One of the joys in life is that we don’t know what will happen next. Most of us have positive expectations but sometimes life doesn’t follow our lead and we’re dealt a blow. It’s how we manage each experience – or how we’ve planned ahead – that will make it either good or bad for us. These three stories could have easily turned out quite differently.

Jordan started his own business servicing computers after working for a major IT company for many years. At age 38, he was enjoying the freedom and control it gave him. Unfortunately his car collided with a truck on the way to see a client and Jordan suffered a severe whiplash injury. He couldn’t work for two months and the loss of income made life hard for his young family.

He didn’t think to arrange income protection insurance to replace the workers’ compensation cover he’d had with his former employer.

By their late 40s, James and Jenny had worked hard to reduce their mortgage and used some of the equity in their home for a loan to invest in an apartment. It was tenanted and had the potential for long-term capital growth. Sadly, James died suddenly after suffering a massive stroke. On a reduced income Jenny couldn’t afford to keep paying off the investment loan. The unit had to be sold quickly at a loss.

They didn’t think to increase James’s life insurance when they borrowed for the apartment.

At 42, Jane is a successful business owner and prides herself in managing her personal finances well. She has a diversified portfolio of property and shares. Last year she contracted breast cancer and her work was disrupted with tests and hospital treatment for five months. She has now recovered but the medical bills made a severe dent in her finances, so she was forced to sell a big chunk of her share portfolio at short notice.

Jane didn’t know that trauma insurance may have paid her a lump sum if she was diagnosed with a critical illness.

Three important lessons can be learned from these cases.

Firstly, the unexpected can happen to anyone.

Secondly, take the time to review your insurance arrangements at least once every year. If there are changes in your circumstances – new job, new loans, family changes, etc. – you may need to make adjustments to your cover.

Thirdly, talk to an expert. There are many different choices of insurance and it pays to have a specialist analyse your needs and find the most cost-effective solution for your circumstances.

Review your insurance policies

The last few years have seen reduced profits for insurance companies due to lower investment returns and rising claims. This has caused premiums on most types of policies to dramatically increase.

Each time you review your insurance, check your coverage and make sure you have told the insurer all of the information they need to know. The last thing you need when making a claim is to discover that you’re not covered, or you didn’t fully disclose the facts.

Checklist

• Does your income protection policy reflect the income you are currently earning?
• Will your life insurance pay off all your current debts and be able to support your dependants if you can’t work?
• Have you taken up a “high risk activity” such as skydiving which could affect your life cover?
• Will your house insurance pay out enough to rebuild your home if it is destroyed?
• Have you recently installed security devices on your home that might reduce your premium?
• Have you bought an expensive work of art and forgotten to add it to your contents policy?

This list is by no means complete but it’s enough to start you thinking. If it’s time to arrange a review for a complete analysis of your insurance needs, contact your licensed adviser.