Life is a series of swings and roundabouts. Being prepared for the tough times, as well as the good, is part and parcel of protecting your most important assets – you, your family and your lifestyle.
Insurance is a practical way of doing just that.
Insurance protects what you have now, and what you may need in the future – should life throw you a curveball.
But what insurances are important, and what do they cover?
Our guide will help you navigate the key insurances available – and help you work out what you need to consider for the stage of life you’re at.
Life insurance provides a set amount of money in the event of your death. You nominate who you want to receive the money. How much you insure yourself for will depend on your stage of life and whether you have a partner and/or dependents.
Things to take into consideration when determining the level of life insurance you need include:
Total and Permanent Disablement cover, often termed TPD, provides a financial safety net in the event you are seriously injured or suffer an illness that prevents you from working.
TPD cover helps cover the cost of your rehabilitation, debt repayments and future cost of living.
Things to take into consideration when determining the level of TPD cover you need include:
Income protection insures you for up to 75% of your income in the event you are unable to work due to sickness or injury.
In essence, it provides you with a replacement income stream to help you stay afloat until you can return to work.
Things to take into consideration when determining the level of income protection cover you need include:
Trauma cover provides a financial safety net in the event you are diagnosed with a specified medical condition or serious injury, or undergo a specific medical procedure outlined in your policy.
It provides support for you and your family if the trauma you experience means it is difficult or impossible for you to work.
Generally, trauma cover will provide you with a set amount of money to help cover things like private medical costs (above those paid by your private health insurer); money to maintain your income stream; adjustments you may need to make to your house because of your illness; the ongoing cost of therapy or special transport needs; and an income stream to repay your debts.
Things to take into consideration when determining the level of trauma cover you may need include:
FAST FACT – Some insurance companies will require you to give them some details about your medical history before they insure you. If you don’t give the insurer this information they may refuse your claim.
Identifying exactly what insurance cover you need to protect you and your family, and at what level, can be difficult.
Your trusted financial adviser can work with you to help determine the type and level of insurance cover you may need – and articulate and explain provisions that may need to be considered.
Working with a professional and experienced adviser gives you peace of mind that the right insurance at the right level gets put into force correctly.
An adviser can also add value by comparing multiple insurers to ensure you get the most appropriate insurer for your age, occupation and health situation.
‘Just like car insurance, different insurers are better suited for different people,’ says Nick Munro, Financial Planner with MBA Financial Strategists.
‘Insurance such as income protection and life insurance can be structured in many ways, each with different advantages and disadvantages. An adviser will help you understand the most appropriate way to hold the cover so that it is most beneficial to your needs.’
MBA Financial Strategists Financial Planner Darren Holst said having ‘insider knowledge’ benefited clients in many ways.
‘Just like any other company, insurance companies have their ‘sweet spot’ or target market,’ he explained.
‘Some prefer blue-collar or white-collar workers, and some are better structured for those who are self-employed rather than employees of a company. Importantly, some are also much more accepting of common health conditions which would need to be disclosed in your application process. Add all of these elements up, and you see that having a professional eye over your insurance can really help you get the best insurance for your needs.’
MBA Financial Strategists Pty Ltd ABN 13 008 285 756 is an Authorised Representative and Credit Representative of AMP Financial Planning Pty Limited, Australian Financial Services Licensee and Australian Credit Licensee. This article contains information that is general in nature. It does not take into account the objectives, financial situation or needs of any particular person. You need to consider your financial situation and needs before making any decisions based on this information.