July 15, 2025 • 44 mins
If you've ever been offered insurance at the checkout and thought, “Wait… do I actually need this?” this ep is for you. From phone cover to pet insurance, there are so many policies that sound smart in the moment but just turn out to be clever marketing. So I called in friend of the show and insurance expert Phil Thompson from Skye Wealth to help us sort the genuinely helpful from the total money drains.
We’re breaking down the covers that quietly siphon your cash, the underrated ones that actually protect your biggest assets (you might be surprised what they are BTW), and the sneaky traps hiding in default policies. If you’ve been meaning to clean up your insurance but don’t want a boring lecture about premiums and policies, this is your no-drama, straight-talking guide on what to keep, skip, or switch.
In this episode:
💸 The insurances we’d never waste our money on
💸 Why default income protection through super might leave you stranded when it counts
💸 Pet insurance or DIY vet fund? We put them head-to-head
💸 The spicy truth about funeral insurance (and why it’s a hard pass for us)
💸 How to get expert insurance advice without dropping four figures
💸 The “Ferrari rule” that’ll change how you think about your income forever
GET YOUR INSURANCES SORTED: With Phil and his team at Skye Wealth here.
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Acknowledgement of Country By Nartarsha Bamblett aka Queen Acknowledgements.
The advice shared on She's On The Money is general in nature and does not consider your individual circumstances. She's On The Money exists purely for educational purposes and should not be relied upon to make an investment or financial decision. If you do choose to buy a financial product, read the PDS, TMD and obtain appropriate financial advice tailored towards your needs. Victoria Devine and She's On The Money are authorised representatives of Money Sherpa PTY LTD ABN - 321649 27708, AFSL - 451289.
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
My name is Tatasha Bamblet. I'm a proud First Nations
woman and I'm here to acknowledge country t Glenn Young
Ganya nianar Kaka yah Ya bin Ahaka nian Our gay
In Mbina, yakarum Jar, Dominyama, Domagahawakaman, damon Imlan Bomba ban
Gadabomba in and now in wakah Ghana on yak rum
Jar water Nadaa. Hello, beautiful friends, we gather on the
(00:24):
lands of the Aboriginal people. We thank acknowledge and respect
the Aberiginal people's land that we're gathering on today. Take
pleasure in all the land and respect all that you see.
She's on the Money podcast acknowledges culture, country, community and connections,
bringing you the tools, knowledge and resources for.
Speaker 2 (00:44):
You to thrive. She's on the Money. She's on the Money.
(01:07):
Hello and welcome to She's on the Money, the podcast
that keeps your finances ready. Whatever plot twist is coming next.
If life three you were curveful tomorrow, would you be
ready for it? Because here's the thing. Most of us
don't find out we've got the wrong cover until it's
too late. So how do you know if you're wasting
money on pointless policies or missing the one thing that
(01:28):
could actually save you. Stick around because we're pulling back
the curtain on the insurances we would never buy and
the ones you simply can't afford to ignore. I'm Victoria
Devine and today we are joined by someone who knows
the insurance world inside and out, mister Phil Thompson. He's
an insurance expert and Big Dog CEO of Sky Wealth.
(01:51):
And if there's anyone who can help us sort out
the financial fluff from the real deal, it is this guy.
Welcome back to the show, Phil. I'm excited I did
that you're here again and that you've somehow consented to
be on my podcast again.
Speaker 3 (02:04):
I appreciate changing my title to Big Dog. I'll go
back to the office and big Dog and flow that around.
Speaker 2 (02:09):
My name on Slack for a long time was big
Bad Bulls with lots of doubu's and s's at the end.
But you will be very excited, and I don't know
if their reference is going to be completely over your head,
but my name on Slack now is Victoria Labuobu.
Speaker 3 (02:24):
That's you know, how old I am and how not? Yeah,
my profile.
Speaker 2 (02:29):
Picture is a pink labooboo and my status is currently
set as really ugly.
Speaker 3 (02:33):
I do know what la booboos are, which is one
of my past three kids said no and the kids
don't know what it is. But one of our teams
said I want to spend four hundred dollars on this.
Speaker 2 (02:42):
Absolutely not. That's why it's my profile because I just
think that they are so ridiculous. Anyway, we wouldn't spend
money on labooboos in this house, and also on dodgy insurance. Now,
before we start calling out the most cooquestionable insurance products
on the market field, I think we actually need to
have a chat about just how big the insurance industry
(03:03):
really is. The Australian insurance space is worth more than
one hundred and fifty billion dollars a year, with general
insurance like car and home and travel making up nearly
sixty six billion dollars worth of that. And I would say, Phil,
that's a lot of cover. That is a lot a
lot of cover like that could buy you a new house,
(03:23):
like that could buy you a new car. And when
you zoom in, the average osy household is spending somewhere
between fifteen hundred to two thousand dollars every single year
on general insurance. So I guess it's no wonder that
people want to know whether they're actually getting some value
out of this or not. And Peel, I know you
have definitely seen it, all the good, the bad, the ugly.
(03:47):
And I was blown away when I saw that one
in five Australians have bought insurance that they don't fully understand.
Add to that fact that nearly half of us aren't
even confident our insurers are going to come through if
we need to claim, and it starts to make sense
why insurance can actually feel consistently or maybe just like
something we would rather avoid. So I guess let's start there.
(04:09):
Feel why does insurance get such a bad rap? I mean,
it's your entire career, so I'm hoping you.
Speaker 3 (04:14):
Know the answer. Yes, we work in a subsect of
the insurance, so we don't walk across the whole gambit
of it.
Speaker 2 (04:20):
But so you're not going to sell me pet insurance,
no iPhone insurance, no I will car insurance, insurance, So
all of the stuff that I probably shouldn't be spending
money on to begin with, you don't sell me.
Speaker 3 (04:33):
That's right, the thing interesting want to replace yourself, Yeah,
you probably don't need insurance for that.
Speaker 2 (04:38):
So talk to me about insurance, because I feel like
so many of us we think we're doing the right thing,
and we go ahead and we ensure something like we
might be at Apple buying a brand new phone and
they offer insurance, and we go, well, this is a
really big purchase and it's really important, and this guy's
just told me that like insuring it is a very
good financial decision.
Speaker 3 (04:55):
So we do it.
Speaker 2 (04:57):
But so many of them, I would say, are comp
completely unnecessary? What do you reckon? The most unnecessary insurance is?
Speaker 3 (05:04):
I mean iPhone insurance? My phone insurance is often like
incredibly expensive and not necessary. These extended warranties. Any time
I go to jbhigh.
Speaker 2 (05:14):
Fie, don't when you're extended warranty, like the whole product
is going to be out of like fashion by the
time that extended warranty is.
Speaker 3 (05:21):
Yeah, I've used it once. I bought it an extended
warranty once, and I had a warranty client. But I
just was like, it's literally five years ago. I don't
I'm not going back and talking about my laptop. They're
broke in the last five also, like I need a
new laptop at that point exactly. So those extended warranties,
really they're just insurance policies. That's what they are, and
that's what they're built for. And so the type of
(05:43):
insurance policies that I don't love. Really at the end
of the day, insurance is about protecting something that you
can't afford to lose. And so the things that you know,
like health insurance is really important because you may have
a health event that is really significant costs. Health insurance
has that. If you have a car that's worth fifty
thousand dollars and if you wiped it off and hit
someone else's car, well you need insurance for that because
(06:06):
it may be a significant cost if you can't afford
to pay that, which all of us can't.
Speaker 2 (06:11):
Yeah, and I think that from I'm an ex financial advisor,
you're a current proper financial advisor. I think from outside
of the story, we just see so many people who
you know, have car insurance, have like house and land
insurance or whatever, and then they don't have income protection,
and you just go, I see that you can see
value in it, but you can't see value in your
(06:33):
own income. Why do you think that's a thing, because
so many Like if you ask me, Victoria, you have
to get rid of every single insurance under the sun.
What one that you're keeping, you get one I can
always guarantee this is the one you would keep as well.
And for me, it's income protection. Like I know that
if my body breaks, I can still pay for my son.
(06:53):
I can still you know, make sure that my mortgage
or payments are being made and that I've got income
coming in the door each and every single month. Whereas
if my car broke, well, I can use my income
right now to purchase a new one. But if my
car broken I didn't have income protection, we are in
a bit of a pickle, right, Like my body is
the thing that is the most valuable to me, and
(07:14):
it just it blows my mind that people don't see that.
Speaker 3 (07:17):
I think people just underestimate the value of their income.
So one thing that we do internally, it's gone we
don't really talk to a client about this too much
as much as we probably should, is we calculate the
value of someone's income based on their today's income, assuming
you're just a CPI inflation increase on their income, no
pay rises or anything like that, and assuming retirement at
age sixty five, and if you get someone on a
(07:39):
relatively modest income that's fairly young, the value of their
income is millions and millions of dollars. And so people
just don't really equate that. Oh, if I'm on fifty
thousand dollars or one hundred thousand dollars or whatever income
I'm on till retirement and compounding that year or on year,
and that loss that's really significant. And so yes, the
(07:59):
likelihood of a claim maybe lower than dropping your phone
and breaking your phone and needing that replace but the
cost of that replacement of my income is really significant,
and we probably understate or underestimate that value of our
our own income.
Speaker 2 (08:13):
But Phil, I've got like, I've got income protection in
my subernuation. I saw there was like a two year
policy there. That's good, isn't it well?
Speaker 3 (08:21):
To cover your income for two years? It is good? Yeah?
Speaker 2 (08:23):
And what about after those two years? Phil, Am, I
good to go?
Speaker 3 (08:26):
Exactly. This fun thing about insurance it's always this balance
between how likely is something to happen and what's the
cost of that thing. So from an insurer's point of view.
I always love getting stats on insurers and like where
are they spending their money? From an income protection point
of view, most of their claims are for policies that
only last for two years. So the claim you know,
someone's injured and then goes back to work after six.
Speaker 2 (08:47):
Months, good, that's the perfect outcome.
Speaker 3 (08:49):
And that's majority of their claims in terms of raw
numbers that they're processing. But the cost to their business,
more than eighty percent of their cost for income protection
is actually for clients that go longer than two years.
And so you think about it from the other point
of view, if insurers are paying most of their money
towards those long term claims, we want to make sure
(09:09):
we're protecting that. So if you go into your super
far and you log in and you look at you've
got an income protection that only lasted two years, think, yes,
that will protect me from majority of the times I
will ever need this.
Speaker 2 (09:20):
But for the really big stuf it gets really real.
Speaker 3 (09:23):
Then you know you're going to be well under insured.
Speaker 2 (09:26):
Yeah, And I think a lot of people go, oh, well,
that's such a good deal because it's through my superinuation
and like, you don't have to necessarily get rid of that.
You can talk to a good financial advisor and get
that topped up. Like I remember when I first got
my income protection sorted, I had my two year policy,
which is why I always bring it up. I have
my two year policy, and then I had one outside
(09:46):
of supbranuation as well, and I was kind of carrying
both for a while because that's what put me in
the best possible position, because obviously suberinuation was a nice
little tax benefit, but having inside super for the entire
time didn't make financial logical sense. Now, two of the
most I would say divisive types of insurances. I would say,
(10:06):
lots of people get heated about private health insurance, whether
you need it, whether you don't, like we've got Medicare
in Australia, and other is pet insurance. So Phil, I
want to know what are your thoughts on both of these.
Speaker 3 (10:19):
So your pet insurance, let's go. I don't have a pet.
Speaker 2 (10:23):
No I do, And for this conversation, let me give
you a little bit of context. I paid for pet
insurance when we got Lucy in twenty twenty one, and
it cost me about four hundred and eighty dollars in
premiums for the year and I got fifteen thousand dollars.
Speaker 3 (10:36):
Worth of car. Yeah, so if you ever needed to
claim you were capped at fifteen thousand dollars and you
couldn't get it was something significant you weren't getting more
than that. I personally don't love pet insurance because of
the cost versus the value that you're going to get
for it can be a misbalance there, So I personally
don't love it. But just like with any type of insurance,
like for yourself, making sure you've got the ability to
(10:58):
save enough money for that outside risk. So if something
happened to Lucy, you've got the money there save. It's
not going to impact your last style. You're not going
to go eat baked beans for weeks on end to
afford it. But I would it's my dog, yeah, because
everyone does. Everyone will will spend a lot of money
on their pet when they're sick ill. It's in the
extension of their family, and so that's something that you
(11:19):
just need to be aware of. You either pay an
insurance premium to cover that cost, or you have the
money available or access to that money. So it is
really important. Although I if I had a pet, I
probably wouldn't have pet insurance. I would make sure we
had some form of.
Speaker 2 (11:32):
Yeah the cash in the side, Yeah cash, And I
think that's the important thing. Like when I got Lucy,
it was my first time owning a dog, and I
was like, I'm going to do all of the right things.
I'm going to get paid insurance. And then you know,
after the year was up and they sent me my
premium again, I was like, I am very like, I'm
in a very privileged position to have enough savings that
if something happened to Lucy and it cost me fifteen
(11:54):
thousand dollars, Like, I don't really want to spend my
savings on that, but I could. And so I just
made the content decision to start putting an extra five
hundred dollars a year into savings instead, because I was like, well,
that just seems to make more sense. And thankfully, knock
on wood, up until this point, she has not cost
me fifteen thousand dollars.
Speaker 3 (12:10):
And to be fair, if something ever happens, you will
never save the premiums to cover the cost. You just won't.
If something happens. It's just making a bet that hey,
hopefully something doesn't happen, that we don't need it. The
thing about insurance is I don't think it's wrong for
anyone to get pet insurance at all. Oh, I think
it can be right.
Speaker 2 (12:28):
It's divisive, like so many people are like that's a
scam or that's a good it's not, but like, is
it in line with your values?
Speaker 3 (12:35):
Yes? And I think it's important to think about what
is our total cost of insurance and do we have
the right ones. That's where it's a conversation where for
someone it may be okay to have pet insurance if
they have certain other insurances that you know that we
believe to be more important. If you're protecting your own
income and you've ticked that box, If you're protecting your
(12:56):
own life disability, like making sure your own personal insurance
is covered and sorted, and you've got ability to afford
the pet insurance as well, then great, go and spend
money on that. The thing that I kind of have
a disagreement on is if someone says I don't want
to have personal insurance, I'm going to cancel my income
protection because the premiums are too expensive. Totally fair and reasonable,
(13:16):
But then go and pay pet insurance and go. Unfortunately,
Lucy's not making much money for you. No, it's just
a straight cost. Your ability to earn an income is
making money, so protecting that is more important. So it's
all about how do we prioritize these insurances properly?
Speaker 2 (13:31):
Yeah. I think that there's also a fair bit of
confusion if you've never looked at your insurances before, to go, well,
why would I see a financial advisor to talk about like,
you know, income protection and TBD. Like I've got private
health insurance. I feel like that is such a common
response when I say, oh, have you got insurance, They're like, yeah,
private health, and you go, that's actually not enough. Is
(13:52):
that still something that you guys are coming up against
consistently in conversation.
Speaker 3 (13:56):
Yeah, because the cover that we help people set up
is the personal insurances and for events like cancer, heart attack, strokes,
or we're just mental health time off work, the personal
insurance cover will pay you for those events. And so
people think, well, I've got private health. If I have cancer,
I'll just go through the private system and that's okay.
And I just got off the phone last week with
(14:18):
a client who found out she had cancer.
Speaker 2 (14:20):
That's the worst part of your job, Like.
Speaker 3 (14:23):
Yeah, dealing with claims is hard, and.
Speaker 2 (14:26):
You know, I'm glad they have you, though, I just
know that you're the best person in those situations. Like,
if I've got something going wrong, you are one of
the first people that I pick up the phone and go,
that's all falling apart. Phil, I feel like you've got
your shit together in the best possible way.
Speaker 3 (14:39):
Yeah, And it's like and it is. I mean, look,
it's emotionally taxing and it's difficult. You know, we're not
going through it, but we're empathizing with our clients and
walking through that process. But this phone call, this client
and like incredibly positive, like had such an amazing outlook
on her situation. But was talking to her last week
and she's like, oh, yeah, we canceled our trauma insurance
(15:00):
two years ago. And I was like, and fortunately she
had income protection that pays her. It's an old policy
that pays her six months of income protection just on
a cancer diagnosis, so there is something. And she was
just like, look, at least it's something. You know, my
sister's over from the UK, so that'll cover flights, that'll
cover you know, go towards something. And this was like
(15:20):
sixty thousand dollars that was going to be paid out,
and in her mind it was like, at least that's
something towards it. And so you know, when people are
setting up the policy, they tell me that they've got
private health insurance. That's totally fine. When they go to claim,
it's rarely like a private health insurance is fine. It's
people's commentary is always, ah, that's great, the money is
(15:41):
in the bank account. Maybe it's probably not enough often
and so one bit of data that an insuran has
come out saying that they've talked about, what is this
total spend on health spending? Private health insurance covers half
the amount of spending than individuals are spending on medical events.
So what that means is the government spends a huge
(16:02):
amount and then personal spending is covered that covers more
than twice what private health is funding towards health events.
So when people say we've got private health insurance that
will cover it, well, it actually covers half of what
the total you know, spend on these health events is.
Speaker 2 (16:19):
Yeah, And to get a little bit I don't know
if the word is morbid here, but like if you
get a cancer diagnosis and you're going through the private system, Like,
that's great because you can pick your doctor. You can
pick you know, your doctor can then pick the team
that works with them. In probably a more cushy environment.
You'll probably guaranteed your own hospital room. That's really nice.
(16:40):
But you might have thought, oh, if I go through
the public system, like, there'll be weights, they'll be this,
they'll be that. Like if you've got a dramatic cancer diagnosis,
you actually go to the front of the line in
the public system. That's why there are so many weights,
Like your ankle surgery is taking two years, it's because
the theaters are full of people with things that need
to happen this week or next month, or within the
(17:00):
next thirty days. And more often than not, if you
are diagnosed with a cancer that needs operation, your doctor
has to get that done within a certain time period.
For some people that's ten days, some people it's twenty,
some people it's thirty. You actually get flown through the
public system, and more often than not, the same doctors
actually work across both in the public system. No, you're
(17:24):
not guaranteed your own private room. You might get a
really good doctor that also works privately, but they might
not be able to pick their team.
Speaker 3 (17:30):
That's fine.
Speaker 2 (17:31):
There's so many like little nuances, But like what happens
when you get out of hospital, Like you can't go
back to work because you've got twelve weeks of recovery.
You can't go back to work because you literally have
PTSD and you're exhausted from all the chemo drugs, and
like you would really love the financial freedom for your
husband to stay home for a few weeks and just
like decompress from the situation that was, Like, these are
(17:53):
the things that I want you to be thinking about,
not just oh yeah, public versa. I'm fine, Like I
get that. And it is such a privilege to look
at public versus private in that way because you don't
get to see the like dramatic nature of what private
and public can actually look like when push comes to shove.
And for me, it's actually, well what happens next, Like,
(18:13):
say you get diagnosed with breast cancer and you've got
you know, a few rounds of chemo and then you
go into remission, and that's fantastic. Your body more often
than not is compromised. I very much doubt after having
this whole diagnosis happen, you return to work in a
full time capacity, Like you do not have to do
that if you have proper insurances to make sure that
(18:36):
you can return hopefully, because like you might be like
me and you're like chomping at the bit to get
back to work, but like you also need to protect
you and you can't do that if you're stressed about money.
Speaker 3 (18:46):
And that's right, And private health insurance covers a lot
of bills. Oh yeah, it doesn't cover money in the
bank to give you space. That's really what personal insurance
cover does. It just gives you breathing space. And you know,
we help a lot of clients going through this claims process.
And that's the biggest thing is when money hits the
bank account, you can just you can just feel the
sigh of relief that people have is just going, oh,
(19:09):
we've got breathing room. Now, we've got capacity to make decisions.
And yes, insurance premiums cost money, and we've got to
pay it on the hope that we never actually get
that money.
Speaker 2 (19:19):
They want it. Like I used to say this to
my advice clients, so'd be like, I actually would love
this to be the biggest waste of money in the
entire world. Like I hope that when you're sixty five,
you and I get to sit down and I'm still
your advisor, and you tell me, I wish I never
got insurance so I didn't get to claim on it.
And you know what, I'm going to say, good because
it means you never experience a significant health event. Wouldn't
(19:40):
that be a privilege?
Speaker 3 (19:41):
And all insurance is really you know, we all look
at insurances as bad, like the insurance companies are bad
and we're good, But really, insurance at its core is
about a community coming together putting money into a big
bank account. When one of us unfortunately need it, they
can pull the money out. So we all feel like
insurance is a waste of money. Me feel like insurance
is a waste of money.
Speaker 2 (20:01):
Good because I'm paying for somebody else's of mind.
Speaker 3 (20:05):
Yeah, we work with clients who are claiming and they
get significantly more money in return than they've ever paid.
And that's because we've all come together as a community
and said, let's put money into this bank account. And
that's really why. I mean, they're for profit businesses insurance,
so it's we're not talking about pure altruism. But as
a policy holder, me, I know other people are claiming
(20:28):
on it because they need it at their worst moment.
Like we all know someone who's had a cancer scare.
You cannot walk around Australia without knowing someone who has
gone through cancer, Uncle, Auntie's brother, sister, whatever it is.
We all know someone and having personal insurance cover is
just allow us for breathing space. And as I said,
(20:50):
it is the most kind of emotionally taxing part of
our business, but the most rewarding part is working with
clients going through a claim and just the sigh of
relief that they have knowing that there's money there.
Speaker 2 (21:01):
Yeah, yeah, that is so true. Let's pivot a little
bit because I want to continue on the divisive topic.
Speaker 3 (21:08):
Let's go let's get I.
Speaker 2 (21:09):
Want your opinions on another relatively topical insurance, and that's
funeral insurance. How do you feel about that?
Speaker 3 (21:16):
I can't. I can't stand it neither.
Speaker 2 (21:19):
I was like, hold on, is he going to go
oh if it gives you peace of mind?
Speaker 3 (21:24):
Like I just think it is trash, No think, I
think it's a waste of money. Like it's really not
so much an insurance policy because people who are buying
it are often you know, getting closer to their funeral
and it's really pre paying a funeral.
Speaker 2 (21:38):
Did you know? So this is like a side note.
I'm currently helping some people with their retirement plans, and
I was like looking on the money Smart website and like,
the cap of assets that you can own before you
start to have your pension influenced is about four hundred
and seventy thousand dollars. And one of the recommendations that
(21:59):
the literal government website.
Speaker 3 (22:01):
Says is your funeral bond.
Speaker 2 (22:03):
Yeah, is this a joke?
Speaker 3 (22:05):
Like is that?
Speaker 2 (22:06):
I was reading that and I was like, surely I'm
on the wrong website. I'm a smart money smart is
recommending that, Like, oh, if you're over the limit and
you're like trying to decrease your assets like maybe a
funeral bond, I would actually prefer you to gamble it away,
do you know what I mean? Like I was just
looking at it, going what what like, Phil.
Speaker 3 (22:28):
Yeah, I wouldn't say it's a prodent financial strategy getting
a funeral bond to us your assets.
Speaker 2 (22:34):
I was shook. And then I did a little bit
more research in preparation for this episode, and once you
move over to the ASSEIC website, it says that the
average funeral payout is about eight and a half thousand dollars,
but many policyholders end up actually paying more than double
of that in premiums because we're all living longer, and
(22:55):
essentially so many people take out that cover at a
young age. Like and if you're retiring and you're on
the money Smart website and you're like, oh, I actually
have just over the threshold of usets. I'm going to
buy this insurance bond and keep tipping money into it.
And I am literally only sixty five because I'm retiring
right now, but you live another thirty years, which is
very probable in this day and eight. Like what that
(23:17):
is actually unhinged to me? Like, there are so many
cases online of people who are paying twenty thirty thousand
dollars in premiums. What is this to me? Scam? Yes, yes,
you get paid out when you die, but it is
not worth it.
Speaker 3 (23:31):
Oh yeah, I mean I wouldn't recommend it. And I
was actually talking to my mother in law the other day,
Please tell me day I have it. No, no, no,
she was talking about her mum. They always thought she
had funeral insurance, but then when they got there, they
couldn't find any paperwork.
Speaker 2 (23:44):
I was about to say, how many people have actually
documented their funeral insurance properly enough so that when something happens,
the kids are like, oh great, Like we have to organize.
Like what if you went and got it because you
thought it was a good decision, but you don't talk
about money with your family.
Speaker 3 (23:58):
Yes, exactly. And something that's interesting if you're an insurance
geek like myself, I'm post to all their stats, all
their data they post. Actually I'm not sure they still
post the revenue per insurance product. But you used to
be able to look at appra's data and they show
you how many premiums and how much is being paid
(24:19):
out on a per insurance policy basis, and so you
can actually see what percentage of premiums are going towards
claims and funeral insurance. The premium to claim ratio is
so low that it just means it's not a good bet.
Speaker 2 (24:32):
No do it.
Speaker 3 (24:33):
Absolutely, you're paying you know, as you said, you're paying
more than you're ever going to receive.
Speaker 2 (24:36):
It drives me insane because if you look at the
marketing of these companies, they're all like, oh, well, actually
you're not leaving your loved ones with a financial burden
expensive please don't get me wrong. Like the average funeral
I think is between five and ten thousand dollars these days.
But if you're putting that money into a savings account
(24:57):
and something happens to you and your family access to
your funds, great, they can actually spend it in line
with how they think they want your funeral to be planned,
or maybe even how you want your funeral to be planned,
because you can do that, and they might even have
some extra money left over for a really good wake,
like whereas a funeral plan is not paying for that.
(25:17):
That is not how that's going to work. And like
a financial burden on your family or that is playing
into people's emotions, and I just think it's like so manipulative.
Speaker 3 (25:27):
Yeah, and this is where it all comes down to.
At the end of the day, we've all got living expenses,
got to spend money. It's just allocating how much you
want to spend towards insurance is what needs to be
really thoughtful and just thinking about what's the alternative. And
so yeah, my view is I don't love funeral insurance
at all.
Speaker 2 (25:44):
All Right, funeral insurance is out I reckon we should
go to a little bit of a break because we've
talked about some controversial insurances and I'm sure people actually
would love to hear from a proper financial advisor, some
actual advice, Like all right, well he told he does
what he doesn't like, what does he like? So because
we know that some of them are trash and some
of them are actually not as bad as we thought,
we're going to go to a really quick breakin. And
(26:06):
on the flip side, I'm going to put the pressure
on Phil to actually share the insurances he believes are
absolutely non negotiables, the stuff that could seriously save you
when things don't go to plan. So stay with us,
we will be right back. All right, welcome back. And
we have talked about what we think is trash and
what we think is maybe worth your cash. Phil, it's
(26:28):
time for I would say the important stuff, like instead
of just talking trash on insurance that we don't think
is worth it, like maybe pair insurance and definitely funeral insurance.
What insurances do you think every single person should have
locked in?
Speaker 3 (26:42):
No matter what I mean, personal insurance is the most
important thing. So what is personal insurance? Is really four
to five different types of cover. So income protection, as
you said at the start, if you had to cancel
everything else but keep one, income protection is the one,
and so that protects your income if you can't work
because of an illness, injury, sickness, if you get made
redundant or you you know, you get fired. It's not
(27:05):
paying you that, but it's for health reasons. If you
can't work, you'll get paid and income. So that's a
part of personal insurance. Then there's life insurance, so VD
if you pass away, there's pretty simple. That's the one.
Speaker 2 (27:15):
I think most people understand.
Speaker 3 (27:17):
If it's easy. You're dead, you're dead, You're dead.
Speaker 2 (27:19):
Yeah. Saying that, I was like, there's a little bit
of flexibilities. You have a terminal diagnosis, you might be
able to cash in on that a little bit early.
Speaker 3 (27:27):
Correct and you know, I, you know, I think we've
spoken about this. One of my really close friends was
termally ill and it was super important for him to
get the claim in his bank account before he passed away.
And it was pancreatic cancer and it was like twelve
months before he was diagnosed before he parted, and it
was so iced up.
Speaker 2 (27:44):
And so how's his family now?
Speaker 3 (27:46):
Yeah, they're doing they're doing it. I mean still, they're
two young boys. They're just starting high school next year.
Speaker 2 (27:51):
You spoke about him, he hadn't passed away yet, you
spoke about him last time you were on or the
time before you were on the podcast, And so the.
Speaker 3 (27:58):
Terminal illness payment, it didn't change whether he got it
after he passed away or not. It's the same money. Yeah,
So but for him it was so important to know that.
Speaker 2 (28:06):
It actually happened.
Speaker 3 (28:07):
I had I set this up to protect my family.
I know the money's in the bank account and my
family is protected. Was incredibly important to him. So, yes,
there is nuances and a bit of an asterisk about
life insurance. The other one is like disability cover. Disability
cover is a lumps on payment, and that's the lowest
likely event to happen. You know, to be totally and
(28:29):
permanently disabled is really unlikely to happen. You're more likely
to pass away than to be totally We.
Speaker 2 (28:34):
Had Rihannon on the podcast a while ago, and she
shared her story of diving into a pool at twenty
one in Bali and becoming a quadriplegic, and like, you
don't expect that stuff to happen. But like she shared
even just how much it cost her on an annual
basis to pee because she can't do that. And like
I think that these are the things that no one
(28:55):
really wants to talk about because it's a bit icky.
But the fact that she's spending I think it was
nearly eighty thousand dollars a year on catheters, Like, where's
that money coming from? Phil If you're not working and
you're not able.
Speaker 3 (29:06):
To Yeah, and look, some of the answer is ndis, Oh,
I have an scheme, and that's great, but that can
change with governments.
Speaker 2 (29:13):
And also that is going to be so limited in
terms of quality of life. Yes, you might get your catheters,
are you able to make the appropriate adjustments to your
home so you've got the right ramps and your comfy
getting in and out of your car? Like the ndis
often don't cover all of the things that are about
quality of life, but more about just getting by.
Speaker 3 (29:33):
And the winds can change. That's the scariest bit about
an NIS scheme. You know, governments can they can be
cost blowouts and then they can rain those costs back in.
And what is raining costs back in from a government
point of view is we're not going to give as
much to people who need it yea, And so you know,
being reliant solely on that is a risk. So disability
is the least likely to happen, but the most financial impact,
(29:55):
like it's really significant. Then the trauma insurance or critical illness,
which pays for specific medical events, so cancers, hard attack strokes,
if any of those diagnosed or happen to you and
a specific severity, then there's a lum some payment that
gets paid out. That's the most one that we help
our clients claim on because it's the most likely to happen.
And there is child's covered that we like we recommend
(30:17):
for our clients is if something significant happens to your kids,
there's money in the bank, gives you breathing space. That's
really what these insurance policies are. So when we talk
about our priorities for me and yes, that's what we do,
and that's our business model is to help people set
this up. But the reason I can do anything in
financial advice, I can help people. I can be you know,
a finance bro and help people invest. But we've chosen
(30:40):
to work in insurance because fundamentally believe that personal insurance
is incredibly important. So if you're and I love that,
I love that.
Speaker 2 (30:47):
I remember when you were telling me that you were
going to start sky Welt and you were do you
reckon it's a good name. I was like, yeah, it's great,
like and you were so like, I don't know if
it works, but I'll give it a crack, like I reckon,
I'll just do insurances. And like at the time, like
I thought it was a really good idea because it
was like a good business model. But I can almost
imagine every single other advisor being like, what is he doing?
(31:09):
Is he crazy? Like he's not going to do investment,
He's not going to do subranuation, he's not going to
do budget and cash flow. This guy is just going
to do insurance, which for a lot of advisors I
would say is a hygiene factor in the nicest possible way.
A lot of advisors who do investment or they really
focus on budget and cash flow or pensions or whatever,
(31:29):
they kind of like do insurance and they know it's important,
but it's not their favorite thing to do. Because he
is quite admin heavy, and there's a lot of back
and forth with insurance companies, and it can kind of,
like low key, be the bang of your existence as
an advisor if you're just so passionate about investing and like,
that was lou key me. When I was an advisor,
I was like, no, this is incredibly important. But nobody
(31:50):
liked negotiating with the bdms. No one wants to go
back and forth with the underwriter and be like, look,
I know that's on their record, but they've recovered, Like
and I would negotiate all the time. It would take hours.
So I remember thinking that you were low key, a
little bit crazy, but also it was genius because financial
advice can be so unobtainable. So like financial advice when
(32:12):
I was working as an advisor, which i'm not now,
was anywhere between four and a half thousand dollars and
ten thousand dollars for my initial statement of advice. For
most people, that is not reasonable. And it's not because
I didn't want it to be reasonable. It's because that's
what it costs to get the advice together, to be
able to create the statement of advice, to pay my team,
to keep the lights on in my office, to pay
(32:32):
for my license to do all of those things. Phil,
I know this sounds really marketing, but like, because you
only do insurance. If I am listening to this and
I'm like, I can't afford to go see a financial advisor,
how much does as Skywealth's statement of advice cost for
a single and then maybe for a couple.
Speaker 3 (32:50):
Yeah, So we've changed up our models slightly. So if
you are like just employed and don't have any major complexities,
then we charge three hundred and thirty dollars for an individual.
Speaker 2 (33:00):
Three hundred and thirty bucks to get your advice done
just for insured.
Speaker 3 (33:03):
That is, that's it. And we only do insurance. So
if someone says they've got an austrailed super but they're
looking at host plus cool, sorry, and we will we
will say hold just hold your horses. We'll look at
any insurance within a strained super. But we're not going
to tell you to go and invest your money here
or change your acid allocation. So it is very scoped advising.
The jargon that we use in I think it's.
Speaker 2 (33:25):
Good because you could go to another advisor. And I
think this is why, like you and I get on
like a house on fire, but we also get on
on like a more altruistic level because if you go
and see another financial advisor for insurance only advice, I
would say minimum two thousand dollars because they honestly they
don't have the model to support going and just doing
(33:46):
insurance for a client. And they also kind of want
you to be a little bit scared away from that
because they don't want to do that.
Speaker 3 (33:51):
Yeah, that's right, brutally on us.
Speaker 2 (33:53):
Most advisors are like insurance only clients, no, thank you.
Speaker 3 (33:56):
Yeah, And to be fair, we work with a lot
of those firms because they prefer to us, which is genius.
Speaker 2 (34:01):
You're like, I'll just do their insurances and sample them
back to you.
Speaker 3 (34:04):
Yeah, because I mean I've finished talking about our fees. Sorry,
just to touch on that, Like, let's be honest. Investments
is fun investments. This money magically increases.
Speaker 2 (34:15):
Yeah, I have a whole investment masterclass, Like I'm obsessed
through that. Do you think because it magically increases this thing,
this asset interesting? How good is that?
Speaker 3 (34:25):
And what we do is we help people pay money
to an insurance company or get paid from an insurance company.
Speaker 2 (34:30):
I'm not gonna lie. That doesn't sounds as sexy as sexy.
Speaker 3 (34:34):
So that's why I start doing it. Yeah, So just
back to our fees, So three point thirty if you're
an individual and you're just payg so you just employed
and for a couple of four hundred ninety five dollars. Now,
if someone is self employed, if they've got like defined benefits,
self managed super funny. More if they're an expat so
we help people who are living abroad get set up
(34:55):
insurance policies in Australia, any one of those four things,
then it's a little bit more expensive. So seven hundred
and seventy dollars for individuals, yeah.
Speaker 2 (35:02):
Because you're a lance. Hundred is actually a little bit
more complex.
Speaker 3 (35:05):
Yeah, and looking through profit and loss statements, it just
sounds easy, especially if you just got to like, if
you're not a simple business, it's still not because the
insurance that we can get is so much more complex.
So yeah, more complex clients have slightly high seve.
Speaker 2 (35:21):
It sounds like I'm I don't know, the biggest fan
of Sky Wealth, but I literally am. Like people actually
message us on a weekly basis and they'll be like, hey,
who was that insurance dude that you mentioned on the podcast,
And I'm like, it would definitely have been Sky like
it definitely was, Phil, Like, I just am such a
fan of it because it's I guess from the flip side.
And we talked about this before. Having been an advisor,
(35:42):
I've seen how bad it can be, and it gives
me so much anxiety to think that my community aren't
protected or maybe they don't see the value in getting protected.
And like we live in Australia and we are so
lucky we have many care like and at the moment
we're seeing all of this stuff happening internationally, like making
decisions left right in the center. I saw TikTok the
(36:03):
other day, Phil, where this American mom was breaking down
her invoice for giving birth in an American hospital and
she was like, oh, it's so good because like this
is a good deal, and it was forty four thousand
dollars USD for her to give birth, and she was
going through like lin item by line item and the
comments were obviously, oh, my gosh, that's so good because
(36:25):
she had an American audience. Mine was sixty six thousand
and whatever. But then there were a few comments from
Australians being like, this is crazy to me because I
went through the public health system in Australia. I had
a C section, or I had a be.
Speaker 3 (36:38):
Dur all, I had these daughters. We walked in, I stayed.
We had couples rooms, so I stayed over for three
little over the moment it was sleepover. We had. We
had a date night. I mean Kate, I loved, not
so much of a day night for her because she's
you had a good time.
Speaker 2 (36:53):
She was along for the ride.
Speaker 3 (36:56):
But you know, and then we walk out like are
we good to go have.
Speaker 2 (37:00):
A good day, enjoy your new baby. It didn't Because
we live in Australia and we see these things and
we are so lucky to have these things. I think
there's an underlying assumption that when things go wrong, we
are looked after. And we are known globally as the
most underinsured country in the world, the most insured country
(37:20):
in the world. Feel you probably already know this is
who Oh he doesn't know this. It's South Africa. Oh yes, okay,
South Africa. They are the most insured country in the world.
And then we are the most underinsured country.
Speaker 3 (37:32):
You know, Trauma insurance was invented in South Africa.
Speaker 2 (37:35):
It was it was I remember going to all these
conferences and like a lot of insurance companies actually based
in South Africa, and that makes sense because it turns
out there they love it. They love it like everybody
has insurance coming out of the kazoo over there, and
it's a.
Speaker 3 (37:50):
Bit of a shoe. We're right attitude, that's the issue
and coming back like this is you know, we help
people set up bills. It's an increase to someone's last
style setting up insurance. Now, the great thing that we
have in Australia is your super fun can fund a
lot of the premiums and it can be really tax effective,
so it doesn't matter if you're with a strain and
(38:10):
super host plus wherever. We can set up the right
insurance policy with a company without using or really what
we think is best for their clients and whoever they're
with from a super point of view, that can fund
the premiums.
Speaker 2 (38:23):
Yeah, and I love that because for those of you
following along at home, the superannuation environment is taxed at
fifteen percent instead of your marginal tax rate, which most
people listening to our podcast is probably going to be
around thirty percent, which is a fifteen percent discount money win, Phiel,
we lose that. That's very sexy.
Speaker 3 (38:40):
Yeah, and you pay, especially life and disability, you pay
pre tax dollars for those premiums instead of paying it out.
Like if you've set up an insurance policy directly with
an insurance provider, you almost certainly not paying it through
SUPER because most of them don't allow it. And so
you're paying tax on your income to then pay these
premiums that aren't deductible. Why don't we just paid inside?
So we've got a lot of free kicks in Australia
(39:01):
when it comes to personal insurance cover the means it's
really advantageous to go and see a financial advisor because
we have choice of insurer regardless of what's SUPER fun
you with. Yeah, if you're with the strained Super, you
don't have to go to TAO, which is the insurer who.
Speaker 1 (39:17):
Yeah.
Speaker 2 (39:17):
I think that's one of my favorite parts about it.
I'm like, yes, it might impact your day to day
income or your cash flow. And I mean, Phil, this morning,
you and I got breakfast and we were talking about
the cost of living crisis, and we're talking about how
ridiculous groceries were in all of that stuff when we
are both in financially privileged positions. But we do still
see it, Like you're dealing with clients every day who
are probably like, okay, cool, Like, let me see how
(39:40):
I can fit that into the budget. Because we're not
just assuming that, you know, for income protection, it might
be one thousand dollars a year, like it might be
more than that depending on your income. We're not expecting
you to just be like, oh yeah, she'll be right.
But it is something that you genuinely should be prioritizing
because it's your livelihood, it's your income. It's like the
the most important asset that you need to protect. So,
(40:03):
knowing that I'm running out of time with you today,
I want to know, is there like a golden rule
for deciding if insurance is kind of worth it for
you or not?
Speaker 3 (40:11):
The kind of analogy I love because we've got a
lot of young team members coming into our business. All
of them tell me I'm young, I don't need insurance,
and I get on my The ones that have been
around for a bit longer, and when a newer person comes,
they're just like, I'm going to fill up for this round.
Yeah yeah. So the thing I like to think about is,
take your income, whatever it is, big, small, doesn't matter.
(40:34):
Take your income. Work out how old you are, so
go age sixty five minus my current age, yeah, whatever
that may be. Go your income times that number. Yeah,
so how many years until retirement my current today income?
Assuming it's not going to increase, If it's a million dollars,
it could be three million dollars. That's without any increase,
without any promotions. And think about if I had a
(40:55):
Ferrari that cost me three million dollars and I was
driving it every single day. Would I say, I'm young,
I'm a good driver, I don't need to ensure it.
Or would I go, that's a three million dollar Ferrari.
If if that crashes or if there's an issue, even
too scared to drive it.
Speaker 2 (41:12):
If it's on insurance, I wouldn't drive it at all.
Like if someone said, do you want to drive my Ferrari,
I'd first say no because I'm too scared to drive
your Ferrari. But second, the next question would be that
it's insured, right, Like if I crash your Ferrari? Like
are you coverage for this? You're good? You're good, But
you don't ask that when you go skydiving, do you?
Speaker 3 (41:31):
Yeah? And that's what and we don't ask it every
time we go out to work, because like the biggest
claim at the moment and the biggest cost for insurance
is mental health. Yes, and mental health. We're in an
absolute epidemic for mental health conditions, and so that's the
thing of going we aren't you know, life is fragile.
(41:51):
You know there are things that can happen, and we
are driving around Ferraris in our bodies. Doesn't matter how
big or small air income is. If you're young, you're
driving around a Ferrari. Now insure that Ferrari. That's the
most important insurance. And that's why you know you've kicked
us off with saying income protection is most important. And
I fundamentally agree that that is.
Speaker 2 (42:09):
I'm a on the same page because we could have
just made this whole episode a little argument like and
that wouldn't have been nearly as in life community. Yeah,
I mean that's fine, But like, I think that is
so important and I haven't thought about it in the
Ferrari analogy. I'm always like, you're insuring your car, but
you're definitely not insuring your life. Like I think you've
got it backwards. But like the idea that we're all
(42:30):
mini ferraris absolutely I love that for us we are expensive,
we are worth it.
Speaker 3 (42:34):
Like, I didn't even know if Ferrari's at three million
dollars none, I don't know what. I personally never looked
into a Ferrari.
Speaker 2 (42:38):
I haven't either, but that at the moment is the
most expensive car I can think of. Yeah, like, I
can't think of anything.
Speaker 3 (42:45):
You know what.
Speaker 2 (42:45):
There are people that are going to be screaming right
now in their cars, being like Victoria.
Speaker 3 (42:49):
This, McLaren, this, this is mor guy.
Speaker 2 (42:53):
Well, neither am I and I think that that's probably
a really good place to leave it. Phil. I need
to update my insurance so we might get onto that.
Thank you so much for coming on the show. It
is always a pleasure, And to be honest, I just
feel like you really do help make this stuff a
whole heapless, overwhelming.
Speaker 3 (43:11):
Oh, thank for having me.
Speaker 2 (43:12):
Thanks for having me.
Speaker 3 (43:12):
Victoria, Hey, VD, thank you so much for having me.
You're not having that edited out.
Speaker 2 (43:19):
One of the joys of.
Speaker 3 (43:20):
My life is being able to spend Tommy. Actually, I
was singing this on the way in here. This will
get a lettered out, I'm sure. Is The older I get,
the more I appreciate long term relationships, so I appreciate you.
Speaker 2 (43:30):
No, I'm not editing that out because it strokes my
ego in exactly the right way. I appreciate it. Guys,
if this episode has made you think twice about what
you're paying for or what you're not covered for, consider
this your reminder to do a little life admin check
in your future. Self is definitely going to thank you
for it, And if you haven't already, make sure that
you're following She's on the Money wherever you're listening right
now so you don't miss the next episode. All information
(43:53):
about our friend Phil and sky wealth is going to
be able to be found in our show notes, so
if you want to talk to this guy, you can
hit him up asap.
Speaker 4 (44:07):
The advice shared on She's on the Money is general
in nature and does not consider your individual circumstances. She's
on the Money exists purely for educational purposes and should
not be relied upon to make an investment or financial decision.
If you do choose to buy a financial product, read
the PDS TMD and obtain appropriate financial advice tailored towards
(44:27):
your needs. Victoria Divine and She's on the Money. Are
authorized representatives of money. Sheper pty Ltd ABN three two
one IS six four nine two seven seven zero eight
AFSL four five one two eight nine
My name is Tatasha Bamblet. I'm a proud First Nations
woman and I'm here to acknowledge country t Glenn Young
Ganya nianar Kaka yah Ya bin Ahaka nian Our gay
In Mbina, yakarum Jar, Dominyama, Domagahawakaman, damon Imlan Bomba ban
Gadabomba in and now in wakah Ghana on yak rum
Jar water Nadaa. Hello, beautiful friends, we gather on the
(00:24):
lands of the Aboriginal people. We thank acknowledge and respect
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She's on the Money podcast acknowledges culture, country, community and connections,
bringing you the tools, knowledge and resources for.
Speaker 2 (00:44):
You to thrive. She's on the Money. She's on the Money.
(01:07):
Hello and welcome to She's on the Money, the podcast
that keeps your finances ready. Whatever plot twist is coming next.
If life three you were curveful tomorrow, would you be
ready for it? Because here's the thing. Most of us
don't find out we've got the wrong cover until it's
too late. So how do you know if you're wasting
money on pointless policies or missing the one thing that
(01:28):
could actually save you. Stick around because we're pulling back
the curtain on the insurances we would never buy and
the ones you simply can't afford to ignore. I'm Victoria
Devine and today we are joined by someone who knows
the insurance world inside and out, mister Phil Thompson. He's
an insurance expert and Big Dog CEO of Sky Wealth.
(01:51):
And if there's anyone who can help us sort out
the financial fluff from the real deal, it is this guy.
Welcome back to the show, Phil. I'm excited I did
that you're here again and that you've somehow consented to
be on my podcast again.
Speaker 3 (02:04):
I appreciate changing my title to Big Dog. I'll go
back to the office and big Dog and flow that around.
Speaker 2 (02:09):
My name on Slack for a long time was big
Bad Bulls with lots of doubu's and s's at the end.
But you will be very excited, and I don't know
if their reference is going to be completely over your head,
but my name on Slack now is Victoria Labuobu.
Speaker 3 (02:24):
That's you know, how old I am and how not? Yeah,
my profile.
Speaker 2 (02:29):
Picture is a pink labooboo and my status is currently
set as really ugly.
Speaker 3 (02:33):
I do know what la booboos are, which is one
of my past three kids said no and the kids
don't know what it is. But one of our teams
said I want to spend four hundred dollars on this.
Speaker 2 (02:42):
Absolutely not. That's why it's my profile because I just
think that they are so ridiculous. Anyway, we wouldn't spend
money on labooboos in this house, and also on dodgy insurance. Now,
before we start calling out the most cooquestionable insurance products
on the market field, I think we actually need to
have a chat about just how big the insurance industry
(03:03):
really is. The Australian insurance space is worth more than
one hundred and fifty billion dollars a year, with general
insurance like car and home and travel making up nearly
sixty six billion dollars worth of that. And I would say, Phil,
that's a lot of cover. That is a lot a
lot of cover like that could buy you a new house,
(03:23):
like that could buy you a new car. And when
you zoom in, the average osy household is spending somewhere
between fifteen hundred to two thousand dollars every single year
on general insurance. So I guess it's no wonder that
people want to know whether they're actually getting some value
out of this or not. And Peel, I know you
have definitely seen it, all the good, the bad, the ugly.
(03:47):
And I was blown away when I saw that one
in five Australians have bought insurance that they don't fully understand.
Add to that fact that nearly half of us aren't
even confident our insurers are going to come through if
we need to claim, and it starts to make sense
why insurance can actually feel consistently or maybe just like
something we would rather avoid. So I guess let's start there.
(04:09):
Feel why does insurance get such a bad rap? I mean,
it's your entire career, so I'm hoping you.
Speaker 3 (04:14):
Know the answer. Yes, we work in a subsect of
the insurance, so we don't walk across the whole gambit
of it.
Speaker 2 (04:20):
But so you're not going to sell me pet insurance,
no iPhone insurance, no I will car insurance, insurance, So
all of the stuff that I probably shouldn't be spending
money on to begin with, you don't sell me.
Speaker 3 (04:33):
That's right, the thing interesting want to replace yourself, Yeah,
you probably don't need insurance for that.
Speaker 2 (04:38):
So talk to me about insurance, because I feel like
so many of us we think we're doing the right thing,
and we go ahead and we ensure something like we
might be at Apple buying a brand new phone and
they offer insurance, and we go, well, this is a
really big purchase and it's really important, and this guy's
just told me that like insuring it is a very
good financial decision.
Speaker 3 (04:55):
So we do it.
Speaker 2 (04:57):
But so many of them, I would say, are comp
completely unnecessary? What do you reckon? The most unnecessary insurance is?
Speaker 3 (05:04):
I mean iPhone insurance? My phone insurance is often like
incredibly expensive and not necessary. These extended warranties. Any time
I go to jbhigh.
Speaker 2 (05:14):
Fie, don't when you're extended warranty, like the whole product
is going to be out of like fashion by the
time that extended warranty is.
Speaker 3 (05:21):
Yeah, I've used it once. I bought it an extended
warranty once, and I had a warranty client. But I
just was like, it's literally five years ago. I don't
I'm not going back and talking about my laptop. They're
broke in the last five also, like I need a
new laptop at that point exactly. So those extended warranties,
really they're just insurance policies. That's what they are, and
that's what they're built for. And so the type of
(05:43):
insurance policies that I don't love. Really at the end
of the day, insurance is about protecting something that you
can't afford to lose. And so the things that you know,
like health insurance is really important because you may have
a health event that is really significant costs. Health insurance
has that. If you have a car that's worth fifty
thousand dollars and if you wiped it off and hit
someone else's car, well you need insurance for that because
(06:06):
it may be a significant cost if you can't afford
to pay that, which all of us can't.
Speaker 2 (06:11):
Yeah, and I think that from I'm an ex financial advisor,
you're a current proper financial advisor. I think from outside
of the story, we just see so many people who
you know, have car insurance, have like house and land
insurance or whatever, and then they don't have income protection,
and you just go, I see that you can see
value in it, but you can't see value in your
(06:33):
own income. Why do you think that's a thing, because
so many Like if you ask me, Victoria, you have
to get rid of every single insurance under the sun.
What one that you're keeping, you get one I can
always guarantee this is the one you would keep as well.
And for me, it's income protection. Like I know that
if my body breaks, I can still pay for my son.
(06:53):
I can still you know, make sure that my mortgage
or payments are being made and that I've got income
coming in the door each and every single month. Whereas
if my car broke, well, I can use my income
right now to purchase a new one. But if my
car broken I didn't have income protection, we are in
a bit of a pickle, right, Like my body is
the thing that is the most valuable to me, and
(07:14):
it just it blows my mind that people don't see that.
Speaker 3 (07:17):
I think people just underestimate the value of their income.
So one thing that we do internally, it's gone we
don't really talk to a client about this too much
as much as we probably should, is we calculate the
value of someone's income based on their today's income, assuming
you're just a CPI inflation increase on their income, no
pay rises or anything like that, and assuming retirement at
age sixty five, and if you get someone on a
(07:39):
relatively modest income that's fairly young, the value of their
income is millions and millions of dollars. And so people
just don't really equate that. Oh, if I'm on fifty
thousand dollars or one hundred thousand dollars or whatever income
I'm on till retirement and compounding that year or on year,
and that loss that's really significant. And so yes, the
(07:59):
likelihood of a claim maybe lower than dropping your phone
and breaking your phone and needing that replace but the
cost of that replacement of my income is really significant,
and we probably understate or underestimate that value of our
our own income.
Speaker 2 (08:13):
But Phil, I've got like, I've got income protection in
my subernuation. I saw there was like a two year
policy there. That's good, isn't it well?
Speaker 3 (08:21):
To cover your income for two years? It is good? Yeah?
Speaker 2 (08:23):
And what about after those two years? Phil, Am, I
good to go?
Speaker 3 (08:26):
Exactly. This fun thing about insurance it's always this balance
between how likely is something to happen and what's the
cost of that thing. So from an insurer's point of view.
I always love getting stats on insurers and like where
are they spending their money? From an income protection point
of view, most of their claims are for policies that
only last for two years. So the claim you know,
someone's injured and then goes back to work after six.
Speaker 2 (08:47):
Months, good, that's the perfect outcome.
Speaker 3 (08:49):
And that's majority of their claims in terms of raw
numbers that they're processing. But the cost to their business,
more than eighty percent of their cost for income protection
is actually for clients that go longer than two years.
And so you think about it from the other point
of view, if insurers are paying most of their money
towards those long term claims, we want to make sure
(09:09):
we're protecting that. So if you go into your super
far and you log in and you look at you've
got an income protection that only lasted two years, think, yes,
that will protect me from majority of the times I
will ever need this.
Speaker 2 (09:20):
But for the really big stuf it gets really real.
Speaker 3 (09:23):
Then you know you're going to be well under insured.
Speaker 2 (09:26):
Yeah, And I think a lot of people go, oh, well,
that's such a good deal because it's through my superinuation
and like, you don't have to necessarily get rid of that.
You can talk to a good financial advisor and get
that topped up. Like I remember when I first got
my income protection sorted, I had my two year policy,
which is why I always bring it up. I have
my two year policy, and then I had one outside
(09:46):
of supbranuation as well, and I was kind of carrying
both for a while because that's what put me in
the best possible position, because obviously suberinuation was a nice
little tax benefit, but having inside super for the entire
time didn't make financial logical sense. Now, two of the
most I would say divisive types of insurances. I would say,
(10:06):
lots of people get heated about private health insurance, whether
you need it, whether you don't, like we've got Medicare
in Australia, and other is pet insurance. So Phil, I
want to know what are your thoughts on both of these.
Speaker 3 (10:19):
So your pet insurance, let's go. I don't have a pet.
Speaker 2 (10:23):
No I do, And for this conversation, let me give
you a little bit of context. I paid for pet
insurance when we got Lucy in twenty twenty one, and
it cost me about four hundred and eighty dollars in
premiums for the year and I got fifteen thousand dollars.
Speaker 3 (10:36):
Worth of car. Yeah, so if you ever needed to
claim you were capped at fifteen thousand dollars and you
couldn't get it was something significant you weren't getting more
than that. I personally don't love pet insurance because of
the cost versus the value that you're going to get
for it can be a misbalance there, So I personally
don't love it. But just like with any type of insurance,
like for yourself, making sure you've got the ability to
(10:58):
save enough money for that outside risk. So if something
happened to Lucy, you've got the money there save. It's
not going to impact your last style. You're not going
to go eat baked beans for weeks on end to
afford it. But I would it's my dog, yeah, because
everyone does. Everyone will will spend a lot of money
on their pet when they're sick ill. It's in the
extension of their family, and so that's something that you
(11:19):
just need to be aware of. You either pay an
insurance premium to cover that cost, or you have the
money available or access to that money. So it is
really important. Although I if I had a pet, I
probably wouldn't have pet insurance. I would make sure we
had some form of.
Speaker 2 (11:32):
Yeah the cash in the side, Yeah cash, And I
think that's the important thing. Like when I got Lucy,
it was my first time owning a dog, and I
was like, I'm going to do all of the right things.
I'm going to get paid insurance. And then you know,
after the year was up and they sent me my
premium again, I was like, I am very like, I'm
in a very privileged position to have enough savings that
if something happened to Lucy and it cost me fifteen
(11:54):
thousand dollars, Like, I don't really want to spend my
savings on that, but I could. And so I just
made the content decision to start putting an extra five
hundred dollars a year into savings instead, because I was like, well,
that just seems to make more sense. And thankfully, knock
on wood, up until this point, she has not cost
me fifteen thousand dollars.
Speaker 3 (12:10):
And to be fair, if something ever happens, you will
never save the premiums to cover the cost. You just won't.
If something happens. It's just making a bet that hey,
hopefully something doesn't happen, that we don't need it. The
thing about insurance is I don't think it's wrong for
anyone to get pet insurance at all. Oh, I think
it can be right.
Speaker 2 (12:28):
It's divisive, like so many people are like that's a
scam or that's a good it's not, but like, is
it in line with your values?
Speaker 3 (12:35):
Yes? And I think it's important to think about what
is our total cost of insurance and do we have
the right ones. That's where it's a conversation where for
someone it may be okay to have pet insurance if
they have certain other insurances that you know that we
believe to be more important. If you're protecting your own
income and you've ticked that box, If you're protecting your
(12:56):
own life disability, like making sure your own personal insurance
is covered and sorted, and you've got ability to afford
the pet insurance as well, then great, go and spend
money on that. The thing that I kind of have
a disagreement on is if someone says I don't want
to have personal insurance, I'm going to cancel my income
protection because the premiums are too expensive. Totally fair and reasonable,
(13:16):
But then go and pay pet insurance and go. Unfortunately,
Lucy's not making much money for you. No, it's just
a straight cost. Your ability to earn an income is
making money, so protecting that is more important. So it's
all about how do we prioritize these insurances properly?
Speaker 2 (13:31):
Yeah. I think that there's also a fair bit of
confusion if you've never looked at your insurances before, to go, well,
why would I see a financial advisor to talk about like,
you know, income protection and TBD. Like I've got private
health insurance. I feel like that is such a common
response when I say, oh, have you got insurance, They're like, yeah,
private health, and you go, that's actually not enough. Is
(13:52):
that still something that you guys are coming up against
consistently in conversation.
Speaker 3 (13:56):
Yeah, because the cover that we help people set up
is the personal insurances and for events like cancer, heart attack, strokes,
or we're just mental health time off work, the personal
insurance cover will pay you for those events. And so
people think, well, I've got private health. If I have cancer,
I'll just go through the private system and that's okay.
And I just got off the phone last week with
(14:18):
a client who found out she had cancer.
Speaker 2 (14:20):
That's the worst part of your job, Like.
Speaker 3 (14:23):
Yeah, dealing with claims is hard, and.
Speaker 2 (14:26):
You know, I'm glad they have you, though, I just
know that you're the best person in those situations. Like,
if I've got something going wrong, you are one of
the first people that I pick up the phone and go,
that's all falling apart. Phil, I feel like you've got
your shit together in the best possible way.
Speaker 3 (14:39):
Yeah, And it's like and it is. I mean, look,
it's emotionally taxing and it's difficult. You know, we're not
going through it, but we're empathizing with our clients and
walking through that process. But this phone call, this client
and like incredibly positive, like had such an amazing outlook
on her situation. But was talking to her last week
and she's like, oh, yeah, we canceled our trauma insurance
(15:00):
two years ago. And I was like, and fortunately she
had income protection that pays her. It's an old policy
that pays her six months of income protection just on
a cancer diagnosis, so there is something. And she was
just like, look, at least it's something. You know, my
sister's over from the UK, so that'll cover flights, that'll
cover you know, go towards something. And this was like
(15:20):
sixty thousand dollars that was going to be paid out,
and in her mind it was like, at least that's
something towards it. And so you know, when people are
setting up the policy, they tell me that they've got
private health insurance. That's totally fine. When they go to claim,
it's rarely like a private health insurance is fine. It's
people's commentary is always, ah, that's great, the money is
(15:41):
in the bank account. Maybe it's probably not enough often
and so one bit of data that an insuran has
come out saying that they've talked about, what is this
total spend on health spending? Private health insurance covers half
the amount of spending than individuals are spending on medical events.
So what that means is the government spends a huge
(16:02):
amount and then personal spending is covered that covers more
than twice what private health is funding towards health events.
So when people say we've got private health insurance that
will cover it, well, it actually covers half of what
the total you know, spend on these health events is.
Speaker 2 (16:19):
Yeah, And to get a little bit I don't know
if the word is morbid here, but like if you
get a cancer diagnosis and you're going through the private system, Like,
that's great because you can pick your doctor. You can
pick you know, your doctor can then pick the team
that works with them. In probably a more cushy environment.
You'll probably guaranteed your own hospital room. That's really nice.
(16:40):
But you might have thought, oh, if I go through
the public system, like, there'll be weights, they'll be this,
they'll be that. Like if you've got a dramatic cancer diagnosis,
you actually go to the front of the line in
the public system. That's why there are so many weights,
Like your ankle surgery is taking two years, it's because
the theaters are full of people with things that need
to happen this week or next month, or within the
(17:00):
next thirty days. And more often than not, if you
are diagnosed with a cancer that needs operation, your doctor
has to get that done within a certain time period.
For some people that's ten days, some people it's twenty,
some people it's thirty. You actually get flown through the
public system, and more often than not, the same doctors
actually work across both in the public system. No, you're
(17:24):
not guaranteed your own private room. You might get a
really good doctor that also works privately, but they might
not be able to pick their team.
Speaker 3 (17:30):
That's fine.
Speaker 2 (17:31):
There's so many like little nuances, But like what happens
when you get out of hospital, Like you can't go
back to work because you've got twelve weeks of recovery.
You can't go back to work because you literally have
PTSD and you're exhausted from all the chemo drugs, and
like you would really love the financial freedom for your
husband to stay home for a few weeks and just
like decompress from the situation that was, Like, these are
(17:53):
the things that I want you to be thinking about,
not just oh yeah, public versa. I'm fine, Like I
get that. And it is such a privilege to look
at public versus private in that way because you don't
get to see the like dramatic nature of what private
and public can actually look like when push comes to shove.
And for me, it's actually, well what happens next, Like,
(18:13):
say you get diagnosed with breast cancer and you've got
you know, a few rounds of chemo and then you
go into remission, and that's fantastic. Your body more often
than not is compromised. I very much doubt after having
this whole diagnosis happen, you return to work in a
full time capacity, Like you do not have to do
that if you have proper insurances to make sure that
(18:36):
you can return hopefully, because like you might be like
me and you're like chomping at the bit to get
back to work, but like you also need to protect
you and you can't do that if you're stressed about money.
Speaker 3 (18:46):
And that's right, And private health insurance covers a lot
of bills. Oh yeah, it doesn't cover money in the
bank to give you space. That's really what personal insurance
cover does. It just gives you breathing space. And you know,
we help a lot of clients going through this claims process.
And that's the biggest thing is when money hits the
bank account, you can just you can just feel the
sigh of relief that people have is just going, oh,
(19:09):
we've got breathing room. Now, we've got capacity to make decisions.
And yes, insurance premiums cost money, and we've got to
pay it on the hope that we never actually get
that money.
Speaker 2 (19:19):
They want it. Like I used to say this to
my advice clients, so'd be like, I actually would love
this to be the biggest waste of money in the
entire world. Like I hope that when you're sixty five,
you and I get to sit down and I'm still
your advisor, and you tell me, I wish I never
got insurance so I didn't get to claim on it.
And you know what, I'm going to say, good because
it means you never experience a significant health event. Wouldn't
(19:40):
that be a privilege?
Speaker 3 (19:41):
And all insurance is really you know, we all look
at insurances as bad, like the insurance companies are bad
and we're good, But really, insurance at its core is
about a community coming together putting money into a big
bank account. When one of us unfortunately need it, they
can pull the money out. So we all feel like
insurance is a waste of money. Me feel like insurance
is a waste of money.
Speaker 2 (20:01):
Good because I'm paying for somebody else's of mind.
Speaker 3 (20:05):
Yeah, we work with clients who are claiming and they
get significantly more money in return than they've ever paid.
And that's because we've all come together as a community
and said, let's put money into this bank account. And
that's really why. I mean, they're for profit businesses insurance,
so it's we're not talking about pure altruism. But as
a policy holder, me, I know other people are claiming
(20:28):
on it because they need it at their worst moment.
Like we all know someone who's had a cancer scare.
You cannot walk around Australia without knowing someone who has
gone through cancer, Uncle, Auntie's brother, sister, whatever it is.
We all know someone and having personal insurance cover is
just allow us for breathing space. And as I said,
(20:50):
it is the most kind of emotionally taxing part of
our business, but the most rewarding part is working with
clients going through a claim and just the sigh of
relief that they have knowing that there's money there.
Speaker 2 (21:01):
Yeah, yeah, that is so true. Let's pivot a little
bit because I want to continue on the divisive topic.
Speaker 3 (21:08):
Let's go let's get I.
Speaker 2 (21:09):
Want your opinions on another relatively topical insurance, and that's
funeral insurance. How do you feel about that?
Speaker 3 (21:16):
I can't. I can't stand it neither.
Speaker 2 (21:19):
I was like, hold on, is he going to go
oh if it gives you peace of mind?
Speaker 3 (21:24):
Like I just think it is trash, No think, I
think it's a waste of money. Like it's really not
so much an insurance policy because people who are buying
it are often you know, getting closer to their funeral
and it's really pre paying a funeral.
Speaker 2 (21:38):
Did you know? So this is like a side note.
I'm currently helping some people with their retirement plans, and
I was like looking on the money Smart website and like,
the cap of assets that you can own before you
start to have your pension influenced is about four hundred
and seventy thousand dollars. And one of the recommendations that
(21:59):
the literal government website.
Speaker 3 (22:01):
Says is your funeral bond.
Speaker 2 (22:03):
Yeah, is this a joke?
Speaker 3 (22:05):
Like is that?
Speaker 2 (22:06):
I was reading that and I was like, surely I'm
on the wrong website. I'm a smart money smart is
recommending that, Like, oh, if you're over the limit and
you're like trying to decrease your assets like maybe a
funeral bond, I would actually prefer you to gamble it away,
do you know what I mean? Like I was just
looking at it, going what what like, Phil.
Speaker 3 (22:28):
Yeah, I wouldn't say it's a prodent financial strategy getting
a funeral bond to us your assets.
Speaker 2 (22:34):
I was shook. And then I did a little bit
more research in preparation for this episode, and once you
move over to the ASSEIC website, it says that the
average funeral payout is about eight and a half thousand dollars,
but many policyholders end up actually paying more than double
of that in premiums because we're all living longer, and
(22:55):
essentially so many people take out that cover at a
young age. Like and if you're retiring and you're on
the money Smart website and you're like, oh, I actually
have just over the threshold of usets. I'm going to
buy this insurance bond and keep tipping money into it.
And I am literally only sixty five because I'm retiring
right now, but you live another thirty years, which is
very probable in this day and eight. Like what that
(23:17):
is actually unhinged to me? Like, there are so many
cases online of people who are paying twenty thirty thousand
dollars in premiums. What is this to me? Scam? Yes, yes,
you get paid out when you die, but it is
not worth it.
Speaker 3 (23:31):
Oh yeah, I mean I wouldn't recommend it. And I
was actually talking to my mother in law the other day,
Please tell me day I have it. No, no, no,
she was talking about her mum. They always thought she
had funeral insurance, but then when they got there, they
couldn't find any paperwork.
Speaker 2 (23:44):
I was about to say, how many people have actually
documented their funeral insurance properly enough so that when something happens,
the kids are like, oh great, Like we have to organize.
Like what if you went and got it because you
thought it was a good decision, but you don't talk
about money with your family.
Speaker 3 (23:58):
Yes, exactly. And something that's interesting if you're an insurance
geek like myself, I'm post to all their stats, all
their data they post. Actually I'm not sure they still
post the revenue per insurance product. But you used to
be able to look at appra's data and they show
you how many premiums and how much is being paid
(24:19):
out on a per insurance policy basis, and so you
can actually see what percentage of premiums are going towards
claims and funeral insurance. The premium to claim ratio is
so low that it just means it's not a good bet.
Speaker 2 (24:32):
No do it.
Speaker 3 (24:33):
Absolutely, you're paying you know, as you said, you're paying
more than you're ever going to receive.
Speaker 2 (24:36):
It drives me insane because if you look at the
marketing of these companies, they're all like, oh, well, actually
you're not leaving your loved ones with a financial burden
expensive please don't get me wrong. Like the average funeral
I think is between five and ten thousand dollars these days.
But if you're putting that money into a savings account
(24:57):
and something happens to you and your family access to
your funds, great, they can actually spend it in line
with how they think they want your funeral to be planned,
or maybe even how you want your funeral to be planned,
because you can do that, and they might even have
some extra money left over for a really good wake,
like whereas a funeral plan is not paying for that.
(25:17):
That is not how that's going to work. And like
a financial burden on your family or that is playing
into people's emotions, and I just think it's like so manipulative.
Speaker 3 (25:27):
Yeah, and this is where it all comes down to.
At the end of the day, we've all got living expenses,
got to spend money. It's just allocating how much you
want to spend towards insurance is what needs to be
really thoughtful and just thinking about what's the alternative. And
so yeah, my view is I don't love funeral insurance
at all.
Speaker 2 (25:44):
All Right, funeral insurance is out I reckon we should
go to a little bit of a break because we've
talked about some controversial insurances and I'm sure people actually
would love to hear from a proper financial advisor, some
actual advice, Like all right, well he told he does
what he doesn't like, what does he like? So because
we know that some of them are trash and some
of them are actually not as bad as we thought,
we're going to go to a really quick breakin. And
(26:06):
on the flip side, I'm going to put the pressure
on Phil to actually share the insurances he believes are
absolutely non negotiables, the stuff that could seriously save you
when things don't go to plan. So stay with us,
we will be right back. All right, welcome back. And
we have talked about what we think is trash and
what we think is maybe worth your cash. Phil, it's
(26:28):
time for I would say the important stuff, like instead
of just talking trash on insurance that we don't think
is worth it, like maybe pair insurance and definitely funeral insurance.
What insurances do you think every single person should have
locked in?
Speaker 3 (26:42):
No matter what I mean, personal insurance is the most
important thing. So what is personal insurance? Is really four
to five different types of cover. So income protection, as
you said at the start, if you had to cancel
everything else but keep one, income protection is the one,
and so that protects your income if you can't work
because of an illness, injury, sickness, if you get made
redundant or you you know, you get fired. It's not
(27:05):
paying you that, but it's for health reasons. If you
can't work, you'll get paid and income. So that's a
part of personal insurance. Then there's life insurance, so VD
if you pass away, there's pretty simple. That's the one.
Speaker 2 (27:15):
I think most people understand.
Speaker 3 (27:17):
If it's easy. You're dead, you're dead, You're dead.
Speaker 2 (27:19):
Yeah. Saying that, I was like, there's a little bit
of flexibilities. You have a terminal diagnosis, you might be
able to cash in on that a little bit early.
Speaker 3 (27:27):
Correct and you know, I, you know, I think we've
spoken about this. One of my really close friends was
termally ill and it was super important for him to
get the claim in his bank account before he passed away.
And it was pancreatic cancer and it was like twelve
months before he was diagnosed before he parted, and it
was so iced up.
Speaker 2 (27:44):
And so how's his family now?
Speaker 3 (27:46):
Yeah, they're doing they're doing it. I mean still, they're
two young boys. They're just starting high school next year.
Speaker 2 (27:51):
You spoke about him, he hadn't passed away yet, you
spoke about him last time you were on or the
time before you were on the podcast, And so the.
Speaker 3 (27:58):
Terminal illness payment, it didn't change whether he got it
after he passed away or not. It's the same money. Yeah,
So but for him it was so important to know that.
Speaker 2 (28:06):
It actually happened.
Speaker 3 (28:07):
I had I set this up to protect my family.
I know the money's in the bank account and my
family is protected. Was incredibly important to him. So, yes,
there is nuances and a bit of an asterisk about
life insurance. The other one is like disability cover. Disability
cover is a lumps on payment, and that's the lowest
likely event to happen. You know, to be totally and
(28:29):
permanently disabled is really unlikely to happen. You're more likely
to pass away than to be totally We.
Speaker 2 (28:34):
Had Rihannon on the podcast a while ago, and she
shared her story of diving into a pool at twenty
one in Bali and becoming a quadriplegic, and like, you
don't expect that stuff to happen. But like she shared
even just how much it cost her on an annual
basis to pee because she can't do that. And like
I think that these are the things that no one
(28:55):
really wants to talk about because it's a bit icky.
But the fact that she's spending I think it was
nearly eighty thousand dollars a year on catheters, Like, where's
that money coming from? Phil If you're not working and
you're not able.
Speaker 3 (29:06):
To Yeah, and look, some of the answer is ndis, Oh,
I have an scheme, and that's great, but that can
change with governments.
Speaker 2 (29:13):
And also that is going to be so limited in
terms of quality of life. Yes, you might get your catheters,
are you able to make the appropriate adjustments to your
home so you've got the right ramps and your comfy
getting in and out of your car? Like the ndis
often don't cover all of the things that are about
quality of life, but more about just getting by.
Speaker 3 (29:33):
And the winds can change. That's the scariest bit about
an NIS scheme. You know, governments can they can be
cost blowouts and then they can rain those costs back in.
And what is raining costs back in from a government
point of view is we're not going to give as
much to people who need it yea, And so you know,
being reliant solely on that is a risk. So disability
is the least likely to happen, but the most financial impact,
(29:55):
like it's really significant. Then the trauma insurance or critical illness,
which pays for specific medical events, so cancers, hard attack strokes,
if any of those diagnosed or happen to you and
a specific severity, then there's a lum some payment that
gets paid out. That's the most one that we help
our clients claim on because it's the most likely to happen.
And there is child's covered that we like we recommend
(30:17):
for our clients is if something significant happens to your kids,
there's money in the bank, gives you breathing space. That's
really what these insurance policies are. So when we talk
about our priorities for me and yes, that's what we do,
and that's our business model is to help people set
this up. But the reason I can do anything in
financial advice, I can help people. I can be you know,
a finance bro and help people invest. But we've chosen
(30:40):
to work in insurance because fundamentally believe that personal insurance
is incredibly important. So if you're and I love that,
I love that.
Speaker 2 (30:47):
I remember when you were telling me that you were
going to start sky Welt and you were do you
reckon it's a good name. I was like, yeah, it's great,
like and you were so like, I don't know if
it works, but I'll give it a crack, like I reckon,
I'll just do insurances. And like at the time, like
I thought it was a really good idea because it
was like a good business model. But I can almost
imagine every single other advisor being like, what is he doing?
(31:09):
Is he crazy? Like he's not going to do investment,
He's not going to do subranuation, he's not going to
do budget and cash flow. This guy is just going
to do insurance, which for a lot of advisors I
would say is a hygiene factor in the nicest possible way.
A lot of advisors who do investment or they really
focus on budget and cash flow or pensions or whatever,
(31:29):
they kind of like do insurance and they know it's important,
but it's not their favorite thing to do. Because he
is quite admin heavy, and there's a lot of back
and forth with insurance companies, and it can kind of,
like low key, be the bang of your existence as
an advisor if you're just so passionate about investing and like,
that was lou key me. When I was an advisor,
I was like, no, this is incredibly important. But nobody
(31:50):
liked negotiating with the bdms. No one wants to go
back and forth with the underwriter and be like, look,
I know that's on their record, but they've recovered, Like
and I would negotiate all the time. It would take hours.
So I remember thinking that you were low key, a
little bit crazy, but also it was genius because financial
advice can be so unobtainable. So like financial advice when
(32:12):
I was working as an advisor, which i'm not now,
was anywhere between four and a half thousand dollars and
ten thousand dollars for my initial statement of advice. For
most people, that is not reasonable. And it's not because
I didn't want it to be reasonable. It's because that's
what it costs to get the advice together, to be
able to create the statement of advice, to pay my team,
to keep the lights on in my office, to pay
(32:32):
for my license to do all of those things. Phil,
I know this sounds really marketing, but like, because you
only do insurance. If I am listening to this and
I'm like, I can't afford to go see a financial advisor,
how much does as Skywealth's statement of advice cost for
a single and then maybe for a couple.
Speaker 3 (32:50):
Yeah, So we've changed up our models slightly. So if
you are like just employed and don't have any major complexities,
then we charge three hundred and thirty dollars for an individual.
Speaker 2 (33:00):
Three hundred and thirty bucks to get your advice done
just for insured.
Speaker 3 (33:03):
That is, that's it. And we only do insurance. So
if someone says they've got an austrailed super but they're
looking at host plus cool, sorry, and we will we
will say hold just hold your horses. We'll look at
any insurance within a strained super. But we're not going
to tell you to go and invest your money here
or change your acid allocation. So it is very scoped advising.
The jargon that we use in I think it's.
Speaker 2 (33:25):
Good because you could go to another advisor. And I
think this is why, like you and I get on
like a house on fire, but we also get on
on like a more altruistic level because if you go
and see another financial advisor for insurance only advice, I
would say minimum two thousand dollars because they honestly they
don't have the model to support going and just doing
(33:46):
insurance for a client. And they also kind of want
you to be a little bit scared away from that
because they don't want to do that.
Speaker 3 (33:51):
Yeah, that's right, brutally on us.
Speaker 2 (33:53):
Most advisors are like insurance only clients, no, thank you.
Speaker 3 (33:56):
Yeah, And to be fair, we work with a lot
of those firms because they prefer to us, which is genius.
Speaker 2 (34:01):
You're like, I'll just do their insurances and sample them
back to you.
Speaker 3 (34:04):
Yeah, because I mean I've finished talking about our fees. Sorry,
just to touch on that, Like, let's be honest. Investments
is fun investments. This money magically increases.
Speaker 2 (34:15):
Yeah, I have a whole investment masterclass, Like I'm obsessed
through that. Do you think because it magically increases this thing,
this asset interesting? How good is that?
Speaker 3 (34:25):
And what we do is we help people pay money
to an insurance company or get paid from an insurance company.
Speaker 2 (34:30):
I'm not gonna lie. That doesn't sounds as sexy as sexy.
Speaker 3 (34:34):
So that's why I start doing it. Yeah, So just
back to our fees, So three point thirty if you're
an individual and you're just payg so you just employed
and for a couple of four hundred ninety five dollars. Now,
if someone is self employed, if they've got like defined benefits,
self managed super funny. More if they're an expat so
we help people who are living abroad get set up
(34:55):
insurance policies in Australia, any one of those four things,
then it's a little bit more expensive. So seven hundred
and seventy dollars for individuals, yeah.
Speaker 2 (35:02):
Because you're a lance. Hundred is actually a little bit
more complex.
Speaker 3 (35:05):
Yeah, and looking through profit and loss statements, it just
sounds easy, especially if you just got to like, if
you're not a simple business, it's still not because the
insurance that we can get is so much more complex.
So yeah, more complex clients have slightly high seve.
Speaker 2 (35:21):
It sounds like I'm I don't know, the biggest fan
of Sky Wealth, but I literally am. Like people actually
message us on a weekly basis and they'll be like, hey,
who was that insurance dude that you mentioned on the podcast,
And I'm like, it would definitely have been Sky like
it definitely was, Phil, Like, I just am such a
fan of it because it's I guess from the flip side.
And we talked about this before. Having been an advisor,
(35:42):
I've seen how bad it can be, and it gives
me so much anxiety to think that my community aren't
protected or maybe they don't see the value in getting protected.
And like we live in Australia and we are so
lucky we have many care like and at the moment
we're seeing all of this stuff happening internationally, like making
decisions left right in the center. I saw TikTok the
(36:03):
other day, Phil, where this American mom was breaking down
her invoice for giving birth in an American hospital and
she was like, oh, it's so good because like this
is a good deal, and it was forty four thousand
dollars USD for her to give birth, and she was
going through like lin item by line item and the
comments were obviously, oh, my gosh, that's so good because
(36:25):
she had an American audience. Mine was sixty six thousand
and whatever. But then there were a few comments from
Australians being like, this is crazy to me because I
went through the public health system in Australia. I had
a C section, or I had a be.
Speaker 3 (36:38):
Dur all, I had these daughters. We walked in, I stayed.
We had couples rooms, so I stayed over for three
little over the moment it was sleepover. We had. We
had a date night. I mean Kate, I loved, not
so much of a day night for her because she's
you had a good time.
Speaker 2 (36:53):
She was along for the ride.
Speaker 3 (36:56):
But you know, and then we walk out like are
we good to go have.
Speaker 2 (37:00):
A good day, enjoy your new baby. It didn't Because
we live in Australia and we see these things and
we are so lucky to have these things. I think
there's an underlying assumption that when things go wrong, we
are looked after. And we are known globally as the
most underinsured country in the world, the most insured country
(37:20):
in the world. Feel you probably already know this is
who Oh he doesn't know this. It's South Africa. Oh yes, okay,
South Africa. They are the most insured country in the world.
And then we are the most underinsured country.
Speaker 3 (37:32):
You know, Trauma insurance was invented in South Africa.
Speaker 2 (37:35):
It was it was I remember going to all these
conferences and like a lot of insurance companies actually based
in South Africa, and that makes sense because it turns
out there they love it. They love it like everybody
has insurance coming out of the kazoo over there, and
it's a.
Speaker 3 (37:50):
Bit of a shoe. We're right attitude, that's the issue
and coming back like this is you know, we help
people set up bills. It's an increase to someone's last
style setting up insurance. Now, the great thing that we
have in Australia is your super fun can fund a
lot of the premiums and it can be really tax effective,
so it doesn't matter if you're with a strain and
(38:10):
super host plus wherever. We can set up the right
insurance policy with a company without using or really what
we think is best for their clients and whoever they're
with from a super point of view, that can fund
the premiums.
Speaker 2 (38:23):
Yeah, and I love that because for those of you
following along at home, the superannuation environment is taxed at
fifteen percent instead of your marginal tax rate, which most
people listening to our podcast is probably going to be
around thirty percent, which is a fifteen percent discount money win, Phiel,
we lose that. That's very sexy.
Speaker 3 (38:40):
Yeah, and you pay, especially life and disability, you pay
pre tax dollars for those premiums instead of paying it out.
Like if you've set up an insurance policy directly with
an insurance provider, you almost certainly not paying it through
SUPER because most of them don't allow it. And so
you're paying tax on your income to then pay these
premiums that aren't deductible. Why don't we just paid inside?
So we've got a lot of free kicks in Australia
(39:01):
when it comes to personal insurance cover the means it's
really advantageous to go and see a financial advisor because
we have choice of insurer regardless of what's SUPER fun
you with. Yeah, if you're with the strained Super, you
don't have to go to TAO, which is the insurer who.
Speaker 1 (39:17):
Yeah.
Speaker 2 (39:17):
I think that's one of my favorite parts about it.
I'm like, yes, it might impact your day to day
income or your cash flow. And I mean, Phil, this morning,
you and I got breakfast and we were talking about
the cost of living crisis, and we're talking about how
ridiculous groceries were in all of that stuff when we
are both in financially privileged positions. But we do still
see it, Like you're dealing with clients every day who
are probably like, okay, cool, Like, let me see how
(39:40):
I can fit that into the budget. Because we're not
just assuming that, you know, for income protection, it might
be one thousand dollars a year, like it might be
more than that depending on your income. We're not expecting
you to just be like, oh yeah, she'll be right.
But it is something that you genuinely should be prioritizing
because it's your livelihood, it's your income. It's like the
the most important asset that you need to protect. So,
(40:03):
knowing that I'm running out of time with you today,
I want to know, is there like a golden rule
for deciding if insurance is kind of worth it for
you or not?
Speaker 3 (40:11):
The kind of analogy I love because we've got a
lot of young team members coming into our business. All
of them tell me I'm young, I don't need insurance,
and I get on my The ones that have been
around for a bit longer, and when a newer person comes,
they're just like, I'm going to fill up for this round.
Yeah yeah. So the thing I like to think about is,
take your income, whatever it is, big, small, doesn't matter.
(40:34):
Take your income. Work out how old you are, so
go age sixty five minus my current age, yeah, whatever
that may be. Go your income times that number. Yeah,
so how many years until retirement my current today income?
Assuming it's not going to increase, If it's a million dollars,
it could be three million dollars. That's without any increase,
without any promotions. And think about if I had a
(40:55):
Ferrari that cost me three million dollars and I was
driving it every single day. Would I say, I'm young,
I'm a good driver, I don't need to ensure it.
Or would I go, that's a three million dollar Ferrari.
If if that crashes or if there's an issue, even
too scared to drive it.
Speaker 2 (41:12):
If it's on insurance, I wouldn't drive it at all.
Like if someone said, do you want to drive my Ferrari,
I'd first say no because I'm too scared to drive
your Ferrari. But second, the next question would be that
it's insured, right, Like if I crash your Ferrari? Like
are you coverage for this? You're good? You're good, But
you don't ask that when you go skydiving, do you?
Speaker 3 (41:31):
Yeah? And that's what and we don't ask it every
time we go out to work, because like the biggest
claim at the moment and the biggest cost for insurance
is mental health. Yes, and mental health. We're in an
absolute epidemic for mental health conditions, and so that's the
thing of going we aren't you know, life is fragile.
(41:51):
You know there are things that can happen, and we
are driving around Ferraris in our bodies. Doesn't matter how
big or small air income is. If you're young, you're
driving around a Ferrari. Now insure that Ferrari. That's the
most important insurance. And that's why you know you've kicked
us off with saying income protection is most important. And
I fundamentally agree that that is.
Speaker 2 (42:09):
I'm a on the same page because we could have
just made this whole episode a little argument like and
that wouldn't have been nearly as in life community. Yeah,
I mean that's fine, But like, I think that is
so important and I haven't thought about it in the
Ferrari analogy. I'm always like, you're insuring your car, but
you're definitely not insuring your life. Like I think you've
got it backwards. But like the idea that we're all
(42:30):
mini ferraris absolutely I love that for us we are expensive,
we are worth it.
Speaker 3 (42:34):
Like, I didn't even know if Ferrari's at three million
dollars none, I don't know what. I personally never looked
into a Ferrari.
Speaker 2 (42:38):
I haven't either, but that at the moment is the
most expensive car I can think of. Yeah, like, I
can't think of anything.
Speaker 3 (42:45):
You know what.
Speaker 2 (42:45):
There are people that are going to be screaming right
now in their cars, being like Victoria.
Speaker 3 (42:49):
This, McLaren, this, this is mor guy.
Speaker 2 (42:53):
Well, neither am I and I think that that's probably
a really good place to leave it. Phil. I need
to update my insurance so we might get onto that.
Thank you so much for coming on the show. It
is always a pleasure, And to be honest, I just
feel like you really do help make this stuff a
whole heapless, overwhelming.
Speaker 3 (43:11):
Oh, thank for having me.
Speaker 2 (43:12):
Thanks for having me.
Speaker 3 (43:12):
Victoria, Hey, VD, thank you so much for having me.
You're not having that edited out.
Speaker 2 (43:19):
One of the joys of.
Speaker 3 (43:20):
My life is being able to spend Tommy. Actually, I
was singing this on the way in here. This will
get a lettered out, I'm sure. Is The older I get,
the more I appreciate long term relationships, so I appreciate you.
Speaker 2 (43:30):
No, I'm not editing that out because it strokes my
ego in exactly the right way. I appreciate it. Guys,
if this episode has made you think twice about what
you're paying for or what you're not covered for, consider
this your reminder to do a little life admin check
in your future. Self is definitely going to thank you
for it, And if you haven't already, make sure that
you're following She's on the Money wherever you're listening right
now so you don't miss the next episode. All information
(43:53):
about our friend Phil and sky wealth is going to
be able to be found in our show notes, so
if you want to talk to this guy, you can
hit him up asap.
Speaker 4 (44:07):
The advice shared on She's on the Money is general
in nature and does not consider your individual circumstances. She's
on the Money exists purely for educational purposes and should
not be relied upon to make an investment or financial decision.
If you do choose to buy a financial product, read
the PDS TMD and obtain appropriate financial advice tailored towards
(44:27):
your needs. Victoria Divine and She's on the Money. Are
authorized representatives of money. Sheper pty Ltd ABN three two
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