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The Financial Independence, Retire Early (FIRE) movement is capturing the attention of a generation right now.
More and more young Australians in their 20s and 30s are focused on accumulating wealth through high savings rates, strategic investing, and intentional lifestyle choices – all with the goal of winding back work earlier than previous generations ever dreamed possible.
As a financial adviser, I work with many clients in this space. They’re smart with their money. They track their spending, invest in shares or property, and are building strong careers to boost their salaries.
They value health and lifestyle freedom, and they’re not afraid to take calculated financial risks.
The goal is simple: build an investment portfolio that works as hard as they do, so they can retire, or at least reduce work – well before 60.
But despite all this focus on financial freedom, there’s a key part of the plan that is often overlooked: personal insurance.
Plans are great – until life gets in the way
While building wealth is key to financial independence, it’s also important to think about what might pause that progress, even temporarily.
What would happen if you couldn’t work for several months due to illness or injury?
How would your investment or savings goals be impacted if your income stopped, and the focus had to turn to trying to cover basic expenses? These aren’t just hypothetical scenarios. They’re real-life challenges that can affect anyone, no matter how fit, young, or financially savvy.
A recent ABC report found that rates of cancer in Australians between ages 30 and 39 are rising at an alarming rate – with some cancers rising by 150%, 200% and even 500% in the last 25 years.
At the same time, data from the Council of Australian Life Insurers (CALI) and KPMG shows a growing proportion of claims for mental health conditions among the 30–40-year-old age group – with a staggering 732% increase in Total and Permanent Disability claims over the past decade.
Life isn’t as predictable as we’d like it to be. When something unexpected happens, your entire financial strategy can unravel if you haven’t put protection in place.
Insurance isn’t just for older people or parents
Traditionally, insurance has been seen as something you get when you have a mortgage or kids. But for young Aussies, those life milestones are happening much later in life. In the meantime, the need for insurance cover hasn’t disappeared.
A 30-year-old on a salary of $85,000 per year will earn approximately $5.65 million in incomeover their working lives*. It is important that young Aussies recognise that their biggest asset is not their superannuation, or their home – but their ability to generate an income.
If you’re aiming for financial independence, insurance shouldn’t be an afterthought. It should be part of your foundation. It’s about protecting that income you’re working so hard to build, and ensuring that if life throws a curveball, your goals remain within reach.
Core covers – explained simply
Here’s what the main personal insurance policies do:
- Life Insurance – pays a lump sum to your beneficiaries if you pass away.
- Total & Permanent Disability – pays a lump sum if you become totally and permanently unable to work due to illness or injury.
- Trauma Insurance/Critical Illness – pays a lump sum if you’re diagnosed with a serious illness like cancer, stroke, or a heart attack.
- Income Protection – replaces a portion of your income if you can’t work for an extended period due to illness or injury.
- Child Cover – pays a lump sum if your child experiences a serious medical event.
Why it’s smart to insure while young
There are some clear advantages to sorting out your cover early:
- Better health, fewer exclusions: You’re more likely to be approved without special conditions or premium loadings for pre-existing health issues.
- Cheaper premiums: Insurance is priced based on age and risk. Consider taking advantage of this while you’re young.
- Future flexibility: Quality policies accessed through an adviser often allow you to increase your cover upon certain policy anniversaries, or life events, without additional medical checks.
Peace of mind has value too
With so many financial decisions to make in your 20s and 30s – from investing to property to making big career moves – it’s easy to put insurance in the ‘later’ basket. But the reality is that life doesn’t wait until you’re ready. With the right insurance strategy, you can protect your financial independence today.
If you’re working towards FIRE, don’t forget to fireproof your plan. A carefully tailored insurance policy can be one of the smartest financial decisions you make – and the peace of mind that comes with it is priceless.
* Assuming annual pay increases of 3%
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The Money & Life website is operated by the Financial Advice Association (FAAA). The views expressed in this article are those of the author and not those of the FAAA. The FAAA does not endorse or otherwise assume responsibility for any financial product advice which may be contained in the article. Nor does it endorse or assume responsibility for the information.
