It is instinctive of us to insure our car and home, but if the latest pandemic taught us anything it is that life is unpredictable. Having the right level of personal insurance including, income protection and life insurance should be heavily considered on your path to creating financial security. Insurance not only provides peace of mind for yourself, but also for your loved ones.
The type and level of insurance you need will vary from person to person depending on your situation, you may even find you have insurance built into your super.
In this article we cover:
- Types of insurance
- Determining how much insurance you need
- Insurance and your super
Understand how a financial adviser can support you with your need for financial security. Get in touch.
Types of personal insurance:
Life Insurance: Life insurance provides benefits to your loved ones if the worst were to happen. It is generally provided in a lump sum payment of the amount set in your insurance plan. It can help cover the cost of funerals, contribute your financial obligations such as mortgage repayments, provide an income for your partner and or family. Generally, you want your life insurance to cover any outstanding debts or owing mortgage so there are no expenses left for your loved ones to try and cover.
You can read more on life insurance here:
Tracey lost the love of her life, Lindsay, to cancer a few years ago. With life insurance in place, the family were able to take care of each other through the hard times, without having to worry about their finances. Read Tracey’s story.
Total and Permanent Disability Cover (TPD): Covers you if you become permanently disabled. It can help cover your ongoing expenses and support any dependants. You may find this is an added extra in your life insurance.
Trauma: Trauma covers cancer, stroke and heart attacks and is provided in lump sum payment. This can be extremely beneficial if you are out of work for a period whilst in treatment or recovery. It can help cover the cost of any medical expenses and living expenses.
Income protection: Income protection provides cover if you are unable to work due to illness or injury. If you are the main household provider income insurance can ensure you are still able to provide for your family and cover repayments. If you are exposed to higher risk jobs or injury, such as tradesman, this is highly worth considering. Generally, there are wait times on receiving income protection, so it is important to still have an emergency fund as part of your financial plan.
Invest Blue client Dwayne, a builder by trade, was grateful to have income protection insurance when a snowboarding accident left unable to work for months. Read his story.
How much insurance do you need?
How much insurance you need will differ from person to person and will change as you go through different stages of life.
The amount of cover will consider variables like:
- Your age
- What you currently earn
- What you currently owe (mortgages, loans, etc)
- Your current health risks
- Whether you have dependents
- If you are a business owner or employee
- Your personal view of risk and lifestyle goals
- Your current savings
You can read our full article on how much insurance cover do I need here.
Insurance & Super
Many superannuation accounts have insurance plans built-in, most commonly life insurance and TPD. Benefits of having insurance built into your super include using before-tax money to pay for your premiums boosting your cash flow and making insurance more affordable.
It is important to review your insurance built into your super to ensure you have enough coverage and are covered, to begin with, this will also prevent you from paying for two separate insurance plans if you weren’t aware it was automatically built into your super.
Our clients Dennis discovered firsthand the benefit of having insurance into his super when he was diagnosed with Macular Dystrophy “Bullseye” impairing his vision and taking him out of a job.
“If I learnt anything from the negatives that we faced, it was the importance of ensuring strong insurance is attached to your superannuation.”
You can read his full story here.
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Personal Insurance Checklist:
- Review insurance premiums to ensure you’re not paying too much
- Check you have the right level of coverage
- Check for insurances in your super
- Carefully read your insurances so you know what and how you can claim. You may be interested in our article “have you had a claimable event when using insurance”
- Review if it is better to keep your insurance inside or outside of your super
- Discuss your insurance with your adult children or loved ones. You can read more on that here: how and why to talk to your adult children about insurance
- Seek the advice of a professional
An adviser can take the hard work out of personal insurance for you, by taking a holistic look at all your finances they will be able to review your coverage and ensure you’re adequately insured. You may even find you were paying for insurance you didn’t even know you had or need. In the event, you need to make a claim your financial adviser will also be able to manage this process for you taking the stress out of an already stressful situation. Knowing you have the peace of mind your loved ones will be taken care of makes it all worth it.
Contact us today for a complimentary initial consultation.
What you need to know
This information is provided by Invest Blue Pty Ltd (ABN 91 100 874 744). The information contained in this article is of general nature only and does not take into account the objectives, financial situation or needs of any particular person. Therefore, before making any decision, you should consider the appropriateness of the advice with regards to those matters and seek personal financial, tax and/or legal advice prior to acting on this information. Read our Financial Services Guide for information about our services, including the fees and other benefits that AMP companies and their representatives may receive in relations to products and services provided to you.