Why Risk Planning Should Go Beyond Life and Health Insurance

Disclosure: This article is for general informational purposes only and does not constitute financial, insurance, legal, or professional advice. Consider reviewing the relevant Product Disclosure Statement and consulting a qualified financial adviser, insurance professional, or legal professional before making decisions.

Risk planning sits at the core of good financial advice. For most practices, that means life insurance, income protection, trauma cover, and total and permanent disability (TPD) policies. These products are well understood, well priced, and relatively straightforward to integrate into a client's financial plan.

But here's the problem: they only cover part of the picture.

Clients come to advisers with complex, interconnected financial lives. Their wealth is not just a portfolio of investments and a superannuation balance. For many, it's tied up in a family home, a car, a rental property, a small business, and years of accumulated household assets. When advisers limit risk conversations to life and health products, entire categories of financial exposure go unaddressed.

That gap matters - and clients are often the last to know about it until something goes wrong.

The Limits of a Life-and-Health-Only Framework

Life insurance is non-negotiable. Income protection for a client with a mortgage and young children is non-negotiable. Nobody disputes that. But framing "risk planning" as synonymous with those two categories misses a substantial portion of what can go wrong in a person's financial life.

Consider the scenarios where life and health products don't touch:

• A client's home is damaged in a bushfire or flood, and they don't have adequate building cover
• Personal belongings worth tens of thousands of dollars are destroyed in a break-in or storm, with no contents coverage in place
• An investment property sits underinsured because the landlord hasn't reviewed the sum insured since purchase
• A client travelling overseas faces an emergency, and their travel insurance has lapsed

None of these events triggers a life or health claim. Yet every one of them can cause serious financial harm - precisely the kind advisers help clients avoid.

The traditional view that risk insurance and general insurance operate in separate lanes is a legacy of how the two industries developed, not a reflection of what clients actually need. As the Money Management analysis on risk advice in practice notes, risk insurance is the foundation on which a solid financial plan rests - but that foundation extends well beyond life and health products when we think about it properly.

Property Risk Is Under-Discussed in Advice Conversations

Australian households hold significant wealth in property. For many clients, the family home represents their single largest asset. Yet the conversation about insuring that asset often happens outside the advice relationship entirely - clients buy home and contents insurance through a comparison website, often without guidance on whether the coverage is adequate.

This creates a real advice gap.

Underinsurance is a well-documented problem in Australia. After every major natural disaster, stories emerge of homeowners whose sum insured falls well short of rebuild costs. This is not a product quality failure - it's an information failure. Clients who have never been guided through a proper insurance review don't know what they don't know.

Contents insurance is particularly overlooked. Most people underestimate the cumulative value of everything inside their home - furniture, appliances, clothing, electronics, jewellery, artwork, and all the smaller items that add up quickly. A proper review often reveals that clients carrying a $50,000 contents policy would face a shortfall of two or three times that amount if they needed to replace everything after a major event.

For clients with appropriate cover in place, policies like NRMA Insurance offer broad protection for household belongings - covering theft, fire, storm, flood, and even accidental damage as an optional add-on - which is exactly the kind of layered protection that advisers should be helping clients understand and verify.

General Insurance Has a Legitimate Place in the Planning Conversation

Expanding the risk conversation doesn't necessarily mean advisers need to become general insurance experts or hold additional licenses. What it does mean is bringing awareness of these exposures into the regular client review process.

Some practical ways to integrate general insurance into advice conversations include:

1. Annual review prompts - Include a standing question in annual review templates asking clients to confirm they have reviewed their home, contents, and vehicle cover in the past 12 months. This alone surfaces problems that would otherwise go unnoticed.
2. Sum-insured reality checks - For clients who own property, encourage them to use rebuild cost calculators to verify that their building sum insured reflects current construction costs, which have increased significantly in recent years.
3. Post-life-event alerts - Major life events that trigger advice reviews - buying a home, renovating, having children, inheriting assets - are also triggers for general insurance reviews. Linking these together creates a more complete planning experience.
4. Referral relationships - For advisers who are not authorised to advise on general insurance products, a referral arrangement with a trusted general insurance broker provides genuine client value while staying within licensing boundaries.
5. Stress-testing scenarios - During financial modelling conversations, ask clients what would happen to their plan if their home were destroyed or their contents stolen. The answer is usually revealing - and motivating.

The Ownership Structure Question Matters Too

One dimension of general insurance that crosses into advice territory is policy ownership and structuring - particularly for clients with investment properties, business interests, or complex asset arrangements.

Ownership structure affects both premium deductibility and claims outcomes. An overview of insurance ownership options is a useful background for advisers considering how their clients hold general insurance policies, particularly where business and personal assets overlap.

For business-owner clients, the risk exposure picture becomes especially complex. Public liability, professional indemnity, commercial vehicle cover, and business interruption insurance all fall outside the life-and-health framework and carry material financial consequences if gaps exist. A client whose business faces a liability claim without adequate cover can see personal wealth eroded rapidly, regardless of how well their life insurance is structured.

Reframing Risk Planning for a Holistic Practice

The term "holistic financial advice" is often used. In practice, it should mean that a client's complete financial exposure is identified, understood, and either covered or consciously accepted.

That standard is hard to meet when risk planning stops at life and health products. General insurance may sit outside the traditional advice remit, but the financial consequences of gaps in general insurance sit firmly within the scope of what advisers are supposed to address.

A few shifts in practice can make a real difference:

• Move from a products-first to a risks-first mindset - identify all meaningful exposures before selecting solutions
• Treat general insurance gaps as planning risks, not as someone else's problem
• Build referral or co-advice relationships that extend the value advisers can deliver to clients

This is not about advisers stretching outside their expertise. It's about acknowledging that a client's financial plan is only as strong as its weakest point - and for many clients, that weakest point is sitting in an outdated home and contents policy they haven't reviewed in five years.

Conclusion

Life and health insurance will always be central to risk planning. Nothing in this conversation changes that. But the clients' advisers serve complex people with complex asset bases, and a narrow risk framework leaves them exposed in ways that can undermine everything else the advice relationship has built.

Broadening the risk conversation - even through awareness, prompts, and referrals rather than direct advice - is one of the most practical steps a financial planning practice can take toward genuinely comprehensive client service. The gaps are there. The consequences are real. Advisers are well placed to help clients see them.