Protection you can’t afford to not have.

We’re all familiar with insurance. You probably have an insurance policy or more than likely, several insurance policies. There’s your phone, car, private health, home and contents just to name a few. We all work pretty hard to acquire the assets these insurances protect.

So who is going to pay the premiums for all of these insurances if you were unable to earn an income? Not to mention all the costs associated with these assets and living the great Australian dream. You are your biggest asset. In saying that, your ability to earn an income all depends on you.

Understanding the different types of personal insurance and the exact cover you have are key components to good financial management.

What is personal insurance?

There are four main types of personal insurance; Life, Total and Permanent Disablement (TPD), Income Protection and Trauma Cover.

Premiums are based on several factors. Such as age, gender, pre-existing health issues and the budget you have for the cover you’re looking to obtain.

Life Insurance

In the event of your death or if you should be diagnosed with a terminal illness and have less than 12 months to live. A life insurance policy pays an agreed amount of money to your nominated beneficiaries. Most Life insurance policies are held through a super fund.

Total and Permanent Disablement (TPD)

TPD covers you in the event that you should be unable to return to work. A policy can be tailored to the type of events you’re covered for. Such as disabilities related to an accident or due to illness. Also, whether you’re unable to return to ‘any occupation’ or ‘own occupation’. Should you specialise in a particular field. TPD policies are typically held in super alone or bundled with Life Insurance.

Income Protection

Designed to help with the cost of maintaining the household while you focus on your recovery. Income Protection can provide you with up to 75% of your regular income until you are able to return to work. You can vary the premium based on a few things. The timeframe you’re prepared to wait before the benefit is paid post the incident and the duration of the benefit period.

Income Protection can be held either in super or out. Policies held outside of super are a tax deduction.

Trauma Cover

Trauma Cover pays an agreed lump sum should you become critically ill or injured. Claims are often processed quickly without the worry of waiting periods. The purpose of Trauma Cover is to help you make the necessary changes to your lifestyle in an effort to aid your recovery. This could be anything from cutting back on time at work. To paying for treatment or making adjustments to your home.

Premiums vary depending on the amount and type of trauma event cover you choose. Trauma Cover cannot be held through super but can be bundled with other policies held outside, such as Life Insurance.

Why do I need personal insurance?

Workplace related injury or illness may qualify you for workers compensation. Alternatively, you may be entitled to the disability pension through Centrelink. Which would provide some assistance but probably wouldn’t be enough.

The leading causes for personal insurance claims include cancer, musculoskeletal disorders, heart disease, mental illness and accidents. While the ‘what if’ is something no-one wants to think about, the reality is that it does happen. Not planning for it could add financial stress and anxiety to an already unfortunate situation.

What financial impact would this have on your family if something does happen to you? Can you afford to maintain your current lifestyle as well as the costs associated with your recovery?

It is highly recommended that self employed individuals have some form of personal insurance.

When should I get personal insurance?

When giving consideration to personal insurance it’s important to think about a few things. What would you do if you became sick or injured and were unable to earn an income? Could you afford your lifestyle and to maintain the repayments on any debts you currently have?

How much cover would you need to reduce or payoff debts. Such as a mortgage, your children’s education or any other major purchases and living expenses.

Even in your 20’s when you may have minimal financial responsibilities. Have some type of personal insurance in place to pay for your lifestyle and/or outstanding debts. This may be a better option than relying on and placing that financial strain on your parents.

To the parents, what would your child do if they became sick or injured? Having the conversation about personal insurance may prove to be an economical one to encourage with them. Parents are so often now taking on the financial responsibility of their children who haven’t protected themselves. When they should be thinking about their own retirement.

How do I get Personal Insurance?

Tailoring personal insurance to the type of policy that would be most beneficial, the amount of cover to have and the best provider for you and your circumstances, are all factors we will work out with you.

Already have personal insurance?

If your personal insurance policy has been in place for some time. There is every chance it may not reflect your current circumstances. Changes in income level, assets/liabilities, marital situation, family members and so on are triggers that should prompt a review.