation and plan their future, without having to rely on external help and goodwill from family, friends, business stakeholders or resorting to public donations.
Tidal provides advice on personal and business risk insurance, helping our clients control their risks, take responsibility for the wellbeing of those that depend on them, and giving them greater certainty when life doesn’t go as planned.
For personalised advice contact me.
Andrew Davies 027 249 1212
This article is general commentary only and does not constitute personalised financial advice.
